THE SAME CORPORATIONS RECEIVING MILLIONS OF DOLLARS IN CORPORATE TAX BREAKS FROM NEO-LIBERALS IN MARYLAND ARE THE SAME ONES MOST GUILTY OF PAYROLL AND WORKPLACE FRAUDS THAT COST ALL MARYLAND CITIZENS THEIR SOCIAL SECURITY, MEDICARE, PUBLIC SERVICES, AND MANY PEOPLE THE ABILITY TO SIMPLY EARN A LIVING.
Have you noticed that corporate NPR/APM says nothing about the Affordable Care Act ending Medicare and Medicaid as Federal programs and having a goal of creating global health institutions that will operate like Wall Street banks? It is their job to make sure the public receives what is called DIS-INFORMATION or what NPR likes to call TRUTHINESS/SPIN. Our public media was the source of real public interest information but was taken corporate and now simply uses taxpayer money as a corporate subsidy.
Today, NPR did the same with Social Security and again they used airtime to promote the privatization of Social Security with the policy of myRA. Employers contributing matching funds to a private payroll deduction that goes into a 401k plan? REALLY????? Do you know there is a shortfall in Social Security and private pensions not only from fraud but from the fact that corporations have failed to make their contributions. With no Federal oversight of payroll payments retirement plans have been left without legally required contributions. See why the 1% are telling us the American people have no retirement savings?
The face of this report was another person of color telling what are largely workers of color to do something that is really, really bad for them.....placing your money in a 401k plan and allow what will become mandatory payroll deductions. The people depending on Social Security the most....are low-wage earners and it is this same group that will lose the most as this social safety net is ended by corporate neo-liberals like Hillary and Obama. Although the low-wage earners are the ones who will suffer most, all Americans know and love Social Security whether democrat or republican so this move to end all social programs including Medicare and Social Security by neo-liberals will not stand. Keep in mind as well that corporate NPR/APM has gone from being a voice of the people to telling the people what will happen. This is state media not public media.
The Reagan Administration tripled the amount of payroll taxes taken from our wages back in the 1980s just so there would be plenty for the baby boomers when they retired......the Social Security Trust is flush with money so ignore the spin as we get corporate pols out of office to secure these funds.
Let's take a look at where all those Trust funds went to see how we are going to recover money to those Trusts!
I've spoken earlier about pension fraud and the need to recover this.....with Wall Street systemically criminal you do not want your retirement in 401k plans. Wall Street uses these plans as fodder and their value is lost every several years and with economic implosions you never increase the value/or lose money in these market plans.
Social Security Chief: Women Live Longer, So They Should Save Early
April 15, 2014 3:21 AM ET 6 min 28 sec NPR
Acting Social Security Commissioner Carolyn Colvin at a news conference last year. She says women need to start saving for retirement early in their careers.
Charles Dharapak/AP The Social Security Administration distributes retirement benefits to nearly 60 million Americans. And of those beneficiaries, nearly 60 percent are women.
The SSA is led by a woman, too. Carolyn Colvin was once retired herself, collecting benefits from the agency she now serves. A call from President Obama brought her back in 2010, and she recently took over as acting commissioner. As part of Morning Edition's look at the , Colvin spoke with Kelly McEvers about how women plan for financial security.
Colvin points out two realities she hopes women consider when planning for retirement. First, women make less money than men on average; when they stop working, their monthly Social Security checks are smaller, too.
Also, women tend to live longer than men. Colvin encourages women to estimate their own life expectancy with the , and find out more . Doing so, she says, often makes women realize they can outlive their savings — and that retirement benefits alone won't be enough.
Interview Highlights On men's vs. women's retirement benefits
The average amount (in 2014) is a little over $17,000 per year for men and a little over $13,000 per year for women. One of the reasons that women are likely to have lower lifetime benefits is because they often have lower lifetime earnings than men. They are more likely than men to take time out of the workforce to care for family members. And of course we still have the issue of gender inequality [in wages].
“ Many women will say they don't have the ability to save, and what I say is that they cannot afford not to save.
On the importance of personal savings
Social Security was never intended to be the primary source of retirement. It was to be one of three legs on a stool, we always say. ... And then, of course, private pension and savings. And we know now that many of the private pensions have been reduced. Some women work in jobs where they really don't have a private pension, and of course many women — particularly low-income wage earners — find themselves just not saving as much as they should in order to ensure that they are able to have a decent income during retirement.
On ways women can plan for the future
One of the things we try to focus on is encouraging women, even at very young ages, to begin to save. ... Many women will say they don't have the ability to save, and what I say is that they cannot afford not to save.
For me, I had to find a way of saving where I would not in fact use that money later. And so I found, for me, real estate was the key. I also found that it did not make sense to leave money on the table, so for every job I've worked where there has been an opportunity for the employer match, I've maximized that.
The most important thing is you need to spend below your means. Maybe it's giving up soda, or giving up cigarettes. ... And then each time they get a raise, don't take that raise. Put it into a 401(k). They haven't gotten used to spending it. It's there. And it will grow.
___________________
You can tell the quality of media programming if everything they report has the words 'scam' attached to it. As this article shows, between outright fraud, fees, and mismanagement----there are no benefits to placing your money in 401k plans. Corporate media is selling this for Wall Street because Wall Street has lost all of its overseas business because it is known worldwide as being criminal. Corporate pols now need more domestic money coming into the stock market.
So, why is Obama creating myRA as the replacement for Social Security------a republican plan to end all social programs? Neo-liberals and neo-cons are global corporate pols working for wealth and profit.....they do not care about quality of life.
Below you see a recommendation of pensions over 401k, but with no oversight in pension management by government even this once safe investment plan is constantly defrauded.
The 401k Scam
Author: Nathaniel Downes July 7, 2012 2:31 pm
The Demos report is an eye opener as to the hidden costs which cause 401k programs to not only fail to keep up with inflation, but to fall behind even the base amount invested into these funds.
What they found was that, for the projected samples that the 401k would lose over $155k for its entire lifetime. Since the entire sample fund at the time of retirement would be $320k, that means a full third of the money which was put into the system was taken by the 401k itself in the guise of fees.
How does this work you may ask? The report goes into detail, but we shall give a simplified example here.
First, your 401k funds are typically put into mutual funds, so let us first address those.
If you put $10,000 into a mutual fund which lists a 3% return, it sounds good, yes? But that is after the fees are deducted. These fees are listed as a percentage of your total investment, but they are deducted from the revenue generated. You get $300 added to the $10,000, but that was after the $150 in “expense ratio,” mutual fund fees such as marketing fees, management fees, and administration feeds, as well as $150 in direct transaction fees have been removed. Your $10,000 had earned $600, but half of that was eaten up in fees. And it does this each and every year. $300 every year for 40 years gives you $12,000 in total fees deducted, more than your original investment.
Then there is the 401k itself, which has its own fees associated with the program. These fund ratio fees are typically around 1%, but over the life of the 401k this adds up to a substantial lump sum.
That original $10,000 over the 40 years of the fund ended up at just over $22,000. Without those fees, it would have been just over $102,000. That is a huge shortfall. Even if you invest an additional $10,000 every year, you are not catching up to this shortfall, as the $1.7 million the fund should have is reduced to $640k, a loss of over a million dollars. And that is if there has been no economic slowdown during the intervening 40 years, which an reduce the principal even further while not reducing the fees associated with that. In a downturn, the fees make the losses even more pronounced than they were before as a result.
Now, I used a high fee rate, typically double the average large mutual fund but not the highest fee currently in the market (which as of the time of writing is 1.53%, held by the HDGE Active Bear ETF Profile Fund according to my research), to best demonstrate the amount lost to these fees.
By comparison, a pension plan is a form of insurance, similar to what you would find for your automobile or your healthcare. Money taken in is used to pay out for those who have met the qualifications for payment. Many of these systems use surplus funds to invest in stable, fixed investments, such as treasury bonds. Social Security works in this manner, surplus funds paid in go into a special trust fund filled with US Treasury Notes, pre-paid cash in effect. The trade-off for this is that the amounts paid out are not directly owned by the individual, they are a large pool that all tap into.
A US Treasury Note, similar to one used by the Social Security Trust
By doing this, the overhead fees are minimal, typically under 1%, and as the amount is not accruing nor are large numbers of transactions being handled, this is not reapplied to the same funds repeatedly as with a mutual fund. As a result, a funded pension plan is far more likely to weather economic hardships without difficulty.
When planning ones retirement, risk is the last word you want to hear.
___________________________________________
Make no mistake, the groups proposing the idea of expanding Social Security are sometimes not as progressive as they seem, but this is in fact the way to recover all the losses to the Social Security Trusts and the pension that were raided. The assumption is this-----
YOU HAVE TAKEN ALL OF OUR PENSIONS, HOUSES, AND SAVINGS SO WE WILL NOW USE SOCIAL SECURITY AS OUR PRIMARY RETIREMENT SUPPORT.
The reason I am not comfortable with some of the groups putting forward these ideas is they never mention the recovery of fraud and public malfeasance in rebuilding these Trusts. Do you know how much money is lost to the SS Trust just from payroll fraud-----corporations categorizing employees as independent contractors when they are not? Over 20 million Americans fell into this category and this has happened for a decade or more. Trillions of dollars have been lost to SS Trust with this one fraud. So, not mentioning it in the solution-----just as not mentioning Medicare and Medicaid fraud in the solution of Expanded and Improved Medicare for All falls short as a solution.
Wednesday, Jul 24, 2013 12:12 PM EST
Growing consensus on Social Security: Expand it After staving off Obama's plan to cut benefits, progressives are fighting to boost checks to seniors
Alex Seitz-Wald
Back when “grand bargain” fever was gripping Washington earlier this year, progressive activists mounted an uphill campaign against their allies in the White House and the Capitol, warning there would be hell to pay if President Obama went forward with his plan to trim Social Security benefits.
Thanks in part to their effort, along with Republican recalcitrance and changing economic realities, Democrats have abandoned any plans to mess with the social safety net, at least for the moment. The federal deficit has fallen precipitously this year – Treasury actually ran a surplus in June — and with it, the impetus for a “grand bargain” trading safety net cuts for increased tax revenue has evaporated. (This may have been the White House’s plan all along.)
Now, as Obama prepares to deliver a major speech on the economy today, the scrappy activists who were until recently playing defense against cuts are turning around and pushing to increase Social Security benefits.
“Social Security is the most effective anti-poverty program in history. Forget cutting it — we need to double down on success and make it even stronger,” Jim Dean, the chair of Democracy for America, will say in an email to supporters today.
The coalition of leading progressive groups, including the Progressive Change Campaign Committee, Democracy for America, Credo Action, MoveOn.org, Progressives United and Social Security Works, are joining together to back a plan introduced by Democratic Sens. Tom Harkin and Mark Begich to boost benefits and shore up Social Security’s finances for the better part of the next century.
These kinds of economic justice issues are Harkin’s bread and butter, but Begich, who is up for reelection this year in deep-red Alaska, is an interesting addition. In May, he made a splash by breaking with Obama on Social Security cuts. His leadership on this issue suggests he thinks expanding the social safety net will not only not hurt him, but actually help him politically, even in one of the most Republican states in the union.
And there’s reason to believe he’s right — Social Security is overwhelmingly popular. A new PPP poll commissioned by DFA and the PCCC found that 51 percent of Kentucky voters support the Harkin-Begich framework, which would boost benefits for 75-year-old workers by $452 per year and by $807 per year for 85-year-olds. Twenty-four percent said they didn’t support the plan, and another 24 said they weren’t sure.
Obama’s budget called for changing the way inflation is calculated for Social Security by switching to the “chained CPI” (consumer price index) formula, which would have the effect of reducing benefits. Begich and Harkin have each introduced slightly different plans, but both would also change the inflation formula. Their change, however, to the “CPI-E,” better accounts for the fact that seniors spend disproportionate amounts of their income on health care, the price of which grows faster than the price of goods overall.
To pay for this expansion, and to ensure the solvency of all of Social Security for decades into the future, the plan would eliminate the income cap on Social Security FICA taxes. Currently, income above $113,700 is exempt from the tax, meaning someone who makes $1 million a year pays the tax on only about a tenth of their income. The new poll commissioned by the groups found that 62 percent of Kentuckians support removing the cap, while 20 percent oppose it and another 18 percent are unsure.
Some liberals have criticized the idea of removing the cap, arguing that it would undermine the political strength of Social Security by making the plan more of a redistributional welfare system than a social insurance scheme. But others point out that the cap means the current Social Security tax is regressive, charging poor and middle-class Americans a larger portion of their income than millionaires and billionaires.
_______________________________________
When people hear the words 'underground economy' they think drugs and prostitution or selling of stolen goods. It's always the poor who are placed into this category. Yet, it is the global corporations who are now the biggest 'underground economies' in the US. Make no mistake, the entire Gulf of Mexico economy is cash only just to avoid paying things like payroll tax and yet, these southern states take the most in social services in the country. These citizens have been left by their politicians paid so poorly through life with no Social Security payments because of this cash economy. The same is happening to immigrants as they and low-wage domestic workers are categorized as independent contractors illegally forced to take responsibility for the corporation's tax and insurance costs. THIS IS HAPPENING AT AN EPIDEMIC PACE AND IT HAPPENS BECAUSE THERE IS NO GOVERNMENT OVERSIGHT OF WAGES----
YOU KNOW----DEPARTMENT OF LICENSING AND REGULATION.
People being paid almost nothing don't say anything about these frauds because they cannot afford the cost of these taxes. Yet, it is these same people not able to claim Social Security benefits when they need them. The poor are being duped into participating and/or are being forced to pay that which is not required because of third world government malfeasance.
If you think this is only the shrimp boat operator or the waste removal small business person-----I have spoken often that it is Johns Hopkins who outsources the jobs to corporate Human Resources businesses they know are operating illegally. Large property management corporations are also doing this. It is going main stream and all of this is what drives the losses to Social Security.
SEE WHY NEO-LIBERALS ARE TELLING YOU THAT SOCIAL SECURITY IS GOING BUST? IF THOSE POSING PROGRESSIVE SOLUTIONS LIKE EXPANDED SOCIAL SECURITY ARE NOT SHOUTING THIS----THEY ARE NOT WORKING FOR REAL SOLUTIONS.
Underground Economy Operations
What Does It Cost You? A February 2005 report, California’s Tax Gap, prepared by California’s Legislative Analyst’s Office, estimates California’s income tax gap to be $6.5 billion. Reports on the underground economy indicate it imposes significant burdens on: (1) the State of California, (2) businesses that comply with the law, and (3) workers who lose benefits and other protections provided by state law when the businesses they work for operate in the underground economy.
Business: When businesses operate in the underground economy, they illegally reduce the amount of money expensed for insurance, payroll taxes, licenses, employee benefits, safety equipment, and safety conditions. These types of employers then gain an unfair competitive advantage over businesses that comply with the various business laws. This causes unfair competition in the marketplace and forces law-abiding businesses to pay higher taxes and expenses.
Workers: Employees of the businesses that do not comply are also affected. Their working conditions may not meet the legal requirements, which can put them in danger. Their wage earnings may also be less than those required by law, and benefits they are entitled to can be denied or delayed because their wages are not properly reported.
Consumers: Consumers can also be affected when contracting with unlicensed businesses. Licensing provisions are designed to ensure minimum levels of skill and knowledge to protect the consumer.
The ultimate impact is erosion of the economic stability and working conditions in this State. Our pamphlet Paying Cash Wages "Under the Table"...Is It Really Worth the Risk? outlines some of the costs and effects of cash pay on your business, your employees, and taxpayers in general. It is available in both English (DE 573CA) and Spanish (DE 573CA/S/).
EDD’s Underground Economy Operations The EDD is concerned about workers who lose benefits and other protections provided by state law when the businesses that they work for operate in the underground economy. When businesses operate in the underground economy, they gain an unfair competitive advantage over businesses that comply with the law. This causes unfair competition in the marketplace and forces law-abiding businesses and every citizen in California to pay higher taxes. EDD’s Underground Economy Operations (UEO) organization was established in 1993 to implement and administer the activities of the Joint Enforcement Strike Force. The mission of UEO is to reduce unfair business competition and protect the rights of workers by:
Labor Enforcement Task Force, and the Construction Enforcement Project.
Employment Enforcement Task Force (EETF) Participating agencies in the EETF include:
The EETF agents from each agency jointly conduct on-site inspections of businesses by interviewing owners, managers, and workers to determine if businesses are in compliance with payroll tax, labor, and licensing laws. To minimize the disruption of compliant businesses, the EETF conducts investigations only if there is a reasonable belief of violations of the Unemployment Insurance Code, Labor Code, and/or the Business and Professions Code.
Employment Enforcement Task Force Program Results Result 2008 2009 Joint Inspections 504 389 Previously Unreported Employees 4,638 4,092 Unreported Wages $187,059,631 $116,249,769 Payroll Tax Audits 422 357 Payroll Tax Assessments $29,344,488 $17,915,081 Labor Code Citation Amounts $5,575,312 $4,106,894 To learn more about the EETF program, see our Information Sheet: Employment Enforcement Task Force, available in both English (DE 631) and Spanish (DE 631/S/).
Labor Enforcement Task Force (LETF) The LETF was initially formed in 2005 as the Economic and Employment Enforcement Coalition and began operating as the Labor Enforcement Task Force in January of 2012. The LETF was formed to: ensure California workers receive proper payment of wages and are provided a safe work environment; ensure California receives all employment taxes, fees, and penalties due from employers; eliminate unfair business competition by leveling the playing field; make efficient use of state and federal resources in carrying out the mission of the LETF. They focus on industries that traditionally employ low wage workers. Agriculture, construction, automotive, carwash, courier, warehouse, garment, and restaurants are the program’s current targeted industries. The LETF members include: the Department of Industrial Relation’s (DIR) Division of Labor Standards Enforcement (Labor Commissioner) and Cal/OSHA; the EDD; the Board of Equalization (BOE); and the Department of Consumer Affairs’ (DCA) Contractor’s State Licensing Board (CSLB) and Bureau of Automotive Repair (BAR).
Construction Enforcement Project (CEP) The EDD recognizes that the vast majority of construction contractors are honest business people who operate legitimately within the law and properly report payroll taxes. However, there are some contractors who do not properly report, and this impacts both workers and law-abiding contractors. The CEP was developed because usual techniques for identifying tax and employment fraud were not as effective in the construction industry. Unlike other industries that have permanent business locations, construction businesses have constantly changing job sites. By the time information is developed that a contractor is probably operating in the underground economy, work at the job site has often been completed and an on-site inspection would not discover any labor law violations.
The CEP uses a variety of investigative techniques to identify contractors who avoid payroll taxes. When a CEP investigator develops evidence of underground economy activities, a payroll tax audit referral is made to the EDD Audit Program. The CEP goal is to develop techniques that will maximize the detection of construction industry employers operating in the underground economy.
Construction Enforcement Project Program Results Result 2008 2009 Previously Unreported Employees 1,777 4,965 Unreported Wages $65,646,628 $56,554,550 Payroll Tax Audits 125 115 Payroll Tax Assessments $8,834,006 $7,565,798 Joint Enforcement Strike Force On October 26, 1993, the Governor signed Executive Order W-66-93, which created the Joint Enforcement Strike Force on the Underground Economy. The Governor subsequently signed Senate Bill 1490, which placed the provisions of the Executive Order into law as Section 329 of the California Unemployment Insurance Code, effective January 1, 1995.
The EDD is the lead agency for the Strike Force, and the Director of EDD is the chairperson. The Strike Force is responsible for enhancing the development and sharing of information necessary to combat the underground economy, to improve the coordination of enforcement activities, and to develop methods to pool, focus, and target enforcement resources. The Strike Force is empowered and authorized to form joint enforcement teams when appropriate to utilize the collective investigative and enforcement capabilities of the Strike Force members. For more information, visit the Joint Enforcement Strike Force (JESF) page.
In addition to EDD, the other Strike Force members are:
Have you noticed that corporate NPR/APM says nothing about the Affordable Care Act ending Medicare and Medicaid as Federal programs and having a goal of creating global health institutions that will operate like Wall Street banks? It is their job to make sure the public receives what is called DIS-INFORMATION or what NPR likes to call TRUTHINESS/SPIN. Our public media was the source of real public interest information but was taken corporate and now simply uses taxpayer money as a corporate subsidy.
Today, NPR did the same with Social Security and again they used airtime to promote the privatization of Social Security with the policy of myRA. Employers contributing matching funds to a private payroll deduction that goes into a 401k plan? REALLY????? Do you know there is a shortfall in Social Security and private pensions not only from fraud but from the fact that corporations have failed to make their contributions. With no Federal oversight of payroll payments retirement plans have been left without legally required contributions. See why the 1% are telling us the American people have no retirement savings?
The face of this report was another person of color telling what are largely workers of color to do something that is really, really bad for them.....placing your money in a 401k plan and allow what will become mandatory payroll deductions. The people depending on Social Security the most....are low-wage earners and it is this same group that will lose the most as this social safety net is ended by corporate neo-liberals like Hillary and Obama. Although the low-wage earners are the ones who will suffer most, all Americans know and love Social Security whether democrat or republican so this move to end all social programs including Medicare and Social Security by neo-liberals will not stand. Keep in mind as well that corporate NPR/APM has gone from being a voice of the people to telling the people what will happen. This is state media not public media.
The Reagan Administration tripled the amount of payroll taxes taken from our wages back in the 1980s just so there would be plenty for the baby boomers when they retired......the Social Security Trust is flush with money so ignore the spin as we get corporate pols out of office to secure these funds.
Let's take a look at where all those Trust funds went to see how we are going to recover money to those Trusts!
I've spoken earlier about pension fraud and the need to recover this.....with Wall Street systemically criminal you do not want your retirement in 401k plans. Wall Street uses these plans as fodder and their value is lost every several years and with economic implosions you never increase the value/or lose money in these market plans.
Social Security Chief: Women Live Longer, So They Should Save Early
April 15, 2014 3:21 AM ET 6 min 28 sec NPR
Acting Social Security Commissioner Carolyn Colvin at a news conference last year. She says women need to start saving for retirement early in their careers.
Charles Dharapak/AP The Social Security Administration distributes retirement benefits to nearly 60 million Americans. And of those beneficiaries, nearly 60 percent are women.
The SSA is led by a woman, too. Carolyn Colvin was once retired herself, collecting benefits from the agency she now serves. A call from President Obama brought her back in 2010, and she recently took over as acting commissioner. As part of Morning Edition's look at the , Colvin spoke with Kelly McEvers about how women plan for financial security.
Colvin points out two realities she hopes women consider when planning for retirement. First, women make less money than men on average; when they stop working, their monthly Social Security checks are smaller, too.
Also, women tend to live longer than men. Colvin encourages women to estimate their own life expectancy with the , and find out more . Doing so, she says, often makes women realize they can outlive their savings — and that retirement benefits alone won't be enough.
Interview Highlights On men's vs. women's retirement benefits
The average amount (in 2014) is a little over $17,000 per year for men and a little over $13,000 per year for women. One of the reasons that women are likely to have lower lifetime benefits is because they often have lower lifetime earnings than men. They are more likely than men to take time out of the workforce to care for family members. And of course we still have the issue of gender inequality [in wages].
“ Many women will say they don't have the ability to save, and what I say is that they cannot afford not to save.
On the importance of personal savings
Social Security was never intended to be the primary source of retirement. It was to be one of three legs on a stool, we always say. ... And then, of course, private pension and savings. And we know now that many of the private pensions have been reduced. Some women work in jobs where they really don't have a private pension, and of course many women — particularly low-income wage earners — find themselves just not saving as much as they should in order to ensure that they are able to have a decent income during retirement.
On ways women can plan for the future
One of the things we try to focus on is encouraging women, even at very young ages, to begin to save. ... Many women will say they don't have the ability to save, and what I say is that they cannot afford not to save.
For me, I had to find a way of saving where I would not in fact use that money later. And so I found, for me, real estate was the key. I also found that it did not make sense to leave money on the table, so for every job I've worked where there has been an opportunity for the employer match, I've maximized that.
The most important thing is you need to spend below your means. Maybe it's giving up soda, or giving up cigarettes. ... And then each time they get a raise, don't take that raise. Put it into a 401(k). They haven't gotten used to spending it. It's there. And it will grow.
___________________
You can tell the quality of media programming if everything they report has the words 'scam' attached to it. As this article shows, between outright fraud, fees, and mismanagement----there are no benefits to placing your money in 401k plans. Corporate media is selling this for Wall Street because Wall Street has lost all of its overseas business because it is known worldwide as being criminal. Corporate pols now need more domestic money coming into the stock market.
So, why is Obama creating myRA as the replacement for Social Security------a republican plan to end all social programs? Neo-liberals and neo-cons are global corporate pols working for wealth and profit.....they do not care about quality of life.
Below you see a recommendation of pensions over 401k, but with no oversight in pension management by government even this once safe investment plan is constantly defrauded.
The 401k Scam
Author: Nathaniel Downes July 7, 2012 2:31 pm
The Demos report is an eye opener as to the hidden costs which cause 401k programs to not only fail to keep up with inflation, but to fall behind even the base amount invested into these funds.
What they found was that, for the projected samples that the 401k would lose over $155k for its entire lifetime. Since the entire sample fund at the time of retirement would be $320k, that means a full third of the money which was put into the system was taken by the 401k itself in the guise of fees.
How does this work you may ask? The report goes into detail, but we shall give a simplified example here.
First, your 401k funds are typically put into mutual funds, so let us first address those.
If you put $10,000 into a mutual fund which lists a 3% return, it sounds good, yes? But that is after the fees are deducted. These fees are listed as a percentage of your total investment, but they are deducted from the revenue generated. You get $300 added to the $10,000, but that was after the $150 in “expense ratio,” mutual fund fees such as marketing fees, management fees, and administration feeds, as well as $150 in direct transaction fees have been removed. Your $10,000 had earned $600, but half of that was eaten up in fees. And it does this each and every year. $300 every year for 40 years gives you $12,000 in total fees deducted, more than your original investment.
Then there is the 401k itself, which has its own fees associated with the program. These fund ratio fees are typically around 1%, but over the life of the 401k this adds up to a substantial lump sum.
That original $10,000 over the 40 years of the fund ended up at just over $22,000. Without those fees, it would have been just over $102,000. That is a huge shortfall. Even if you invest an additional $10,000 every year, you are not catching up to this shortfall, as the $1.7 million the fund should have is reduced to $640k, a loss of over a million dollars. And that is if there has been no economic slowdown during the intervening 40 years, which an reduce the principal even further while not reducing the fees associated with that. In a downturn, the fees make the losses even more pronounced than they were before as a result.
Now, I used a high fee rate, typically double the average large mutual fund but not the highest fee currently in the market (which as of the time of writing is 1.53%, held by the HDGE Active Bear ETF Profile Fund according to my research), to best demonstrate the amount lost to these fees.
By comparison, a pension plan is a form of insurance, similar to what you would find for your automobile or your healthcare. Money taken in is used to pay out for those who have met the qualifications for payment. Many of these systems use surplus funds to invest in stable, fixed investments, such as treasury bonds. Social Security works in this manner, surplus funds paid in go into a special trust fund filled with US Treasury Notes, pre-paid cash in effect. The trade-off for this is that the amounts paid out are not directly owned by the individual, they are a large pool that all tap into.
A US Treasury Note, similar to one used by the Social Security Trust
By doing this, the overhead fees are minimal, typically under 1%, and as the amount is not accruing nor are large numbers of transactions being handled, this is not reapplied to the same funds repeatedly as with a mutual fund. As a result, a funded pension plan is far more likely to weather economic hardships without difficulty.
When planning ones retirement, risk is the last word you want to hear.
___________________________________________
Make no mistake, the groups proposing the idea of expanding Social Security are sometimes not as progressive as they seem, but this is in fact the way to recover all the losses to the Social Security Trusts and the pension that were raided. The assumption is this-----
YOU HAVE TAKEN ALL OF OUR PENSIONS, HOUSES, AND SAVINGS SO WE WILL NOW USE SOCIAL SECURITY AS OUR PRIMARY RETIREMENT SUPPORT.
The reason I am not comfortable with some of the groups putting forward these ideas is they never mention the recovery of fraud and public malfeasance in rebuilding these Trusts. Do you know how much money is lost to the SS Trust just from payroll fraud-----corporations categorizing employees as independent contractors when they are not? Over 20 million Americans fell into this category and this has happened for a decade or more. Trillions of dollars have been lost to SS Trust with this one fraud. So, not mentioning it in the solution-----just as not mentioning Medicare and Medicaid fraud in the solution of Expanded and Improved Medicare for All falls short as a solution.
Wednesday, Jul 24, 2013 12:12 PM EST
Growing consensus on Social Security: Expand it After staving off Obama's plan to cut benefits, progressives are fighting to boost checks to seniors
Alex Seitz-Wald
Back when “grand bargain” fever was gripping Washington earlier this year, progressive activists mounted an uphill campaign against their allies in the White House and the Capitol, warning there would be hell to pay if President Obama went forward with his plan to trim Social Security benefits.
Thanks in part to their effort, along with Republican recalcitrance and changing economic realities, Democrats have abandoned any plans to mess with the social safety net, at least for the moment. The federal deficit has fallen precipitously this year – Treasury actually ran a surplus in June — and with it, the impetus for a “grand bargain” trading safety net cuts for increased tax revenue has evaporated. (This may have been the White House’s plan all along.)
Now, as Obama prepares to deliver a major speech on the economy today, the scrappy activists who were until recently playing defense against cuts are turning around and pushing to increase Social Security benefits.
“Social Security is the most effective anti-poverty program in history. Forget cutting it — we need to double down on success and make it even stronger,” Jim Dean, the chair of Democracy for America, will say in an email to supporters today.
The coalition of leading progressive groups, including the Progressive Change Campaign Committee, Democracy for America, Credo Action, MoveOn.org, Progressives United and Social Security Works, are joining together to back a plan introduced by Democratic Sens. Tom Harkin and Mark Begich to boost benefits and shore up Social Security’s finances for the better part of the next century.
These kinds of economic justice issues are Harkin’s bread and butter, but Begich, who is up for reelection this year in deep-red Alaska, is an interesting addition. In May, he made a splash by breaking with Obama on Social Security cuts. His leadership on this issue suggests he thinks expanding the social safety net will not only not hurt him, but actually help him politically, even in one of the most Republican states in the union.
And there’s reason to believe he’s right — Social Security is overwhelmingly popular. A new PPP poll commissioned by DFA and the PCCC found that 51 percent of Kentucky voters support the Harkin-Begich framework, which would boost benefits for 75-year-old workers by $452 per year and by $807 per year for 85-year-olds. Twenty-four percent said they didn’t support the plan, and another 24 said they weren’t sure.
Obama’s budget called for changing the way inflation is calculated for Social Security by switching to the “chained CPI” (consumer price index) formula, which would have the effect of reducing benefits. Begich and Harkin have each introduced slightly different plans, but both would also change the inflation formula. Their change, however, to the “CPI-E,” better accounts for the fact that seniors spend disproportionate amounts of their income on health care, the price of which grows faster than the price of goods overall.
To pay for this expansion, and to ensure the solvency of all of Social Security for decades into the future, the plan would eliminate the income cap on Social Security FICA taxes. Currently, income above $113,700 is exempt from the tax, meaning someone who makes $1 million a year pays the tax on only about a tenth of their income. The new poll commissioned by the groups found that 62 percent of Kentuckians support removing the cap, while 20 percent oppose it and another 18 percent are unsure.
Some liberals have criticized the idea of removing the cap, arguing that it would undermine the political strength of Social Security by making the plan more of a redistributional welfare system than a social insurance scheme. But others point out that the cap means the current Social Security tax is regressive, charging poor and middle-class Americans a larger portion of their income than millionaires and billionaires.
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When people hear the words 'underground economy' they think drugs and prostitution or selling of stolen goods. It's always the poor who are placed into this category. Yet, it is the global corporations who are now the biggest 'underground economies' in the US. Make no mistake, the entire Gulf of Mexico economy is cash only just to avoid paying things like payroll tax and yet, these southern states take the most in social services in the country. These citizens have been left by their politicians paid so poorly through life with no Social Security payments because of this cash economy. The same is happening to immigrants as they and low-wage domestic workers are categorized as independent contractors illegally forced to take responsibility for the corporation's tax and insurance costs. THIS IS HAPPENING AT AN EPIDEMIC PACE AND IT HAPPENS BECAUSE THERE IS NO GOVERNMENT OVERSIGHT OF WAGES----
YOU KNOW----DEPARTMENT OF LICENSING AND REGULATION.
People being paid almost nothing don't say anything about these frauds because they cannot afford the cost of these taxes. Yet, it is these same people not able to claim Social Security benefits when they need them. The poor are being duped into participating and/or are being forced to pay that which is not required because of third world government malfeasance.
If you think this is only the shrimp boat operator or the waste removal small business person-----I have spoken often that it is Johns Hopkins who outsources the jobs to corporate Human Resources businesses they know are operating illegally. Large property management corporations are also doing this. It is going main stream and all of this is what drives the losses to Social Security.
SEE WHY NEO-LIBERALS ARE TELLING YOU THAT SOCIAL SECURITY IS GOING BUST? IF THOSE POSING PROGRESSIVE SOLUTIONS LIKE EXPANDED SOCIAL SECURITY ARE NOT SHOUTING THIS----THEY ARE NOT WORKING FOR REAL SOLUTIONS.
Underground Economy Operations
- Report Payroll Tax Fraud
- Definition of "Underground Economy"
- What Does It Cost You?
- EDD’s Underground Economy Operations
- Significant UEO Program Efforts
- Joint Enforcement Strike Force
- Annual Fraud Reports
- Call our toll-free hotline: 1-800-528-1783
- Fax: 916-227-2772
- Submit a Fraud Reporting Form online
- Mail us a UEO Lead Referral/Complaint Form, available in English (DE 660) and Spanish (DE 660/S/).
- Help Us Fight Fraud, DE 2370
What Does It Cost You? A February 2005 report, California’s Tax Gap, prepared by California’s Legislative Analyst’s Office, estimates California’s income tax gap to be $6.5 billion. Reports on the underground economy indicate it imposes significant burdens on: (1) the State of California, (2) businesses that comply with the law, and (3) workers who lose benefits and other protections provided by state law when the businesses they work for operate in the underground economy.
Business: When businesses operate in the underground economy, they illegally reduce the amount of money expensed for insurance, payroll taxes, licenses, employee benefits, safety equipment, and safety conditions. These types of employers then gain an unfair competitive advantage over businesses that comply with the various business laws. This causes unfair competition in the marketplace and forces law-abiding businesses to pay higher taxes and expenses.
Workers: Employees of the businesses that do not comply are also affected. Their working conditions may not meet the legal requirements, which can put them in danger. Their wage earnings may also be less than those required by law, and benefits they are entitled to can be denied or delayed because their wages are not properly reported.
Consumers: Consumers can also be affected when contracting with unlicensed businesses. Licensing provisions are designed to ensure minimum levels of skill and knowledge to protect the consumer.
The ultimate impact is erosion of the economic stability and working conditions in this State. Our pamphlet Paying Cash Wages "Under the Table"...Is It Really Worth the Risk? outlines some of the costs and effects of cash pay on your business, your employees, and taxpayers in general. It is available in both English (DE 573CA) and Spanish (DE 573CA/S/).
EDD’s Underground Economy Operations The EDD is concerned about workers who lose benefits and other protections provided by state law when the businesses that they work for operate in the underground economy. When businesses operate in the underground economy, they gain an unfair competitive advantage over businesses that comply with the law. This causes unfair competition in the marketplace and forces law-abiding businesses and every citizen in California to pay higher taxes. EDD’s Underground Economy Operations (UEO) organization was established in 1993 to implement and administer the activities of the Joint Enforcement Strike Force. The mission of UEO is to reduce unfair business competition and protect the rights of workers by:
- Coordinating the joint enforcement of tax, labor, and licensing laws.
- Detecting and deterring payroll tax violations in the underground economy. This includes unreported cash pay, wages reported on Forms 1099, and unreported/unpaid payroll tax deductions.
- Conducting research to identify strategies to increase compliance with payroll tax laws.
- Educating customers on UEO programs to increase compliance with payroll tax laws.
Labor Enforcement Task Force, and the Construction Enforcement Project.
Employment Enforcement Task Force (EETF) Participating agencies in the EETF include:
- Employment Development Department (EDD)
- Department of Industrial Relations (DIR)
- Contractors State License Board (CSLB)
The EETF agents from each agency jointly conduct on-site inspections of businesses by interviewing owners, managers, and workers to determine if businesses are in compliance with payroll tax, labor, and licensing laws. To minimize the disruption of compliant businesses, the EETF conducts investigations only if there is a reasonable belief of violations of the Unemployment Insurance Code, Labor Code, and/or the Business and Professions Code.
Employment Enforcement Task Force Program Results Result 2008 2009 Joint Inspections 504 389 Previously Unreported Employees 4,638 4,092 Unreported Wages $187,059,631 $116,249,769 Payroll Tax Audits 422 357 Payroll Tax Assessments $29,344,488 $17,915,081 Labor Code Citation Amounts $5,575,312 $4,106,894 To learn more about the EETF program, see our Information Sheet: Employment Enforcement Task Force, available in both English (DE 631) and Spanish (DE 631/S/).
Labor Enforcement Task Force (LETF) The LETF was initially formed in 2005 as the Economic and Employment Enforcement Coalition and began operating as the Labor Enforcement Task Force in January of 2012. The LETF was formed to: ensure California workers receive proper payment of wages and are provided a safe work environment; ensure California receives all employment taxes, fees, and penalties due from employers; eliminate unfair business competition by leveling the playing field; make efficient use of state and federal resources in carrying out the mission of the LETF. They focus on industries that traditionally employ low wage workers. Agriculture, construction, automotive, carwash, courier, warehouse, garment, and restaurants are the program’s current targeted industries. The LETF members include: the Department of Industrial Relation’s (DIR) Division of Labor Standards Enforcement (Labor Commissioner) and Cal/OSHA; the EDD; the Board of Equalization (BOE); and the Department of Consumer Affairs’ (DCA) Contractor’s State Licensing Board (CSLB) and Bureau of Automotive Repair (BAR).
Construction Enforcement Project (CEP) The EDD recognizes that the vast majority of construction contractors are honest business people who operate legitimately within the law and properly report payroll taxes. However, there are some contractors who do not properly report, and this impacts both workers and law-abiding contractors. The CEP was developed because usual techniques for identifying tax and employment fraud were not as effective in the construction industry. Unlike other industries that have permanent business locations, construction businesses have constantly changing job sites. By the time information is developed that a contractor is probably operating in the underground economy, work at the job site has often been completed and an on-site inspection would not discover any labor law violations.
The CEP uses a variety of investigative techniques to identify contractors who avoid payroll taxes. When a CEP investigator develops evidence of underground economy activities, a payroll tax audit referral is made to the EDD Audit Program. The CEP goal is to develop techniques that will maximize the detection of construction industry employers operating in the underground economy.
Construction Enforcement Project Program Results Result 2008 2009 Previously Unreported Employees 1,777 4,965 Unreported Wages $65,646,628 $56,554,550 Payroll Tax Audits 125 115 Payroll Tax Assessments $8,834,006 $7,565,798 Joint Enforcement Strike Force On October 26, 1993, the Governor signed Executive Order W-66-93, which created the Joint Enforcement Strike Force on the Underground Economy. The Governor subsequently signed Senate Bill 1490, which placed the provisions of the Executive Order into law as Section 329 of the California Unemployment Insurance Code, effective January 1, 1995.
The EDD is the lead agency for the Strike Force, and the Director of EDD is the chairperson. The Strike Force is responsible for enhancing the development and sharing of information necessary to combat the underground economy, to improve the coordination of enforcement activities, and to develop methods to pool, focus, and target enforcement resources. The Strike Force is empowered and authorized to form joint enforcement teams when appropriate to utilize the collective investigative and enforcement capabilities of the Strike Force members. For more information, visit the Joint Enforcement Strike Force (JESF) page.
In addition to EDD, the other Strike Force members are:
- Department of Consumer Affairs 1-800-952-5210
- Department of Industrial Relations
Minimum Wage, Safety, and Work Violations 1-888-275-9243 - Department of Insurance 1-800-927-HELP (4357)
- Franchise Tax Board Tax Informant Hotline: 1-800-540-3453
- Board of Equalization 1-888-334-3300
- Department of Justice 1-800-952-5225
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IMAGINE THAT THE ABOVE POLICY WAS WRITTEN ALMOST A DECADE AGO AND SINCE THEN, ALL OF THESE CORPORATE FRAUDS AGAINST OUR RETIREMENT TRUSTS AND AGAINST THOSE EARNING THE LOWEST WAGES IS SOARING. It hurts all Americans when systemic fraud allows our Trusts to be depleted and this money must come back and not from the low-wage earner burdened unfairly.
Maryland is ground zero for these frauds and it is the DLLR-----State agency charged with oversight of these industries. See why the election for Governor of Maryland can only have candidates known to continue to turn their heads to Maryland's massive and systemic frauds? See why it was Maryland's DLLR head-----Tom Perez -----that was Obama's Labor Department choice? This is the person charged with ignoring massive wage and tax thefts by corporations operating in Maryland.
Now, immigrant workers are sometime scapegoated for taking work from domestic workers but these immigrant workers are being used and exploited while simply trying to earn a living so it is our duty to fight for justice for all workers to bring an end to these practices. Enforcing workplace laws helps everyone.
IT IS DISGUSTING AND THIS IS WHY GLOBAL CORPORATE MEDIA AND POLS ARE PRETENDING THERE ARE SHORTFALLS IN OUR SOCIAL SECURITY AND MEDICARE TRUSTS.
This is a Texas article but Maryland is just as bad....neo-liberal/neo-con means massive systemic fraud and corruption.
- Employee or Independent Contractor? Employer Fraud Costs Workers
- September 30, 2013 / Chris Wagner
- Wrongly classifying workers as independent contractors gets around laws like workers' compensation and family and medical leave. It's costing Texas construction workers millions, according to the International Brotherhood of Electrical Workers Local 520 in Austin. Photo: Workers Defense Project.
Misclassification of employees as independent contractors is a serious problem in the Texas construction industry—so serious that my local decided to do an undercover investigation, using covert workers to infiltrate job sites.
The conditions they found were severe.
“The workers sometimes wouldn’t even get paid that week. They were scared to report the violations to anyone. They feared their boss and the government due to deportation,” said Philip Lawhon, assistant business manager/organizer for Electrical Workers (IBEW) Local 520.
“One of our members said that it reminded him of working in Mexico. He said, ‘I came to America to get away from these types of issues.’”
More than 40 percent of construction employees are misclassified as independent contractors, according to the Build a Better Texas report, released earlier this year by the Workers Defense Project.
It’s a problem for the workers who get misclassified: many labor laws do not cover them, exposing them to abuse. It’s a problem for legitimate employers, who are undercut by the unscrupulous ones.
And it’s a problem for all Texas residents, as cities and the state lose out on tax revenue, and social safety nets—already stretched thin—are forced to help out the cheated workers.
As business manager of Local 520, I instructed my organizing department to investigate these illegal employment practices and to act on their findings.
Going Undercover Twelve high-rise projects, 17 to 50 stories, in and around downtown Austin are in some stage of construction, from planning to near completion. My organizers found that, of the eight that have started construction, six are using electrical contractors that misclassify their employees as independent contractors.
Four of them are using the same contractor, Power Design Inc., from Florida. Managers at Power Design, we found, had attempted to insulate themselves from charges of payroll fraud by subcontracting out most of the labor to still other contractors, ESP Electric and ES&R, both owned by brothers Rigar and Alex Espinosa.
What Is an Employee? According to the Internal Revenue Service (IRS), whether someone is an employee or an independent contractor depends on the degree of control the person has over the work.
Three categories of evidence are used to determine the degree of control and independence:
Behavioral: Does the company control, or have the right to control, what the worker does and how the worker does his or her job? Is the worker told when and where to do the work, what tools or equipment to use, where to buy supplies and services, what order to follow when doing the work? Does the worker get more detailed instructions or less detailed? The type of evaluation system also helps determine behavioral control: an employee would be evaluated on how the work is performed, while an independent contractor might only be evaluated on the end product.
Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how the worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) What level of investment has the worker made in the necessary tools of the trade? Does the worker incur substantial unreimbursed expenses? Does the worker have opportunity for profit or loss? What is the method of compensation? Someone paid an hourly wage is usually an employee.
Type of Relationship: Are there written contracts or employee type benefits (i.e., pension plan, insurance, vacation pay, etc.)? Will the relationship continue, and is the work performed a key aspect of the business?
The IRS provides Form SS-8 to help employers and workers determine who is an employee and who is an independent contractor.
We got three of our members hired on with these two companies during the summer of 2012, all of them Mexican citizens fluent in Spanish.
These members found that “90 percent of the installers were undocumented immigrant workers,” Lawhon said. “These workers’ skills were very limited. The workers were trained to do basically one task and that was predominantly all they did.”
How Workers Are Abused Independent contractors are sometimes called “1099ers,” because of the IRS tax form 1099 that employers must give them at the end of the year, rather than the W-2 required for employees.
These workers are mostly unprotected by labor and employment law. They are not covered by minimum-wage and overtime requirements under the Fair Labor Standards Act.
They are not entitled to the protection from discrimination based on race, color, religion, sex, or national origin afforded by Title VII of the Civil Rights Act of 1964. The Age Discrimination in Employment Act does not protect them, nor do the Americans with Disabilities Act, the Family and Medical Leave Act, or the National Labor Relations Act.
The Build a Better Texas survey of five cities found that 81 percent of Texas construction workers are Latino, and that 73 percent are foreign-born—making them especially ripe for abuse because of their lack of knowledge of U.S. labor and tax laws. The fact that many are undocumented means they are less likely to report abuses.
Shells As far as we can tell, ESP and ES&R exist only to provide manpower to other unscrupulous electrical contractors. We can find no records of either company contracting with any general contractors or pulling any electrical construction permits.
ESP and ES&R both pay their workers as independent contractors, anywhere from $8 to $14 an hour, with no deductions, no unemployment, no workers' comp, and no overtime pay.
Workers are hired by word of mouth and paid by check. Many frankly prefer being paid under the table—but they get upset at the working conditions and getting shorted on their pay, getting paid late, or not getting paid at all.
The workers did not even receive 1099 forms at the end of the year.
Honest Businesses Pay the Price A fair marketplace for labor assumes that all employers follow the law. Honest contractors are at a disadvantage when competing with those who misclassify their workers.
Companies that operate illegally by not paying payroll taxes, unemployment insurance taxes, and overtime compensation are able to underbid legitimate contractors by 15 to 25 percent, according to Michael White, Vice President for Government Affairs for the Texas Contractors Association.
Responsible businesses are also burdened by increased unemployment insurance tax rates, caused by the recession, when others fail to make their required payments.
Misclassified employees, cheated out of pay, also have less money to purchase goods and services, so the state loses out on sales tax revenue—creating another burden on an already cash-strapped state. Texas has no income tax.
Lost unemployment taxes due to this kind of payroll fraud total around $54.5 million a year—meaning that much less money for unemployment benefits for those who need them.
And workers misclassified as independent contractors get neither health insurance nor worker’s comp. When they are injured on the job, or when they or a family member are sick, they must rely on the charity of public hospitals, driving up the costs of health care for all.
Widening Investigation After gathering information for several weeks, in November last year Local 520 filed complaints on behalf of the workers with the U.S. Department of Labor Wage & Hour Division, the Texas Workforce Commission (for failure to pay unemployment taxes), and the IRS.
The wheels of justice move incredibly slowly and quietly in these cases, and as a third party complainant, Local 520 gets very little information on their progress.
We have heard nothing from the IRS.
The most encouraging correspondence has come from the Department of Labor. A representative called Local 520 in May and said that, since ESP and ES&R had kept such poor records, the DOL was expanding the complaint to include Power Design Inc. The DOL was opening an investigation into 147 Power Design projects all along the South from Texas to Florida.
Changing Texas Law While Texas has long been a business-friendly state, with elected officials loath to restrict enterprise, legitimate businesses have recently made a push to pass stiffer penalties for misclassifying employees as independent contractors.
Bills introduced in the Texas House of Representatives and Senate would increase the penalties for payroll fraud. Many legitimate subcontractors support such laws--though one group very much against stopping payroll fraud is the Homebuilders Association.
The City of Austin recently passed an ordinance to make it harder to misclassify electricians. Its language was developed by a coalition of union electricians, union and non-union electrical contractors, and the City of Austin Electrical Inspection Department.
The ordinance requires that electricians working as “independent contractors” have a Texas electrical contractor’s license.
Most of the workers being exploited have only an electrical apprentice license, which just requires paying a small fee to the state licensing department. The contractor’s license is, of course, much more difficult to obtain, with electrical experience and knowledge requirements involved.
The only way to stop the illegal practices of unscrupulous construction contractors is for organized labor and legitimate business owners to join forces, to work toward stiffer penalties and enforcement and to demand that the government entities charged with enforcing existing labor law do their jobs.
Chris Wagner is business manager of International Brotherhood of Electrical Workers Local 520 in Austin, Texas.
- See more at: http://www.labornotes.org/2013/09/employee-or-independent-contractor-employer-fraud-costs-workers#sthash.8jLE1Cxr.dpuf
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