THE FALLACY OF THE SOCIAL SECURITY SYSTEM

Consider this statement: “The basic idea of social security is a simple one: During working years employees, their employers, and self employed people pay social security contributions which are pooled into special trust funds. When earnings stop or reduced because the worker retires or becomes disabled, monthly cash benefits are paid to replace part of the earnings the family has lost.”
If this statement is true, the present value of the old-age pensions already promised to persons covered by social security is in the billions if not trillions of shillings. That is the size that would be required to justify the statement above.

The impression is given that a worker’s “benefits” are financed by his “contributions.” The fact is that taxes collected from persons at work are used to pay benefits to persons who had retired or to their dependents and survivors. No trust fund in any meaningful sense is being accumulated.
Workers paying taxes today can derive no assurance from trust funds that they will receive benefits when they retire. Any assurance derives solely from the willingness of future taxpayers to impose taxes on themselves to pay for benefits that present taxpayers are promising themselves. This one-sided “compact between the generations,” foisted on generations that cannot give their consent, is a very different thing from a “trust fund.” It is a Ponzi Scheme!

Social security is in no sense an insurance program in which individual payments purchase equivalent actuarial benefits. Social Security is a combination of a particular tax and a particular program of transfer payment – the same way ponzi schemes work.

To make matters worse, if you are over the retirement age and decide to work; you will still have to contribute to social security (benefits that you will obviously not receive!)

So this compulsory tax for all employed people should be called National Ponzi Scheme not National Social Security Fund.

Economic Freedom and Taxation

An essential part of economic freedom is freedom to choose how to use our income: how much to spend on ourselves and on what items; how much to save and in what form; how much to give away and to whom. Currently, more than 40 percent of out income is disposed of on our behalf by government. That means you work for the government 146 days out of the 365 days in a year; 3.20hrs a day out of the 8hrs that you are at work daily.
The sad thing is: the government gets its share before you get your share.
Isn’t it sad that you do not have control of 40% of your income? You do not have a say about where & what the government will your money for.

To make matters worse, you do not have total freedom on how, where and what you can spend the rest of 60% of your income. Your after-tax income is taxed further when you make a purchase (16% on most items, higher for some items).
As consumers, we are not even free to choose how to spend the part of our income that is left after taxes. We are not free to buy weapons, drugs etc. Our doctor is not free to prescribe many drugs for us that he may regard as the most effective for our ailments, even though the drugs may be widely available abroad. We are not free to buy an old automobile (more than 8yrs old).

Another essential part of economic freedom is freedom to use the resources we possess in accordance with our own values – freedom to enter any occupation, engage in any business enterprise, buy from and sell to anyone else, so long as we do so on a strictly voluntary basis and do not resort to force in order to coerce others.

Currently corporate income tax in Kenya is 40%. The government is entitled to 40 cents for every Shilling of profit. That simply means that the government owns 40% of every corporation in Kenya.

Do we have economic freedom?
Have we allowed the government to own us?
Are the services provided by the government comparable to the amount of taxes that we are forced to pay the government?