Question

Suppose the real rate of growth of wages subject to Social Security taxes is expected to average 1 percent per year during the next 40 years. Assuming that the Social Security tax rate remains constant, prove that the average return on Social Security taxes paid into the Social Security trust fund also will be 1 percent. Explain why workers with high incomes can expect negative returns on their Social Security taxes during this period.


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  • CreatedAugust 22, 2015
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