We hear much about how infeasible and unfair it is for young people to pay Social Security taxes that get transferred directly to retirees. A recent study at UC Berkeley finds that the value of the educations the young receive at the expense of tax-paying older folks is worth more than the intergenerational transfer of Social Security benefits.
On average, Americans pay the taxes that subsidize education 30 years after receiving the benefits, the study noted. By contrast, people start drawing their Social Security and Medicare benefits 30 years or so after paying taxes into these government funds. Thus, each education dollar is worth $10 in retirement benefits, according to the study, which is published in the March issue of the journal Population and Development Review.So, if it's wrong for 40-year-old John Doe to pay taxes that support 70-year-old retirees, was it also wrong for them to be paying taxes 30 years ago to give 10-year-old John a free education?