The AICPA releases a comprehensive study on Social Security reform alternatives.





AICPA Initiates Debate on Social Security Reform

A ccording to projections made by the Social Security Administration, fund balances will peak in 2012. In 2032, annual payments will exceed collections by 25%. And, by that time, Social Security will pay retirees only 75% of promised benefits.

In an attempt to make sense of these dire predictions and many proposals to reform the fund, the taxation section of the AICPA recently released Understanding Social Security: Issues and Alternatives .

This tax policy study brings together a vast body of knowledge on Social Security issues and provides readers with a summary of the reform alternatives, said Carol Ferguson, a technical manager in the AICPA tax division.

It will provide anyone interested in the Social Security reform debate with background on the financial condition of the system, the goal of Social Security and how well the fund will achieve its objectives in the future, she said.

Weighing the Alternatives
How reforms might affect the soundness of the Social Security fund, the number of retirees living in poverty and savings for retirement were three of the many criteria used to evaluate reform alternatives in the recently released AICPA tax policy study, Understanding Social Security: The Issues and Alternatives .

The following is an excerpt which summarizes the possible effects of various proposals in these major categories.

 
    Soundness: Poverty: Growth:
    Improves condition of fund? Degree of redistribution
to low incomes?
Impact on saving?
I. Reduce Benefits  
a. Across the board Yes Less More
b. For high-wage workers Yes More More
c. Increase retirement age Yes Depends More
II. Increase Revenue  
a. Raise payroll tax rate Yes Depends More
b. Raise ceiling on taxable earnings Yes More More
III. Improve Return on Assets  
a. Invest trust fund in equities Yes No effect No effect
b. Individual accounts No effect Less Increases

Understanding Social Security combines information (including financials, statistics and demographics) provided by Social Security with economic forecasting. The study also offers a thorough discussion of selected reform alternatives.

The 75-page study was developed by the AICPA Security Reform Task Force to further the discourse on Social Security reform. Its purpose is to inform legislators and decision makers at the federal level about the reform alternatives they are likely to consider this year. Accordingly, the study will be distributed to all members of Congress as well as key White House policy makers.

Tax section members will receive an executive summary of the study. The summary, and the full-text version of the study, will also be available on the AICPA Web site at http://www.aicpa.org.

To order a print copy of Understanding Social Security: the Issues and Alternatives (product code 061059), call 1-888-777-7077 or fax your order to 1-800-362-5066. Orders may also be mailed to AICPA Order Department, P.O. Box 2209, Jersey City, NJ 07303-2209.

The price is $9.95 for AICPA members and $12.45 for nonmembers.



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