Social Security operates on a pay-as-you-go (PAYGO) basis; almost all of the funds coming in are immediately paid out to current beneficiaries. This system displaces private, fully funded alternatives under which the funds coming in would be saved and invested for the future benefits of today’s workers. The result is a large net loss of national savings, which reduces capital investment, wages, national income, and economic growth. Moreover, by increasing the cost of hiring workers, the payroll tax substantially reduces wages, employment, and economic growth.
--- This is a more investing centric approach to the problem. It's from a 1994 report on FICA.
--- This is a more investing centric approach to the problem. It's from a 1994 report on FICA.