H.J.R. 2 Enrolled

RESOLUTION ON SOCIAL SECURITY
2001 GENERAL SESSION
STATE OF UTAH
Sponsor: James A. Ferrin
Stephen D. Clark
Roger E. Barrus
Rebecca D. Lockhart
Matt Throckmorton
Glenn L. Way
David Ure
Mike Thompson
David N. Cox
Peggy Wallace
Kevin S. Garn

This joint resolution of the Legislature urges Congress to enact legislation which enhances
and modernizes Social Security, allowing workers, in addition to the existing public option,
a private option to direct their Social Security tax contributions to individually owned
separate accounts.
Be it resolved by the Legislature of the state of Utah:
WHEREAS, Social Security is a federal program that requires almost unanimous
participation by employed workers in the state of Utah and throughout the United States;
WHEREAS, the retirement portion of the Social Security tax is high, having risen from an
initial rate of 1% of the first $3,000 of a worker's income, up to a maximum of $30 per year, to the
present rate of 12.4% of the first $80,400 of employee wages or self-employment income up to a
maximum of $830.80 per month or $9,969.60 per year;
WHEREAS, the maximum Social Security retirement tax, paid by almost 11 million
workers, has risen 5.51% in 2001 over the year 2000, and is now 57% higher than in 1990;
WHEREAS, because neither the employee's direct tax contribution to Social Security nor
the employer's contribution on the employee's behalf appears on the employee's federal tax return,
few employees understand the amount of Social Security retirement tax they actually pay each
month;
WHEREAS, individuals can estimate their own Social Security tax cost by estimating 1%
of annual compensation paid each month -- for example, an annual income of $30,000 would yield
an estimated monthly Social Security retirement tax cost of $300 per month;
WHEREAS, the Social Security retirement tax consumes nearly every dollar that many
workers of modest income might otherwise be able to save and invest;

WHEREAS, because higher income workers are better able to save and invest over and
above the amounts paid in Social Security taxes, escaping Social Security dependence, but modest
income workers cannot, the system creates disproportionate dependence on the system by low and
middle-income workers;
WHEREAS, for many lower income American workers, the Social Security retirement tax
represents virtually all of the monthly retirement savings they assemble;
WHEREAS, with the individual retirement benefit currently ranging from a low of just a few
dollars per month to a high of approximately $1,400 per month, and the average monthly retirement
benefit currently at about $845 per month, Social Security retirement benefits amount to a below
poverty level subsistence for many retirees;
WHEREAS, although Social Security was originally intended to merely supplement other
core retirement income sources, the high tax rate prohibits many workers from ever adequately
saving and investing, and as a consequence, Social Security has become the core retirement income
source for many Americans;
WHEREAS, national demographics have shifted significantly since the system was created
as a part of President Roosevelt's New Deal policies;
WHEREAS, in 1945, 41.9 workers supported each retiree, and today just 3.3 workers support
each retiree;
WHEREAS, the ratio is expected to dwindle to 2 workers per retiree within the next 30 years,
making the current system unsustainable;
WHEREAS, tax receipts currently exceed benefit payments, yet, Social Security Trustees
estimate that benefit payments will exceed tax receipts, producing annual deficits, beginning in
approximately 15 years, or the year 2015;
WHEREAS, the Social Security Trustees estimate the cumulative annual deficits for years
2015 through 2075 to reach $21.6 trillion;
WHEREAS, it is unethical to perpetuate a system that accrues benefits for a current
generation of retirees at the expense of younger workers who will likely never collect benefits but
will inherit the mounting debt;

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WHEREAS, the current system is unfair to future retirees because after a lifetime of paying
into the system, a worker retains no legal right nor claim to any amount or benefit, but is subject to
future congresses who will set the benefit rates;
WHEREAS, the current system is unfair to those who die prematurely because it is possible
to pay for a lifetime into the system yet draw only minimal benefit or even no benefit prior to death
and leave no residual value to any heir;
WHEREAS, the current system is unfair to widows and widowers because they must forego
either their own benefit or their deceased spouse's benefit ("widow(er)" benefit), and may claim the
widow(er) benefit only after attaining qualification age themselves regardless of the age of the
deceased spouse;
WHEREAS, the current system is unfair to women who leave employment to raise families
because many women in Utah and throughout the United States work and pay retirement taxes into
the system for many years but never complete the required 10 years or 40 quarters, before leaving
employment, making them ineligible for retirement benefits;
WHEREAS, the system is unfair to some ethnic minorities, including African-Americans,
whose life expectancies are shorter and will typically collect benefits for a shorter time period;
WHEREAS, retirement security is best achieved by regularly saving and investing one's own
money over a lifetime of work, and public policy regarding Social Security should support, facilitate,
and encourage saving rather than discourage or deter it;
WHEREAS, the objective of Social Security privatization is for individual workers to have
legal ownership in a retirement asset that can be used and ultimately passed on to heirs;
WHEREAS, even with modest return assumptions, the private, individually owned account
can be expected to produce a significantly enhanced retirement income;
WHEREAS, private, individually owned accounts accrue value and future benefits to the
workers regardless of future congressional actions;
WHEREAS, private, individually owned accounts grow on behalf of the worker whether or
not the worker completes 40 quarters of contributions;
WHEREAS, private, individually owned accounts can be passed on by inheritance to

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spouses, children, or grandchildren, affording an opportunity for long-term inter-generational wealth
accumulation;
WHEREAS, a national system of private, individual accounts can be perpetuated without end
and without concern for projected dates of insolvency;
WHEREAS, private, individual accounts afford workers the opportunity to select from
among multiple investment options, including government bonds or prudent, diversified investment
models like those used by large pension or endowment funds;
WHEREAS, workers around the world are embracing privatized systems as a workable
solution to an overburdened government Social Security program;
WHEREAS, the successful pioneer Chilean model was commenced 20 years ago with at least
seven other Latin American countries following suit;
WHEREAS, Great Britain, Australia, and Singapore have also adopted private options,
similar reforms are underway in Russia, Hungary, Poland, and Kazakhstan, and the People's
Republic of China have embraced a private option with workers contributing one-half of their
retirement funds into an individual account system since 1996;
WHEREAS, some U. S. workers have enjoyed a private account system as certain
municipalities, including Galveston, Texas were allowed to opt out of Social Security in favor of a
privatized system prior to 1981; and
WHEREAS, since many Americans are unable to save and invest for retirement beyond the
12.4% payroll tax, a privatized Social Security option may be the only hope for many lower income
or economically disadvantaged Americans to achieve financial empowerment and retirement
security:
NOW, THEREFORE, BE IT RESOLVED that the Legislature of the state of Utah urge the
United States Congress to enact legislation to allow individual workers to choose to remain in the
current system or to select a private account option.
BE IT FURTHER RESOLVED that the Legislature urge that the legislation not disrupt the
benefits paid to existing Social Security recipients.
BE IT FURTHER RESOLVED that the legislation create private accounts to be owned and

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controlled by individual employees or workers, allow the individual employee or worker discretion
to invest among multiple prudent and diversified investment options, and create minimum
guaranteed income, disability, and death benefits in the private account.
BE IT FURTHER RESOLVED that a copy of this resolution be sent to the Speaker of the
United States House of Representatives, the President of the United States Senate, and the members
of Utah's congressional delegation.

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