A Local Solution to Social Security

Now I am no legal expert, and the following proposal will probably make that clear. It is my understanding that government and municipal employees do not have to contribute to SS because the government agency has it's own plan. One might wonder if a municipality (town or state) might choose to attract business to its area by providing a shelter from SS taxation.

One way in which to do this is that the employees might be leased to the companies from the municipality (for a small processing fee + wages). In return the employer and employee would be free of the SS burden. In that way, neither the employee nor employer have to shoulder that 15% tax. The municipality would then have to take "care" of retirement, but do they? I don't know anything about legal restrictions on municipal retirement plans. Do they allow any flexibility? Could this agency then turn around and tell its "employees" in this plan that they are either on their own or perhaps they must provide proof that they are dutifully taking of their retirement privately.

Just a thought.