Social Security program is removed from the federal budget, no longer hiding the true size of the federal deficit.
Investment rules are established so that Social Security can no longer be used to hide the size of the national debt.
Payroll taxes are eliminated for both workers and employers.
The self-employment tax is eliminated for the self-employed.
Benefits are fully funded through a surtax on personal income taxes, broadening the tax-base.
No surtax is levied on the income taxes of children (who are too young to accumulate benefits) or on the income taxes of those already receiving benefits.
Unincorporated businesses — including sole proprietorships and partnerships — are taxed only relative to their owners' accumulation of benefits, not for their workers. This occurs only through the surtax on the owners' income taxes, not through any additional tax.
Corporations are taxed — through a surtax on corporate profits taxes — only to pay for adjusting benefits for inflation. Thus, only those corporations making a profit are taxed.
A true trust fund is created so that today's revenues are accumulated for tomorrow's benefits, not for today's benefits.
The program is governed by seven commissioners appointed by the President and confirmed by the Senate. Social Security is otherwise insulated from Presidential and Congressional politics.
Each commissioner serves 14 years in staggered terms. A one-term President cannot appoint a majority of the Board; a two-term President can finally appoint a majority only towards the end of his second term.
The general manager is hired by, reports to, is supervised and evaluated by, and (if necessary) is fired by the commission. The next level of managers is similarly employed under the authority of the general manager.
All other employees — including professional actuaries — are under civil service.
Individuals already receiving Social Security benefits continue to receive them, including inflation adjustments.
Anyone who has the required 40 calendar quarters of covered wages or salary but has not yet started to receive benefits would receive a combination of benefits from both programs.
The cost of maintaining benefits under the "old" program is determined and fully funded "up front" through the issuance of government bonds with maturities staggered over the remaining existence of the program, creating a debt that recognizes the universal commitment to fulfill the promise of Social Security.
The confusing multitude of tax-sheltered retirement accounts — IRA, SEP IRA, Roth IRA, Keogh, 401(k), 457, and others — are reduced to just three, equivalent to IRA, Roth IRA, and 401(k).
The amount that can be saved annually in these accounts is significantly increased.
Tax penalties for early withdrawal are revised to allow for early retirement.
Mandatory withdrawals are eliminated, with taxes recovered from those who inherit these accounts.
For married couples, tax-free transfers between spouses are allowed.
For accounts replacing (similar to) 401(k) plans, workers have more control over their own money along with better protection against employer abuses.
