Do you support "scrap the cap" if you make over $118,500, the current cap?

[randys1]

yes or no

[KamaAina]

1. Are there any DUers who make over $118,500, the current cap?

[randys1]

2. Has to be, more than you think if the demos here are accurate.

My answer, whether my status applies or not, is yes.

[FreakinDJ]

3. yep and scrap the cap

[Kber]

36. Yes and yes

[Yupster]

44. I'd be for it as long as the retirement formula goes up to reflect it

As long as I get more out for the more I put in I'd be okay with it.

But don't cap my benefit and not cap my contribution.

[whathehell]

54. Yes, and yes. n/t

[lapfog_1]

59. yes I do, and yes, lets eliminate the cap

but lets also make the SS withholding a progressive tax rather than regressive. i.E. if you make over $200K, you should pay a higher percentage of wage earnings.

In addition, lets tax cap gains and other forms of non-wage income for SS.

[Throckmorton]

65. I do as well,

Yes, scrap the cap, and while we are at it, we should also revisit the SS Death Benefit as well, it is $255.00 and hasn't changed since 1934.

[KamaAina]

66. Wow, there are a lot of affluent DUers!

Anyone want to give me a decent job?

[Xithras]

75. Yes and yes.

[1StrongBlackMan]

76. Yes. There are several. I'm close; but, not quite there ...

My wife is ... and we both support scrapping the cap, largely because for the good it would do, the slight loss in wages would be worth it.

[TexasProgresive]

4. YES and when was the last time it was raised?

That was my Mom's index for inflation. Everytime she when over the cap it would be about 6 months til it was raised.

[randys1]

6. Goes up a little every year. Or almost every year

[TexasProgresive]

45. Yeah, I see that

https://www.ssa.gov/policy/docs/policybriefs/pb2011-02.html
Table 1. Tax max levels, level-setting mechanisms, and policy rationales, 1937–2011 Years Tax max ($) Mechanism and policy rationale
1937–1950 3,000 Original amount; set by the House Ways and Means Committee.
1951–1954 3,600 Ad hoc increases set by Congress. Intended to maintain benefits
that would more closely resemble preretirement income for middle-
and higher-income workers while also increasing program revenue.
1955–1958 4,200
1959–1965 4,800
1966–1967 6,600
1968–1971 7,800
1972 9,000 Levels set by the 1972 amendments.a
1973 10,800
1974 13,200
1975 14,100 Levels set by wage indexing formula of 1972 amendments.
1976 15,300
1977 16,500
1978 17,700
1979 22,900 Ad hoc increases to levels determined by wage indexing formula.
Addressed system financing problems created by the "flawed" benefit
formula in the 1972 amendments.
1980 25,900
1981 29,700
1982 32,400 Levels set by wage indexing; indexing formula was adjusted slightly
by the Omnibus Budget Reconciliation Act of 1989.
1983 35,700
1984 37,800
1985 39,600
1986 42,000
1987 43,800
1988 45,000
1989 48,000
1990 51,300
1991 53,400
1992 55,500
1993 57,600
1994 60,600
1995 61,200
1996 62,700
1997 65,400
1998 68,400
1999 72,600
2000 76,200
2001 80,400
2002 84,900
2003 87,000
2004 87,900
2005 90,000
2006 94,200
2007 97,500
2008 102,000
2009 106,800
2010 106,800
2011 106,800
SOURCE: SSA 2010a.
a. The 1972 amendments set the 1974 level at $12,000; subsequent legislation raised the tax max to $13,200 (see note 5).

[Vinca]

5. Yes. It's long overdue.

[randys1]

7. How could anyone oppose this if they knew it would fix Social Security?

I am waiting to have that conversation with someone here.

[Vinca]

14. I know and in Congress it would be a quick fix if they didn't hate grandma so much.

She's a taker, you know. Wants Fancy Feast rather than house brand, too.

[ViseGrip]

8. Yes, in the 90's Clinton wanted 140K! Scrap the cap!

[HassleCat]

9. Yes

I should have paid more into the system than I did, but the cap prevented me from doing so. Getting rid of the cap is the best way, the fairest way, to make sure Social Security does not go broke.

[randys1]

12. Love your answer.

[RKP5637]

10. Yes!

[Nye Bevan]

11. Nope.

Someone earning $10 million per year pays exactly the same in Social Security taxes as someone earning $118,500 per year. But then when they retire they receive the exact same Social Security benefit, which seems entirely fair. This is the main reason why Social Security continues to be broadly supported across the entire income spectrum. Trying to turn it into more of a wealth redistribution program would cause it to be perceived more like a welfare program, and we all know what even Democrats tend to do to "welfare as we know it".

[doc03]

19. That is already done since 1983 when Reagan started taxing up to 50% of SS benifits, then

in 1992 Clinton raised it to 85% of SS benefits. Also the threshold for paying taxes on SS has never been adjusted for inflation
since it was introduced in 1983. Eventually anyone that gets any pension outside of SS will have the excess taxed and also 85% of his SS taxed. This has the effect of taxing the same money twice.

[wiggs]

25. +1. good and proper answer. Black and white questions/answers are usually off the

mark.

Additionally, the question leaves out other ways to help SS. What if assumptions about wage growth hadn't been wrong? What if wages for middle and lower income workers hadn't stagnated (intentionally and deviously by TPTB) for 3 decades? What if nearly all the income growth hadn't gone to the top 2%? Wouldn't that mean a LOT more money would flow into SS?

If we get back to the notion that the economy depends on consumers and the middle class rather than the 'job creators' then we should be in the clear, as predicted in the 80s. A minimum wage that is a true living wage, support for unions rather than disbanding them, keeping money in the US rather than in tax shelters, incentivizing investments in business and growth instead of speculation, eliminating loopholes that allow pay to be taxed at capital gains rates rather than wage rates, less idolization of multinational corporations like Walmart, etc..

More income for those making less than 118,000 equals not only a more vibrant, stable economy but also better funding of safety nets.

But....hard to have a public conversation when most of the GOP whiners are exaggerating SS problems and issues. We need to agree on the type and scope of the problem first, then devise a fix (probably minor if you listen to dems). But a significant strategy of the right is confusion, misdirection, fear, mistrust....so we can't even discuss the problem as a nation.

[exboyfil]

29. Right now lower income workers are subsidized

by those who made on average inflation adjusted $50 to $1157/yr (approximately). This is because three tiers of benefits exist for the system. I am willing to add a fourth tier to the system for those incomes over the cap limit (lets say 1%).

The current tiers are as follows:

90% on approx. first $10K
32% on approx. $10K to $60K
15% on approx. $60K to $117K

so lets just add a 1% for the income averaging over approximately $117K. Seems fair to me.

[stopbush]

83. Millions of Americans pay into the fund their entire lives and never draw a dime in retirement.

They die before they become eligible to collect.

Is that "fair?" Should their $ be refunded to their heirs? No, that doesn't happen.

Millions more Americans draw very limited benefits, collecting for only a few years before they die.

Here's what's not fair: 97% of Americans pay FICA taxes on 100% of their income, while a person making $1,180,000 a year pays FICA taxes on only 10% of their income - or less. A person making $11,800,000 pays FICA tax on a measly 1% of their income.

Why should the rich get a break from paying FICA on 100% of their earnings?

Remove the cap entirely. Tax 100% of the income made by all Americans, including those who make over $118,000 a year. Then, pay everybody the same benefit.

[Nye Bevan]

85. What you propose would destroy Social Security.

Right now the very rich don't really care about it because the 12.6% tax is imposed only up to the cap, and they will get a corresponding benefit from it upon retirement. But if you slap a 12.6% tax on their entire income, with no increase in benefits, suddenly many rich people and their lobbyists will start plotting to do to Social Security what Bill Clinton did to welfare.

[stopbush]

88. Amazing how you know exactly what would happen.

How do you know such things with such certainty?

[Nye Bevan]

90. Well I have been known to be correct in my predictions.

http://www.democraticunderground.com/10026901012

[notadmblnd]

13. yes

[Logical]

15. NO! Not unless the SS payments when they retire is higher. SS is not a handout, you pay for it!! nt

[notadmblnd]

22. Yes how much $$ you get when you retire is based on your lifetime earnings

Higher income earners receive more in monthly benefits than lower income workers. I think the minimum currently is about 790.00 a month. I couldn't tell you what the max payment is though. Everyone can go out on line and look up what their estimated benefit at retirement is though. Social Security used to mail out yearly statements estimating your retirement benefits. The statement also showed how much at 65 and how much more if you wait longer to draw.

I've paid Social Security taxes on every dollar I've ever earned in my life, I see no reason why everyone shouldn't.

[Logical]

27. I agree, as long as you increase the benefits also. nt

[notadmblnd]

28. Thats the curent system, I don't forsee it being changed if the cap is raised.

Of course a republican could be elected and the cuts they've wanted could finally be enacted. However, I think then that it would only be raising the retirement age to 70 or more and not cuts to amounts people draw form SS.

[philosslayer]

49. You do realize then...

That some entertainers, business people and athletes would be making hundreds of thousands or even millions of dollars per year in SS benefits after they retired. People who are already exceedingly wealthy.

[notadmblnd]

60. The formula

Social Security benefits are calculated based on your 35 highest-earning years in the workforce, and are adjusted for inflation. If you don't have 35 years of earnings, zeros are averaged in for the years you didn't work at a job in which you paid into Social Security. The proportion of your income that is replaced by Social Security varies based on how much you earn. Consider a worker who turns 62 in 2011. To calculate his benefit, the first $749 of his average monthly earnings is multiplied by 90 percent, the next $3,768 by 32 percent, and the remainder by 15 percent. The sum of these three amounts equals his initial monthly payment amount. Workers also have cost-of-living increases added to their benefit beginning at age 62, even if they don't begin to receive benefits until a later year.

http://money.usnews.com/money/retirement/articles/2011/08/01/how-to-predict-your-social-security-payout

[exboyfil]

31. Here is the method of calculating it

Only the top inflation adjusted income 35 years is used in the formula. Three tiers of benefits (90%, 32%, and 15%). I propose a fourth tier of 1% for everything above $117K


https://www.ssa.gov/pubs/EN-05-10070.pdf

[pipoman]

38. Yeah, it seems to me that it should go up

To around $200 or 250 joint, then there should be a lower rate above that amount that nets no additional benefit....thought this for a long time. Social security (or some other program) will be paid for the poor paid for by everyone else in one way or another.

[doc03]

16. Yes I do. Also the threshold for taxing SS

as income has never been increased since it was introduced by Reagan in 1983. Today if you are single and make over $34000 in SS and pension income you are taxed twice once for any income over $34000 and again on 85% of your SS check. I believe that tax starts at $68000 for a married couple. I worked hard all my life and put money in a 401K, when withdraw money from my IRA now it is taxed by the IRS effectively at 33% plus another 6% for the state tax..

[notadmblnd]

26. That must just be for you.

Because if I were to work after I began drawing Social Security, I'd only be allowed to earn 12k a year before I had to start paying some of it back.

I guess you're lucky, you're allowed to earn 34k. The IRS rate of 33% on your 401k withdrawals sounds like the penalty rate. I know cause they got me. I get to pay 14k on 34k. However, everyone who has a 401k should be aware of the penalties for early withdrawal. If not, shame on them. It's one of the reasons some work places allow their employees to borrow against it.

[doc03]

33. It is not an early withdrawal I am 67 and I am not working. My SS income and pension comes to over

$34000. I pay taxes on all my income then anything over $34000 is taxed twice. You are taxed on the your income
which I have no problem with. But it also makes up to 85% of your SS taxable so you pay the SS you earned working
45 years for back to the government. This was started back in 1983, at that time $34000 was considered a high income
but it has never been raised since 1983. If that was increased for inflation it would be over $81000 a year. In a few years when
it starts affecting middle class married couples I am sure it will be changed but for now it mostly applies to singles or married couples with incomes over $68000 a year.

[JustABozoOnThisBus]

17. Yes, scrap the cap.

If the rich get a little bit more at retirement, so be it. Right now, the 100k earners will get more SS than the 50k earners. Not twice as much, because the system is progressive, but some more.

[ljm2002]

18. When I used to make >$120,000...

...I was all for scrapping the cap. I still am.

[tularetom]

20. I retired at the end of 2000 and I was always just a couple of months over the cap

I remember at the time being pissed off that every time I got a raise, they raised the cap and I stayed more or less static vis a vis the cap.

I'm OK, but I have at least one relative who is struggling to make it on her SS allowance, so now I feel bad that I bitched about the SS cap. I would support its elimination altogether.

[msongs]

21. and quit cheating people who paid in and get only 10% of what they should get nt

[SickOfTheOnePct]

23. What? n/t

[taught_me_patience]

24. No

Unless the payouts are raised. Does anybody like to pay more taxes for absolutely no benefit?

[TexasBushwhacker]

39. Actually, wealthy people already get plenty of benefits

that people who make less do not.

People who are wealthy can write off up to $1.1Milluon in interest on mortgages for first AND second homes. That's $1.1Milion total. At the top tax bracket, that's worth up to $396K - Every year.

The wealthy have enough discretionary income to invest, and long term capital gains is taxed at 23.8% (20% plus a 3.8% Medicare surtax), plus that income is not subject to Social Security tax. Again, that tax break is every year.

Of course, the higher your income is, the more you can save for retirement. If you're a highly paid employee, you can save up to $18K per year, pretax, in a a 401K. Over 50? An extra $6K. Self employed? Great! You can contribute up to 25% of your net self-employment income up to a maximum of $53K - PER YEAR.

[hill2016]

50. that's like saying

the more the wealthy donate to charity the more benefit they get

[TexasBushwhacker]

58. Actually, if they donate stock or art, they get a deduction

for they value at the time of the transfer, not the amount they paid for it.

I understand that the wealthy have a heavy tax burden. But it's disengenuous to say they don't get benefits that ONLY the wealthy get.

The social security system is Old Age, Survivors and Disabled Insurance. A civil society in the wealthiest country in the world doesn't allow its senior citizens, widows and orphans and disabled persons to live on the street and starve. We have INSURANCE for that. Just like auto insurance, you receive a benefit by simply knowing that if you die pennyless, your widow and/or children will still be taken care of. If you become disabled, even if you don't have other insurance, you will at least get SSI or SSDI and if you love long enough, you will receive benefits in your old age.

Think about car and homeowner's insurance. You hope you never have to make a claim, right? By the fact that you have insurance, you have the peace of mind of knowing that if an accident or a fire happens, it won't be a financial catastrophe as well. You hope you will never have to have a claim and I hope you don't bitch about your neighbor receiving a big check if they total their car.

I have no problem with paying high earners more to a point. But giving more money to those who have plenty already makes as much sense as subsidizing oil companies when they're making record profits. When resources are limited, we should spend more on those who have less first.

[pipoman]

41. There is benefit

We are going to be in a crisis situation with more people retired than working...proactively assessing those who can easiest absorb it

[jberryhill]

52. Absolutely no benefit?

How about not seeing your elderly fellow citizens go hungry or lose their homes?

Isn't that a benefit?

How about not forcing people who do physically demanding labor to keep doing it until they are 70?

Is that a benefit?

[randys1]

69. Knew there was a reason I liked you

[FSogol]

74. +1 n/t

[VMA131Marine]

30. Yes, get rid of the cap!

[abelenkpe]

32. Yes

[Abouttime]

34. Of course scrap it

And collect ss on ALL income, capital gains included.
I've always thought the fairest tax on capital gains would be 50%, capital gains would not be possible without government infrastructure and regulation so the tax of half is fair. I would be willing to settle for ss tax on top of the capital gains rate.

[Travis_0004]

35. The majority of capital gains is inflation

Its one of the reasons the capital gains tax is lower. If you want a 50% tax on long term capital gains, one should be allowed to write off inflation.

[Zynx]

48. Functionally, no that isn't correct. Asset price increases have far outstripped inflation.

[JCMach1]

37. Scrap the taxation level and cap the benefit level at the $118K level...

[REP]

40. Fuck yes

Everyone I know in that income group wants to dump the cap.

[whatthehey]

42. Sure

The only potential argument is that a cap on payments equates to a cap on contributions to prevent it being a pure welfare program, but the payback is already steeply progressive so simply extending that function should suffice.

[drray23]

43. absolutely i do

That is all it would take to make social security solvent forever. It is crucial to so many elderly americans who otherwise would be homeless. I do not mind paying SS over the cap.

[rufus dog]

46. Yes, but.....

I think they should take a donut hole approach, have a gap from 118k to 250k, then all income over 250k.

SS is saved while the talking point that it hits small business owners goes away until income is in excess of 250k.

[Frustratedlady]

47. Yes.

[thelordofhell]

51. The cap should be at the salary of the President........

And anything more than the salary of the President should be taxed at 50%...........

[zipplewrath]

53. I'd probably say "raise" the cap.

I'm not sure how much of a persons income needs to be exposed to this, but 118K is too low. Maybe even a diminishing exposure as the cap is "exceeded".

[kimbutgar]

55. There were two years in the 90's I made over the cap.

My pay checks were a lot bigger every two weeks. I went to HR to say there was a problem with my paycheck and I learned about the cap. I asked them to take out the FICA and they told me they couldn't. I paid a lot of taxes that year.

[BlueCheese]

56. I support raising the cap, but...

... we have to be careful to make sure not to turn Social Security into a wealth redistribution program. Not that that is bad, necessarily, but there are other government programs that can do that. The reason Social Security is one of the most popular government programs in history is that it's perceived to be from everybody, for everybody.

[Blanks]

57. The employer contribution should increase...

The problem with the cap is that it creates an incentive to pay people who are already making more than the cap more, because it doesn't increase the employers tax burden.

Raise the employers contribution above the cap, and then you don't have people feeling like they deserve more because they're paying in more, but there is a disincentive for employers to pay the higher earners more.

[Gormy Cuss]

71. I agree that the change should come from the employer's side of the equation.

The cap is based on max benefits and supports the notion that Social Security is self-funded. I would argue however that the employer contribution should be raised from dollar one because this could benefit low wage workers in the long run by allowing for higher payouts.

[n2doc]

61. Yes. SS is a critically important program.

Wish there was a cap on military and spy spending, though.

[Adrahil]

62. Yes. nt

[GummyBearz]

63. Do you support forcing teachers to pay into SS?

Because there are roughly 15 states (including California) where teachers pay $0 into SS. Of course the point is they don't get to collect SS in the end. Unless they decide to work for a year at a job that does pay into SS... then they really get the best part of the system.

[randys1]

70. Why did you answer a question with a question? If you dont support lifting the cap

just say so.

[GummyBearz]

72. I don't care if the cap is lifted. It wont affect me.

I wanted your opinion on my question... care to answer it now that I answered yours?

[randys1]

77. Teachers are overworked and underpaid. If they dont collect soc sec why would

they pay in.

makes no sense

[GummyBearz]

82. Yes that is how generally it would go

But there is an apparent loop hole where a teacher just works a job for some small amount of time and do pay some small amount into SS, then they are eligible for the minimum paycheck for the rest of their life.

My wife for example worked several retail jobs while attending college. She is now a teacher and doesn't pay anything to SS, but she says the few thousand bucks she contributed from those retail jobs make her eligible to collect SS when she is old enough. If this is all true, she would easily take out more in her first year than she put in her whole life.

[randys1]

86. Fantastic news then, teachers need all the pension money they can get.

[librechik]

64. OBVIOUSLY!!!

and done numerous times over the years without a peep from Republicans--until now.

[hedgehog]

67. Yes! Sometimes the bonus takes us over the imit, but I'd rather see Social Security sound and

see the payments increase to something approaching people's actual costs!

[DefenseLawyer]

68. Yes. n/t

[haele]

73. If I did, hell yes. I know too many people who depend on SSI and SSDI

Not only that, if a financially cautious basketball superstar was cheated out of over $40 million of his set-aside for retirement by his financial advisor who had a good reputation (until the thief didn't), how can I be sure that most of the money I might have set aside for retirement will be there when I need it.

Personally, I don't have to worry about hitting the cap. I'm making half that now, and pushing 60 as it is, and doubt that I'll be able to remain employed for more than another 5 - 8 years as it is because it's all about the bottom line when it comes to labor, and I'll be getting "more expensive" the longer I'm working.
I'll be using what I have in my 401K to pay off my student loan as soon as I can draw from it, and SSI and my military Pension to live on until I die.

There's also the distinct possibility that there will be yet another burst-bubble recession right when I'm at the point I need to retire that can wipe out half or more that I have built up. So if I were at the point that I was into 6 figures of annual income, I'd be considering the difference in the quality of life longevity between a sudden 25 - 30% loss I had managed to accrue just under a million in retirement (possible for an engineer, doctor, or other high-income profession) and the same loss if I had just under $10 million (board member or executive level profession) is significant.

The length of time one can "retire comfortably" at age 65 - 70 on $750K vs. $7.5M taking into account increasing medical, mobility support, and aging-specific costs and still maintain a estate for one's children drops significantly.

It's happened to two different 70+ year old professionals who had been making 6 figures each who had set up to retire over 2008/2010 period with their 401Ks and their "secure" IRAs.

The man who retired just as the crash slow-rolled into critical mass lost almost half his retirement in the crash (over $800K in retirement became around $400K) and couldn't find any work because no one was going to hire someone who had just turned 70 when there were millions of other people competing for available jobs; the other put off retirement (she turned 70 in 2010) even though she eventually lost her job because of the crash in a futile attempt to make up a portion what she lost - which she never did. Since they're both fairly healthy, they both now depend on SSI and Medicare for the majority of their current retirement income so that there's something left the very possible event they live for another 20/30 years and will need it due to geriatric needs.

They're both living at a significantly lower cost of living level than they had while they were working and barely touch what they had to start withdrawing, because even now, they never know when they may need to replace a major appliance, modify or repair their home, find alternative modes of transportation to driving, or spend money on expensive medical problems.

If they didn't keep a significant amount of what was left of their retirement sitting in safe investments, they'd both be out of money before they were 80.

If my 76 year old mom didn't continue to live as frugally as she could on her pension and survivor's benefits, putting most interest back into the investments and not touching the principle on her retirement accounts, if she had to live solely on retirement interest and principle, she would run through the $400K+ she and dad had saved by the time she was 80.

Trash the cap. No matter how well you think you're planning, you never know if you're going to need Social Security when the time comes that someone - you or your survivors - won't have a regular income to survive on.

Haele

[Major Nikon]

78. Depends on how it's implemented

If you scrap the cap on maximum income you also scrap the cap on maximum benefits, which means someone could potentially draw millions in SS benefits. So you might have more coming in, but you'll also have more going out which negates most of the benefits of eliminating the cap in the first place. The benefit formula would also need to be reworked under such a scheme, otherwise there'd be little point in doing it.

[randys1]

80. Of course not, either we want gramma eating dog food or we dont. Make up your mind.

[Major Nikon]

84. I'm not much for dichotomous thinking

YMMV.

[Ivan Kaputski]

79. What percentage of DU members make over $118,500?

[randys1]

81. I dont know, I also dont know what the actual numbers are on this, if you did scrap

the cap, how much of a difference it would make.

[magical thyme]

87. I made over the cap limit for about 5 years back in the mid-late 90s. Yes. Would vote to scrap it

in a heartbeat. Would have then; would now.

I remember the shock of my paycheck suddenly jumping 8 months or so into each year. And thinking I don't need to take home this much more (it all went to savings); would much rather pay into SS to ensure it's there for me if all else fails.

[DFW]

89. I now live in Germany, but if I lived in the USA still, I would support it

And I do make over that.

[phylny]

91. Yes.

It only makes sense to do it.