Your editorial "A Break for Pensioners" (Oct. 3), regarding Social Security benefits for pensioners who have to work to supplement their retirement checks, is right on target.
However, there is a serious error of fact. The "grossly unfair taxation" is not 50%, as you stated, but rather over 80%.
After retirement two years ago, I became a consultant in data processing. My skills and experience must have some value since I am reasonably in demand. But for every marginal dollar I earn, I pay over 80%--that's right, over 80%--back to a government agency.
This breaks down into 15% to 22% in federal income tax, 2% to 4% in state income tax, 13.02% in self-employment tax (in lieu of Social Security), for a total of 30% to 39%.
Add to that the 50% which I must repay to Social Security, and you see that my true tax rate is between 80% and 89%. To add injury to insult, I also have to pay income tax on the money which is repaid to Social Security.
The actual numbers work out like this: Income of $700 from Social Security, and $1,400 of earnings from work, for a total of $2,100. At minimum rates, I pay 15% of $2,100, or $315 federal income tax; 2% or $42 in state income tax; 13% of $1,400, or $182 in self-employment tax, and $700 as repayment to Social Security, for a total of $1,239, or 88.5% at minimum rates.
And next year it gets worse. The self-employment tax rate goes up, and the Reagan Administration ("I will never increase taxes") imposes a 15% surcharge on my federal income tax.
And to think that a tax on tea was once considered sufficiently onerous to start a revolution!