Originally Posted by pb4uski
I don't think your impression is totally right... the SS trust fund tracks taxes paid in less benefits paid out and invests its cash flow in general fund treasuries... it currently has a $2.9 trillion balance because over the years it has collected so much more than it has paid out. The last year that benefits paid exceeded taxes collected was back in 1981.
You are correct, my statement was not "totally" correct. I think it was "almost totally" correct, as a response to the poster who considered his payroll taxes an investment.
I think we need to look at the second table to separate payroll taxes from total revenue.
SS was run almost entirely as a paygo program through 1983. At that time, the accumulated trust fund was only 15% of a single year's benefits.
Then, the 83 amendments intentionally increased taxes so they would be more than benefits for a number of years into the future. As it turned out, payroll taxes outran benefits in each year for the next 25 years. The excess wasn't all that great. On average, benefits were 89% of payroll taxes in those years. So we might say that my statement was 89% accurate for a person whose working career covered exactlyly those years.
For the remaining 9 years in your link, payroll taxes were less than benefits, by an average of 13%. A simple average says that payroll taxes outran benefits by about 5% for the entire 34 year period.
But, instead of a simple sum, we could accumulate the taxes and benefits with interest. If I do that, using rates inferred from the tables, I get a positive balance at the end of the 34 period that is about 7% of the accumulated payroll tax.
Lots of numbers, but I think "SS is mostly a paygo program, even after the 83 amendments" is reasonably accurate.
Note that the table includes "taxation of benefits". I treated that as a reduction in benefits in the calculation above, since I was trying to compare everything to payroll taxes paid. If I had included it as revenue, all the percentages above would have been slightly smaller.
Also, one reason the tax/benefit ratio changed in the last 9 years was the temporary cut in payroll taxes in 2011 and 2012.