Refer to the Table 1 below, which shows an economy where individuals live for two periods. Those who are young in one period become old retirees in the next. Suppose in Period 1, there was no Social Security program. In Period 2, the program begins and the young of that period pay tax to fund the program for the current retirees. In Period 5, suppose the Society Security program abruptly ends (such that retirees in Period 5 do not receive any benefits, and workers do not pay the tax towards Social Security). Suppose the payroll tax to support Social Security is 10%, that population grows by 5% per year, and that earnings grow at 5% per year.

Earnings per Taxes Paid by Total Taxes Number of Taxes Period Number of Benefits Young Workers Young Worker Young Worker Paid Old to Old Paid by Rate of Retirees Retirees Old Return Retirees 1000 $50,000 0 $0 0 $0 2 1100 $52,500 $5,250 $B 1000 $C $0 Infinite 1210 $55,125 $A $6,670,125 1100 $6,063.75 $D E% 4 1331 $57,881.25 $5,788.13 $7,703,994 1210 $6,366.94 $5,512.50 F% 5 1465 $60,775.31 0 $0 1331 $0 $5,788.13 G%