Financing Social Insurance
Harry Gunnison Brown
[Reprinted from the American Journal of Economics
and Sociology,
Vol.4, No.4, July, 1945]
MUCH ATTENTION has been given recently in Great Britain and the
United States to social insurance plans, and particularly to the
Beveridge plan. These plans are intended to provide payments and
services for workers "from the cradle to the grave," such as
sickness insurance with medical care, unemployment insurance, old age
annuities, etc. So enthused have the liberals become over such schemes
that it would appear they consider insurance the solution of all
social problems.
One aspect of the plans which is completely overlooked is how the
services and payments are going to be paid for. What is proposed is
that the expenses incident to providing such services be met by taxes
that fall mostly on earned income. Insofar as the familiar payroll tax
is used, it is important to note that, whatever the pretense that
these are partly contributed by employers, their burden is altogether
and with no significant qualification on employees' wages. And insofar
as the necessary funds are drawn from general tax revenues, they come
-- under the present tax system -- much more largely from earned than
from unearned income. Thus the aid of relief extended to some workers
tends to put extra burdens on other workers, and to bring the incomes
of the latter nearer to -- or sometimes below-the level at which they,
too, need relief.
I am not seeking here, to cast discredit on social insurance as such,
any more than I seek to cast aspersions on the insurance of buildings
against the hazard of fire. I am seeking to point out that these
so-called "liberals" are enthusiastically trying to compel
workers who, by working harder or more efficiently, are able to lift
themselves economically a little above their fellows, to contribute of
this excess toward the rest. They are ready and anxious to draw from
the earnings of what men save and invest in the construction of
capital to ameliorate the lot of the less fortunate. But to any
proposal that a special tax burden be placed on the unearned incomes
that men get from their ownership of the earth and from charging
others for permission to use the earth, most of these liberals are
altogether indifferent.
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