Payroll taxes for social security in the United States: The future of fiscal and social policy illusions

This paper examines the validity of common assumptions about the basis of public support for the U.S. social security program. Various rationales for the social insurance approach are summarized and critically assessed. A review of public opinion surveys from 1935–1981 shows: (1) the distinction between social insurance and public assistance was not regarded as important by the public in the program's early years; (2) most Americans are now aware that the system operates on a pay-as-you-go basis; (3) there is widespread feeling that social security payroll taxes are too high, but at the same time a majority of the population thinks program benefits should be maintained or increased; and (4) serious doubt about the program's future is widespread, with many workers believing that there will not be sufficient money left for their own pensions when they retire. The paper concludes that the explanation of social security's enduring popular appeal and the phenomenon of mass toleration of rising payroll taxes is more closely tied to the perception that the program serves a deserving clientele, rather than a result of the social insurance approach.