It’s a funny thing, though obvious, that when you actually look at all the hand-wringing about budget shortfalls and Social Security funding, it always comes down to the same issue: are the richest among us going to pay their fair share, or are they going to continue to be part of a legalized robbery that drains the wealth of the country into the hands of a few, while the burden increase on most hard-working Americas? So, it is with Social Security.
I think it’s, by now, more people know that the richest people pay less money as a percentage of their income into Social Security — but it’s still probably a well-kept secret for the majority in the country. Every year, the cap on earnings subject to the Social Security tax goes up. This past January 1st the cap rose to $113,500. Uh, right…what about those people earning one million dollars? Well, they don’t pay tax above the cap.
So, as the Center for Economic and Policy Research correctly points out:
A worker who makes twice the cap – $227,400 per year – pays Social Security tax on only half of his or her earnings, and one who makes over a million dollars per year pays the tax on only about a tenth, or even less. In other words, workers who make $113,700 or less per year pay a higher Social Security payroll tax rate than those who make more.
So, why not eliminate the cap entirely? Yes, that is a no-brainer, and it’s being talked about as a way of ensuring Social Security’s long-term funding (but, as I always must point out, Social Security is solvent for a long time and can pay most of its benefits for decades). This is about fairness — or least reduced greed.
As CEPR observes:
We find that about 1 in 20 workers (the top 5.2 percent) would pay more if the Social Security cap were eliminated entirely and only the top 1.3 percent would be affected if the tax were applied to earnings over $250,000.
As I said, in a normal world, a no-brainer. In our world where the richest just don’t want to be part of the rest of society when it comes to obligations, well, it’s not so straightforward.