Social Security and Flat Tax

* Re “A Fair Flat Tax to Rally Behind,” by Michael Dukakis, Commentary, March 15: I’m afraid Dukakis makes a fundamental error in his logic: The Social Security tax is not an income tax, and its taxation methods cannot be compared to the flat-rate methods being proposed for income taxes.

The Social Security tax is supposed to be (though in reality it is not) a way to “pay in advance” for your retirement. In theory we are merely setting aside money (albeit involuntarily) that will eventually come back to us as retirement benefits. In fact we are paying the benefits of the currently retired, and are hoping that enough people will still be contributing to the plan when we retire so that they will then be paying our benefits.

Why, therefore, should low-income workers be excluded from contributing a small portion of their income to their future benefit? They will, as a whole, be compensated far more than they will ever contribute. And why should high-wage earners contribute far more than they will ever be able to recover?

If Dukakis means that retirement benefits should be equal for all, and that lower earners should contribute less and the higher earners should contribute more, then the solution is to abolish the present system, raise income taxes and pay retirement benefits out of the general fund. This takes us even one step closer to socialism. But if we are to keep the Social Security system, then the current method of taxation is the only fair method.

TOM VAN HUSS

Playa del Rey

* Dukakis is correct about the regressive nature of the Social Security tax. In making his argument, however, he takes an unfair swipe at the flat-tax proposal as being a “huge tax break to wealthy taxpayers.” In relative terms, this is not true, for the same reason that he observes about the Social Security tax--because the benefit of the low-end exemption in the flat-tax proposal ($36,000 for a family of four) is less as income increases.

A family of four making $50,000 pays 17% of $14,000. A family with twice as much income pays 17% of $64,000, which is 4.6 times as much tax. A family of four making $500,000 (10 times as much as the first family) pays 17% of $464,000, which is 33 times as much tax. Some break for the wealthy! But, at least everyone is paying the same rate, and that’s what makes it fairer than what we have now.

RICHARD HAUSER

Camarillo