ABSTRACT
Payroll taxes have a significant impact on the tax payments of the lowest income groups. One way to introduce general revenue financing would be to adopt the recommendation of two Quadrennial Advsiory Councils on Social Security that payroll tax receipts of the hospital insurance fund be gradually shifted to the old-age and survivors’ insurance fund and that general revenue receipts be used to replace the payroll tax receipts in the hospital fund. The major purpose of the social security trust funds is to assure the American people that benefits will be paid at the statutory rate, without new congressional authorisation, even if payroll tax receipts do not cover current benefits for brief periods. Social security provides protection against loss of income resulting from retirement, death and disability. Social security may encourage individuals to set aside a smaller amount of personal saving on the ground that a major reason for saving has now been removed.
