Wednesday, January 30, 2008

Social Security: Fair or Foul

Big news in the baseball world today – the New York Mets are poised to sign Johan Santana arguably the best pitcher in baseball.  Seems the deal could be for something like $20-$25 million/year.  Good for him.

Here’s what bugs me about it.  It’s not the amount of money he’ll be making.  It’s that the way our tax infrastructure works, he’s going to be paying exactly the same amount of Social Security taxes that I pay.  And guess what – I make a LOT less than $20 million/year.  Not only that, if the Senate changes the economic stimulus package to give the administration what it originally wanted, the pitcher and I will get the same tax rebate.  I’m guessing he doesn’t really need that check that badly.  (In the House-passed version, neither of us get one.)

Consider the stats:  In 2005, the Pittsburgh Pirates had the lowest average salary for Major League Baseball -- $963,674.  In 2005, the American Federation of Teachers reported that the average teacher salary was $47,602.  The maximum earnings taxable for Social Security in 2005 was $90,000.

So…in 2005, the average teacher paid Social Security tax on 100% of his/her salary.  The average Pittsburgh Pirate player paid Social Security tax on less than 10% of his.

Fair or foul?

Posted by Andi at 17:00:42 | Permanent Link | Comments (3) |
Comments
1 - Doesn't sound fair to me. Not only are the social security payments inequitable, teacher's salaries are disproportionately low. (Comment this)

Written by: Anonymous at 2008/01/31 - 13:43:30
2 - the author of this blog hit another one out of the park...and what strikes me as so much narrishkeit is that those who teach our children for low wages are increasingly being held to unfair standards of performance and for school conditions beyond their control while a superstar steroid using pitcher who underperforms gets a sympathetic hearing on primetime TV. (Comment this)

Written by: Anonymous at 2008/02/02 - 01:13:21
3 - Oh my god!! This is appalling!!! Your example perfectly illustrates the inadequacies in the tax laws! It's even worse if you use a hedge fund manager in your example...some make a lot more than $20 million.

I knew tax laws were skewed, but I had no idea that soc. sec. had a cap, and was this unfair. It's true that laws are enacted to protect the majority and that most people earn far less than $90,000, but in this day and age, MANY earn upwards of several million and even more earn into six figures. Certainly enough people that laws should be revised. (Maybe I'm a pessimist, but I don't see it ever happening.)

Thanks for pointing it out.
--Rebecca Brooke (Comment this)

Written by: Anonymous at 2008/02/04 - 14:08:57
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