Social Security - Medicare - Fair Income Tax - Federal Debt

The Federal Deficit

• 1996 - $5.225 trillion
• 2016 - $19.573 trillion
• 2020 - $26.945 trillion
• 2024 - $35.464 trillion

As of January 2025, the US federal debt is $36.218 trillion. The debt is created by the US government spending more than its revenues and having to borrow to cover the short fall. This can be remedy by spending less, collecting more revenues or a combination of both.

This debt is not caused by Social Security or Medicare benefits but actually is caused by an unfair tax system. The Trump tax cuts started in 2018.

Social Security is a pension/annuity system funded by US workers.

The figures below are from the Social Security Trustees Report for 2023.

In 2023 workers paid $1.112 trillion dollars via payroll deductions into the system.

This is 12.4% of the wages up to $160,200 of every worker in the country in 2023. This does not include Medicare taxes that American workers pay and this is also separate from the federal income taxes that workers paid in 2023.

During 2023, Social Security paid out $1,232 trillion in benefits to retirees and disabled Americans and paid $7 billion for its own admin expenses.

The Social Security Trust Fund started 2023 at $2.830 trillion and ended the year at $2.788 trillion. That is a loss of $41 billion.

The system earned $67 billion in interest (2.3%, $67/$2,829) from the US treasury bonds that it is forced to buy with any surplus assets.

This requirement is counter to any prudent investment strategy for a pension fund. A diversified strategy could easily create a $75 billion return on interest and dividends, and $140 billion in increased asset value ($2.852 trillion times 5%). That is $215 billion each year rather than $67 billion. Just think of all the wasted years in the past. Of course, the federal government would be paying higher a interest rate on its debt.

The Social Security system would be greatly strengthened by applying the 12.4% tax to incomes above $500,000 and raising the federal minimum wage for all workers.

In plain English, the Social Security system has been subsidizing the expenses of the federal government. If the Social Security Trust Fund had been allowed to follow a diversified stock/bond policy, the system would self-sustaining into the foreseeable future.

In addition, the Social Security system is not part of the current federal debt. In fact, it owns $2.8 trillion of the $36 trillion federal debt.

Social Security Trust Fund Recap for 2023

• $2.830 trillion Open Bal - 2023
• $1.233 trillion Wage Taxes
• $0.067 trillion Interest Earned
• -$1.379 trillion Benefits Paid
• -$0.007 trillion Admin Expenses
• $2.788 trillion Close Bal - 2023

Medicare Benefits for Retirees and Disabled Americans

The figures below are from the 2023 annual report from the trustees of the Medicare Trust Fund.

In 2023, American workers paid $367.2 billion in Medicare taxes (2.9%) on all wages. This is separate from federal income taxes and Social Security taxes.

The Medicare Part A trust fund increased in value during 2023. Benefits paid out, however, were $37.4 billion more than payroll taxes collected. Miscellaneous revenue items created the $12.2 billion increase in the fund.

In the future, Medicare Part A may become a major cost item in the federal budget but as of now it is not a cost item.

Medicare Part B and Part D do require federal contributions which are components of the federal budget:

• Part B - $342.1 billion in 2023
• Part D - $$93.7 billion in 2023

If the economy is growing, it helps with Medicare costs and if the economy is not doing well, it is negative for Medicare costs.

Part A Benefits

Medicare Trust Fund Recap for 2023

Part A Benefits

• $196.6 billion Open Bal 2023
• $367.2 billion Medicare Wage Taxes
• $35.0 billion Income Taxes on OASDI benefits
• $5.7 bllion Interest Earned
• -$397.5 billion Benefits Paid
• -$5.6 billion Admin Expenses
• $208.8 billion Close Bal - 2023

Part B Benefits

• $194.2 billion Open Bal 2023
• $131.2 billion Part B Premiums (25%)
• $342.1 billion Federal Treasury (75%)
• $4.1 bllion Interest Earned
• -$497.4 billion Benefits Paid
• -$5.4 billion Admin Expenses
• $172.2 billion Close Bal - 2023

Part D Benefits

• $18.3 billion Open Bal 2023
• $18.6 billion Part D Premiums
• $93.7 billion Federal Treasury
• $15.8 billion Payments from States
• $0.2 bllion Interest Earned
• -$130.5 billion Benefits Paid
• -$0.5 billion Admin Expenses
• $15.7 billion Close Bal - 2023

Federal Income Taxes for 2022

The figures shown below come from the tax tables on the IRS web site. Calendar year 2022 is the most recent year reported by the IRS and 1996 is the oldest year.

You will see from the first table below that in 2022 the total US national Adjusted Gross Income (AGI) was $14.834 trillion. In 1996, the figure was $4.536 trillion. The 2022 amount is over triple the amount from 1996.

1. In 1996,
   • tax filers with AGI under $25,000
     • represent 53% of all filers but
     • their total AGI was 16% of the total AGI of all filers.
     • their total AGI was $671 billion
     • their average tax rate was 7.0%
     • paid $34.414 billion in income taxes
   • tax filers with AGI over $200,000
     • represent 1.3% of all filers but
     • their total AGI was only 17.8% of the total AGI of all filers
     • their total AGI was $807 billion
     • their average tax rate was 28.1%
     • paid $226.112 billion in income taxes
2. In 2022,
   • tax filers with AGI under $50,000
     • represent 52% of all filers but
     • their total AGI dropped to only 12.9% of the total AGI for all filers.
     • their total AGI was $1.744 trillion.
     • their average tax rate was 5.4%
     • paid $63.924 billion in income taxes
   • tax filers with AGI over $500,000
     • represent 1.5% of all filers but
     • their total AGI significantly increased to 25.9% of the total AGI of all filers
     • their total AGI was $3.849 trillion (450% over 1996)
     • their average tax rate was 24.6%
     • paid $945.991 billion in income taxes

If the average tax rate for the top 1.5% was 50%, the total US income tax would have increased by $976 billion in 2022. The total national income tax for 2022 would have jumped from $2.099 trillion to $3.075 trillion.

Federal Income Taxes for 2022

AGI Range	Number of tax returns for range	% of total range	Total AGI for the range	% of total AGI	Taxes Paid	% of taxes to AGI
All	161M	(100.0%)	$14.834T	100%	$2.099T	15.27%
Under $50K	84M	(52.0%)	$1.744T	12.9%	$63.924B	5.39%
$50k to $100K	39M	(24.2%)	$2.782T	18.8%	$213.183B	8.25%
$100K to $200K	26M	(16.0%)	$3.567T	24.0%	$397.758B	11.28%
$200k to $500k	10M	(6.2%)	$2.891T	19.5%	$478.105B	16.58%
$500k and up	2.5M	(1.5%)	$3.849T	25.9%	$945.991B	24.60%

Details of the Top 1.5%

AGI Range	Number of tax returns for range	% of total range	Total AGI for the range	% of total AGI	Taxes Paid	% of taxes to AGI	Fairer Tax Rate	Fairer Tax Amount
$500 to $1M	1.7M	(1.0%)	$1.124T	7.4%	$254.285B	22.65%	25%	$257.206B
$1M to $1.5M	360K	(0.2%)	$0.435T	2.9%	$110.820B	25.50%	35%	$139.477B
$1.5M to $2M	148K	(0.1%)	$0.254T	1.7%	$67.287B	26.47%	45%	$104.551B
$2M to $5M	208K	(0.1%)	$0.621T	4.2%	$166.027B	26.76%	61%	$345.158B
$5M to $10M	52K	(0.003%)	$0.362T	2.4%	$96.476B	26.62%	75%	$250.306B
$10M and up	35K	(0.002%)	$1.052T	7.1%	$251.097B	23.90%	86%	$806.157B
"1%" Total					$945.991B	24.80%	49.49%	$1,902.866B

Anthem - US Department of Justice - Medicare Advantage Scam

I just stumbled on the following notice from DOJ. Within the press release you can find 112 page complaint. You can read the opening paragraph below:

Department of Justice
U.S. Attorney’s Office
Southern District of New York
FOR IMMEDIATE RELEASE
Friday, March 27, 2020

Manhattan U.S. Attorney Files Civil Fraud Suit Against Anthem, Inc., For Falsely Certifying The Accuracy Of Its Diagnosis Data

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that the United States filed a civil fraud lawsuit today against ANTHEM, INC. (“ANTHEM”), alleging that ANTHEM falsely certified the accuracy of the diagnosis data it submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes. As a result of these acts, ANTHEM caused CMS to calculate the risk-adjustment payments to ANTHEM based on inaccurate, and inflated, diagnosis information, which enabled ANTHEM to obtain millions of dollars in Medicare funds to which it was not entitled.

Why is the notice significant? Well, Anthem is the company NYC has contracted with to ramrod NYC retirees into a Medicarae Part C plan (aka Medicare Advantage). You can read the opening of the proposed NYC/Anthem contract below. This raises serious questions about the integrity of this whole process.

Medicare Advantage Group Agreement

This NYC Medicare Advantage Plus Plan Group Agreement (hereinafter "MA Agreement") is entered into as of January 1, 2022 (hereinafter “Effective Date”) by and between

the City of New York (“City”) acting through Mayor’s Office of Labor Relations – Employee Benefits Program on behalf of the Labor Management Health Insurance Policy Committee for the New York City Health Benefits Program with an office at 22 Cortlandt Street, 12th Floor, New York, NY 10007 (hereinafter "Group") and

Anthem Insurance Companies, Inc. doing business as Empire BlueCross BlueShield Retiree Solutions, on behalf of itself and the Alliance, defined below (hereinafter “Empire” or the “Alliance”) sponsor of the NYC Medicare Advantage Plus Plan (hereinafter "MA Plan"). Empire and The Group each are sometimes referred to herein as a “Party” and collectively as the “Parties.”

WHEREAS,

the City and Municipal Labor Committee (“MLC”), an umbrella organization for municipal unions, negotiate on a variety of matters, including collective bargaining regarding health benefits pursuant to their obligations under the New York Collective Bargaining Law;

WHEREAS,

to aid in the administration of the negotiated health benefits agreements, the City and the MLC established the Labor Management Health Insurance Policy Committee (“Committee”) for the MLC and City representatives to meet on a regular basis to discuss City health insurance benefits; and

WHEREAS,

the Employee Benefits Program (“EBP”) is a division of the Mayor’s Office of Labor Relations (“OLR”), and OLR is acting under the authority of the New York City Administrative Code Section 12.126(d) as the administrator of the New York City Health Benefits Program (“HBP”); and

WHEREAS,

on October 30, 2020 OLR’s request for authorization to enter into a Negotiated Acquisition to solicit a Medicare Advantage plan under Medicare Part C for the Medicare eligible retirees and dependents of the City of New York who are eligible for the City’s Health Benefits Program was approved by the City Chief Procurement Officer; and

WHEREAS,

OLR issued a public notice for a negotiated acquisition (EPIN:0021N002) in conformance with the New York City Procurement Policy Board Rules (“PPB”) and had otherwise advertised in order to solicit vendors through the Notice of Intent to provide health benefits services in the form of a Medicare Advantage plan under Medicare Part C for the Medicare eligible retirees and dependents of the City of New York who are eligible for the City’s Health Benefits Program; and

WHEREAS,

the Retiree Health Alliance (“the Alliance”), a strategic alliance between Empire and EmblemHealth Plan, Inc. (“EmblemHealth”) and their affiliates, submitted a response for such services, as provided for in the public notice for a negotiated acquisition, in the form of an expression of interest to OLR; responses were evaluated by an evaluation committee pursuant to PPB Section 3-04; and

WHEREAS,

OLR determined the Alliance’s proposal to be most advantageous to the City, taking into consideration technical expertise, price, contract terms, M/WBE Utilization Plan and other factors set forth in the negotiated acquisition solicitation; and

WHEREAS,

the City desires to appoint the Alliance to provide a Medicare Advantage Plan Under Medicare Part C for City of New York Retirees, and their Dependents, and

NOW, THEREFORE,

in consideration of the terms and conditions contained herein, the parties hereby agree as follows:

  ARTICLE 1 - PURPOSE
The Alliance will provide health insurance coverage to the Group’s eligible retirees and other eligible individuals as described in this MA Agreement. Empire is accountable for the operations, compliance, and performance of the MA Plan. EmblemHealth is an entity contracting with Empire to administer portions of this co-branded product to help ensure the City’s retirees receive continuity of care and membership support.

Specifically, EmblemHealth will co-manage the account, provide a professional network in the downstate New York area, deliver care through Neighborhood Health Centers, and support Empire in multiple areas of plan performance. ...

DOI and Mazza

The Department of Investigation (DOI) recently released a fraud report involving theft of NYCERS checks.

Below is an excerpt from the beginning of the report which was 23 pages long and dealt with the loss of nearly $384,000 from NYCERS. The report, while accurate about the fraudulant cashing of NYCERS benefit checks, is a lot to do about a relatively small issue. DOI rarelly reports a complete accounting of the actual convictions and prison sentences that result from its investigations.

I want, however, to point out specifically the mention of Commissioner Gill Hearn's thanks to Karen Mazza at the end of the excerpt. Of course, Gill Hearn doesn't mention that she has not completed the investigation that DOI had committed to pursue into perjury and corruption charges against Mazza and other NYCERS management staff. I am sure the financial impact of corrupt management at NYCERS is far greater than $384,000.

FOR IMMEDIATE RELEASE
CONTACT: DIANE STRUZZI
WEDNESDAY, MAY 9, 2012
(212) 825-5931
DOI RELEASES PENSION FRAUD REPORT INVOLVING EIGHT SEPARATE CASES IN WHICH INDIVIDUALS ATTEMPTED TO DEFRAUD OR DEFRAUDED NYCERS OF MORE THAN $400,000
ROSE GILL HEARN, Commissioner of the New York City Department of Investigation (“DOI”), released a report today detailing eight recent investigations into fraud upon the New York City Employees’ Retirement System (“NYCERS“), the country’s largest municipal pension system. The eight investigations included in this report are the most recent that DOI has conducted and illustrate a range of fraudulent schemes that include family members and beneficiaries of deceased pensioners taking NYCERS funds they were not entitled to receive and the theft of NYCERS checks by ndividuals who falsely claimed they had not received the funds. These eight investigations identified nearly $384,000 in NYCERS funds that individuals wrongfully obtained and an attempt to obtain approximately $17,200, which was thwarted by DOI and NYCERS. Five of the eight individuals have already been criminally charged and three of those individuals have pleaded guilty, with one individual receiving a 60-day jail sentence just last week. A copy of the report is attached to this release.
...
Commissioner Gill Hearn thanked NYCERS Executive Director Diane D’Alessandro, NYCERS Director of Security Craig Thornton, and NYCERS General Counsel Karen Mazza, and their staffs, for their assistance and cooperation in these investigations.