06/22/2005
Wednesday afternoon, several Republicans are expected to announce a Social Security reform plan that would use the current Social Security surplus to create individual retirement accounts.
Under the plan, the Social Security system’s cash surplus would be used to establish optional individual accounts for workers younger than 55. The money would be invested in government bonds and yield a rate of return just like Social Security’s trust funds, which also are invested in Treasury bonds. After a certain time, workers could sell their bonds and purchase stocks.
Utah Sen. Robert Bennett also expects to introduce Social Security reform measures: one aimed at slowing the growth rate of benefits, and a separate bill to create individual accounts.
As lawmakers continue to debate Social Security reform plans, NFIB urges them to keep in mind the following four principles to ensure Social Security reform is fair to small business:
- Individually controlled Personal Retirement Accounts should be a major part of any Social Security reform. An NFIB member ballot question in 2005 found that 71 percent of members believe that Social Security should be reformed to allow individuals to invest in PRAs.
- Payroll taxes must not be increased. Small-business owners not only pay their own Social Security payroll taxes, they also contribute taxes on behalf of their employees. Reform will cost money; however, NFIB members oppose increasing payroll taxes as a financing option.
- Social Security reform should not increase paperwork burdens on employers. A principal small-business concern about Social Security is administrative complexity. Reform plans must take steps to ensure that paperwork burdens on employers are not increased.
- Social Security should continue its commitment to provide benefits to retired workers. Eighty-five percent of NFIB members believe that even with private accounts, the program should remain mandatory and that retirees should receive a minimum benefit.
