During this time of national crisis over the coronavirus, scammers, fraudsters, hucksters, and assorted con men have come out of the woodwork.
According to the article “4 Coronavirus Scams That Could Cost You,”
Because so many people are feeling vulnerable right now, it’s a prime time for scammers to strike. These fraudsters take advantage of the fear and uncertainty many Americans are experiencing, and there are four common scams that could cost you a lot of cash.
These four scams are Social Security, medical, charity, and stimulus-check scams. Here is a brief summary of each one as condensed from the article.
Social Security scams
“You may receive an official-looking letter saying your benefits have been suspended because of COVID-19, and to continue receiving your monthly checks, you must call a phone number listed in the letter. Once you call, the scammer may tell you that you have to pay a fine or fee to get your benefits reinstated.”
The article recommends that if you ever receive a letter, phone call, or email telling you that your Social Security benefits will be suspended because of COVID-19, you should “ignore it and report the incident to the Office of the Inspector General.” If you’re suspicious, “it’s best to contact the Social Security Administration to see if the person reaching out to you is legitimate or a scammer.”
“Scammers will call or email victims and pose as a doctor or medical provider. They may tell you that they are treating one of your loved ones for COVID-19, but they need payment for the treatment.” Other scammers try to “sell fake cures or vaccines for the coronavirus,” and ask you to “provide your personal information and payment over the phone.”
The article recommends that “if you receive any type of phone call, letter, or email that sounds suspicious, report it to the Federal Communications Commission.”
“You may receive a call or email from someone pretending to be with a charity or other major group such as the World Health Organization. These fraudsters will ask for donations on behalf of the organization, then steal your cash.”
The article recommends that you “do your research and double-check that the organization is legitimate and that you’re donating through the correct website.” If you’re suspicious, “do not provide any personal information and instead go to the charity’s website to donate.”
“You could receive phone calls, emails, or texts from people posing as government officials saying they need to verify your bank account information” before depositing your stimulus check.
The article recommends that “if you’re asked to provide that information over the phone or in an email, hang up or don’t respond” because “the Treasury Department will use the information that’s already on file from your taxes to directly deposit or mail your check.
It is unfortunate that some vulnerable Americans will be deceived by these scams during this time of national crisis over the coronavirus. All Americans should be aware of them. But all Americans should be equally aware of government scams concerning Social Security, medical, charity, and stimulus checks.
The government’s Social Security scams
The government taxes wages at the rate of 12.4 percent (split equally between employers and employees) on the first the first $137,700 of employee income and calls it the Social Security payroll tax. Most Americans think that they are entitled to receive Social Security benefits when they retire because they paid into the system their entire working lives.
But Social Security is not a retirement plan, an insurance program, a savings account, a 401(k)-type account, an investment vehicle, or a pension fund. Social Security has no lock box, trust fund, or dedicated account. All taxes collected are immediately deposited in the federal treasury and spent by the government. Taxes collected are less than benefits paid. There is no contractual right to receive benefits. There is no connection between the Social Security taxes paid and the benefits received. Congress can revise the Social Security benefit schedule at any time, raise Social Security taxes, or raise the retirement age.
Social Security is simply a system whereby money is taken from those who work and given to those who don’t.
The government’s medical scams
The government taxes wages at the rate of 2.9 percent (split equally between employers and employees) on every dollar of employee income and calls it the Medicare payroll tax. High-income workers pay an additional 0.9 percent tax on their earnings above a certain threshold. Most Americans think that they are entitled to receive Medicare benefits when they turn 65 because they paid into the system their entire working lives. Medicaid is government-funded health care for poor Americans of any age and people with certain disabilities.
Although Medicare consists of four parts, only Part A (hospital insurance) is actually funded by the Medicare payroll tax. Like Social Security, all Medicare taxes collected are immediately deposited in the federal treasury and spent by the government. There is no connection between the Medicare taxes paid and the benefits received. The payroll tax collected is more often than not much less than the Medicare benefits received. And if one dies prematurely or doesn’t require hospitalization after he turns 65, none of the Medicare taxes are ever refunded.
Medicare, then, is just like Medicaid — a form of welfare. Health care is not a right; it is a service that can and should be provided on the free market the same way dining, recreation, pest control, entertainment, and automobile repair are services provided by the market. The government cannot provide medical services for one American without first confiscating the resources of another American. No American is entitled to health care provided at the expense of another American.
The government’s charity scams
There are at least 80 federal government welfare programs that aid the poor by providing them cash, food aid, housing subsidies, or assorted in-kind benefits. Some of the most well-known are Temporary Assistance for Needy Families (TANF); Section 8 housing vouchers; Supplemental Security Income (SSI); Head Start; the National School Lunch Program (NSLP); the Low Income Home Energy Assistance Program (LIHEAP); Women, Infants, and Children (WIC); and the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps).
Although the federal government programs look very charitable, it should be noted that the government has no money of its own. The billions of dollars a year in charitable giving by the government is possible only because it confiscates billions of dollars from Americans through taxation. It’s easy to be charitable with other people’s money. Government welfare programs are income-transfer and wealth-redistribution programs masquerading as charity.
Charity that is not voluntary is theft. Forced charity is coercion, not charity.
The government’s stimulus-check scams
The government sends out stimulus checks to certain persons every year in the form of refunds of taxes that were never paid in. A regular tax credit is a dollar-for-dollar reduction of the amount of income tax owed. But a refundable tax credit is treated as a payment from the taxpayer like federal income tax withheld or quarterly estimated taxes paid. If the “payment” is more than the tax owed after regular tax credits are applied, then the taxpayer receives a refund of money he never actually paid in.
Low-income Americans have three refundable tax credits: the American Opportunity Tax Credit (AOTC), the Child Tax Credit (CTC), and the Earned Income Tax Credit (EITC). The maximum AOTC is $2,500, 40 percent of which is refundable. The maximum CTC is $2,000 per child, of which $1,400 is refundable. The amount of one’s EITC benefit depends on a recipient’s income and number of children. For tax year 2019, the maximum EITC that one can receive is:
$529 with no qualifying children
$3,526 with one qualifying child
$5,828 with two qualifying children
$6,557 with three or more qualifying children
Refundable tax credits are just another form of welfare. No one should receive a “refund” of taxes that he never paid in.
What is really bad about these government scams is that they will be around long after the coronavirus crisis is over.