For the past two years, members of Congress have been predicting a surge of bitter public resentment when the Social Security tax goes up a half percentage point next Jan. 1.
Fear that workers will consider the new tax rate of 6.65 percent an excessively heavy bite out of their paychecks has fueled proposals to "roll back" the scheduled tax increase.
But compared to workers in many other leading industrial nations, the U.S. worker has an extremely light social security tax burden. Such countries as Germany, Japan, the Netherlands and France all have a much higher tax rate.
The U.S. payroll tax rate, now 6.13 percent, will rise to 6.65 percent Jan. 1.
But in West Germany, with an economy similar in many ways to the United States', the worker social security tax rate was 16.4 percent in 1979 -- and the worker's employer had to pay about the same amount, according to "Social Security Programs Throughout the World," a new publication of the U.S. Department of Health and Human Services. (These figures are the total tax paid by U.S. and foreign workers for old-age, disability, health and unemployment insurance plus worker's compensation.)
In Japan, now one of the United States' chief economic rivals, the worker payroll tax in 1979 was 9.1 percent; in France, it was 12.04 percent. In the Netherlands, it was a staggering 23.42 percent. And in all these countries, the employer paid in a hefty amount as well, usually more than the amount paid by the worker.
These differences translate into huge variations in the chunk of money coming out of the paycheck. Take a worker making $15,000 a year in 1979 -- a fairly common salary for large groups of workers in all these countries except France, where that salary would be a bit high.
In the United States, the Social Security tax bite for a $15,000-a-year worker in 1979 was $919.50.
In Germany, the worker making the equivalent of $15,000 paid $2,340 in social security taxes out of his annual salary.
For Japan, the figure was about $1,365. And for the Netherlands, according to computations based on HHS figures, it was about $3,500 -- more than three times the U.S. figure.
If you look at maximum possible payments for workers making more than $15,000 a year, the figures are even more striking. This year in the United States, the maximum payment for the highest-paid worker will be $1,587, which will rise to $1,975 in 1981.
By contrast, the highest-paid workers in Germany had a payroll tax bite of $3,885 in 1979. In the Netherlands, it was about $4,900. This includes in every case only the share paid directly by the worker.
According to statistics worked out by the office of Max Horlick, chief of the international comparative studies for the U.S. Social Security Administration, retirement benefits were higher in the United States for the typical $15,000 worker than in many of the other developed nations.
Thus, the $15,000 worker retiring in 1979 received an initial U.S. Social Security pension of $5,853 -- $8,780 if he had a retired dependent wife.
In Japan, the benefit for a single retiree who had been earning $15,000 was $4,801 ($5,168 for a couple); in Germany, it was $7,352 for a retired worker, without added payment for a wife.
In France the single-retiree benefit was $5,721 ($6,629 for a couple); in the Netherlands, $5,274 for a single retiring worker and $7,655 for a couple.
But in all these countries, many other benefits are much more generous than in the United States, and that's why their taxes are higher. For example, all have national health insurance for persons of all ages. In the United States, it is available only to the aged (Medicare) or to the poor (Medicaid).
All these countries also have payments for partial and temporary disability and automatic paid maternity leave (12 weeks at full salary in Germany). In the United States, six states have some form of government-paid maternity leave, but it is extremely limited.
These countries also have family allowances -- a monthly payment if you have a child -- and automatic increases in monthly old-age pension payments to keep pace with national wage and price rises.This is similar to U.S. automatic Social Security increases to counteract rises in the cost of living.
Partly because of the wide range of benefits, Horlick said, many other nations are now having social security financing problems somewhat akin to the United States'. Germany has put a cap of 4 to 4.5 percent on automatic annual benefit increases in the last few years, and other nations are striving to hold down medical costs.
Horlick said many countries already are using general revenue financing to supplement their payroll tax revenues for social security -- and some are even considering imposing a special extra tax on capital-intensive businesses that pay little total social security tax because they have few workers.
If all other forms of taxation are added to social security levies, the U.S. tax burden remains lower than that of France, West Germany or the Netherlands, but is higher than Japan's.