Email claims Social Security is voluntary and tax deductible – true or false?

Psst! Wait till you hear this!

An email is making the rounds purporting to be a “history lesson” on Social Security for “young whipper snappers” who “weren’t taught or just didn’t know” the following truths about Social Security.  In case you doubt any of these, the email tells you “facts are facts.”

The email tells you:

  • Social Security is VOLUNTARY and has been since FDR set it up.
  • Participants would only have to pay 1% of their annual income.
  • The money put into Social Security would be deductible from the participant income taxes.
  • Money put into Social Security would go into Trust Fund and not the General Operating Fund.
  • Annuity payments to retirees would never be taxes as income.

OMG! Voluntary? One percent? Deductible?

IS THIS TRUE?!?!

In a word: no. This very effective, get-your-blood-pumping, email is… FALSE.

Factcheck.org takes apart the email’s claims.

1. Not Voluntary. Contrary to the e-mail’s very first claim, FDR never promised that “the program would be completely voluntary.” It is supported by taxes and participation has never been voluntary. As historian DeWitt states: “From the first days of the program to the present, anyone working on a job covered by Social Security has been obligated to pay their payroll taxes. ”

2. Not 1 Percent. Another false claim is that FDR promised participants would pay only “1% of the first $1,400″ of income. The law FDR signed taxed income up to $3,000, for one thing. And while the rate was 1 percent for the first few years, the law FDR signed raised it incrementally in 1940, 1943, 1946 and 1949, when it reached 3 percent.

3. Not Deductible. Also false is the statement that Social Security contributions “would be deductible from their income for tax purposes.” The opposite is true. Section 803 of the law Roosevelt signed specifically says Social Security payroll taxes “shall not be allowed as a deduction to the taxpayer in computing his net income for the year.” So the claim made later in the e-mail – that Democrats “eliminated the income tax deduction” for payroll taxes – cannot possibly be true. There was never a deduction to eliminate.

4. Trust Fund Falsehoods. The message claims that FDR promised Social Security funds would be used “for no other government program,” but that Lyndon Johnson and a Democratic Congress later took Social Security into the General Fund “so that Congress could spend it.” This is twisted history. The government has always been able to use Social Security funds for other purposes when not needed to finance benefits. As DeWitt states: “[T]here has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.” All LBJ did in 1968 was to make Social Security taxes and spending part of a “unified budget.” As DeWitt notes, this was an accounting issue and “has no affect on the actual operations of the [Social Security] Trust Fund itself.”

5. Taxation of benefits. The e-mail also gets it wrong when it claims that Roosevelt promised that “annuity payments to the retirees would never be taxed as income.” It’s true that Social Security benefits weren’t taxed at first, but DeWitt writes that this was the result of a series of administrative rulings by the Treasury Department, not the result of Roosevelt’s law or anything he did or promised. And contrary to a false claim made later in the e-mail, it was not Democrats alone who “started taxing Social Security annuities.” Congress authorized taxation of Social Security benefits in 1983, when Republicans controlled the Senate, and the measure was signed into law by President Ronald Reagan, a Republican. The measure was part of a bipartisan compromise to shore up the finances of the system, which were then on the verge of collapse.

Read the entire email (with even more wild claims) and Factcheck.org’s complete analysis here.

Honestly, I do not expect this email to die here. The story is just too good. You want it to be true.

A good rule of thumb with emails is if it gets you excited or angry, it if promises to tell you the real truth, it is probably false. At least, check with Snopes.com or Factcheck.org.

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Disclaimer: This is NOT legal advice. This site provides general information about Social Security disability cases in Colorado. To discuss your particular circumstances, please contact a lawyer in your area. Please review the full disclaimer .

About Tomasz Stasiuk

Tomasz Stasiuk is a Colorado Springs Social Security disability lawyer and the founding attorney of the Stasiuk Firm - a law firm specializing in Social Security disability cases in Colorado. Follow Tomasz Stasiuk on Google and Twitter

  • anon

    So why is it that when I talked to a representative at the social security office she confirmed that I was not required to have a SSN and that I am able to rescind my social security number. You need to research this more.

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