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Apr 22

Social Security is a massive transfer from the poor and minorities to whites and the affluent

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Columnist Star Parker is out with a brilliant column today:

Here’s the conclusion of a 2013 study published by the Urban Institute in Washington, D.C.: “When considered across many decades — historically, currently and in the near future — Social Security redistributes from Hispanics, blacks and other people of color to whites.”

According to the calculations of the authors of the Urban Institute study, for every $100 that white beneficiaries pay in Social Security payroll taxes, they receive $113 in benefits. But blacks receive only $89 in benefits and Hispanics only $58 in benefits for every $100 they pay in taxes.

There are a number of factors contributing to this disparity.

Social Security penalizes those with shorter lifespans. Whereas national life expectancy is 79 years, for blacks it is 74 years. For black males, it is 71 years.

Social Security is biased toward married households rather than singles, because marrieds can take advantage of spousal benefits. According to the Pew Research Center, in 2008, 32 percent of the adult black population was married compared to 56 percent of the adult white population.

Parker adds:

Social Security taxes preclude wealth creation for low-income workers by taxing away the only funds they have available for investing in real retirement savings.

Median white household wealth, according to Pew, is $141,000, contrasted with $13,700 for blacks and $11,700 for Hispanics. The percentage of whites with IRAs or Keogh plans is 35 percent, contrasted with 10 percent for blacks and 11 percent for Hispanics. The percentage of whites with 401(k) plans is 45 percent, contrasted with 24 percent of blacks and 30 percent of Hispanics.