What are the key issues surrounding the perceived problems with the Social Security system in the United States? What are the possible solutions to these problems?
One of the key issues surrounding the perceived problems with S.S. would be the fact that, in the current financial environment, one will not receive benefits comparable or comparable to the amount of funding one has contributed into the system. In other word it is unsustainable in part because we are not replenishing the workforce at a rate that is comparable to the rate at which the older generation is leaving the workforce and begin to claim social security benefits.
Solutions to this issue include: increasing taxes in some form to fund the program in the future, raising the age at which one can begin to receive benefits, or a reduction of over all benefits for everyone into the foreseeable future. None of which would receive much popular support from the population at large.
Discuss the differences between progressive and regressive tax systems, and importantly, how the structure of the progressive tax system can affect income inequality.
A regressive tax is a tax imposed in such a way as the tax rate decreases as the amount subject to taxation increases. While a progressive tax system is a system in which the tax rate increases as the taxable base amount increases.
Progressive taxation reduces income inequality because progressive taxes are imposed in an attempt to reduce the tax burden of people with a lower ability-to-pay, while shifting the burden to those with an increased ability-to-pay. This serves as a method of wealth redistribution because those who are receiving a reduced burden receive the same over all benefits while those with a larger portion of wealth will in turn compensate for those with less.