Anyone serious about restoring solvency to social security funding should focus on the simple fact that after earning $106,800 in salary, employees do not pay any further social security taxes for that year. Obviously this benefits only upper income workers, who like most recipients will in all probability (depending on lifespan) receive far more in benefits than they contributed to the system. AARP magazine had a recent article stating that eliminating this cap on income subject to social security taxes would address 99% of the projected shortfall in the system!

Location: Scottsdale Arizona

 

2 Responses to “Social Security reform–eliminate the cap”

  1. Nicki says:

    This seems like a very easy way to raise income. At a minimum, the cap should be raised this October so that the increase would be effective next October. Effectively, someone now who earns $106,800 and someone who earns $500,000 pay the same amount.

  2. First, you do not cite any credible source for saying that it will solve the problem.

    Second, you do not understand how the system works. Social Security is conceptually an insurance premium where the person who contributes gets something back. The payback is heavily biased to lower-income workers already. Social Security in no way benefits high-wage earners if you look at the moneys-worth studies from the Social Security Administration. They already subsidize the system.

    Third, why should be raise payroll taxes and not income taxes to control the deficit. Any revenue that can be collected as a payroll tax could be collected as an income tax. This idea is that we should push money into our retirement system while we are pushing the cost of government on our kids.

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