A Simple Fact: Most Americans Pay SS Tax on 100% Of Their Income; A Millionaire Pays On 10%

[stopbush]

It's a simple fact - you pay Social Security taxes on all of the income you earn up to $106,800. That's when you hit the cap on income that is taxed for SS. Everything you make above $106,800 is not taxed for SS.

So, if you make $105,000 per year, you pay SS taxes on 100% of your income. Same thing if you make $80,000 a year, or $50,000 or $20,000 - you pay SS tax on 100% of your income.

But if you make a million dollars a year, you pay SS taxes on only the first $106,800, which means that you pay SS taxes on only 10% of your income. If you make $2-million a year, you pay SS taxes on 5% of your income. If you make $4-million a year, you pay SS taxes on 2.5% of your income.

Meanwhile, 90%+ of Americans are paying that tax on 100% of their income.

Time to lift or eliminate altogether the income cap on SS taxes. Time for the rich to pay their fair share.

[WinkyDink]

1. No; no "eliminate the cap." TAX FROM THE TOP DOWN, AND STOP IT PRIOR TO A CERTAIN AMT.

[stopbush]

4. There is absolutely no chance of that happening in our lifetimes.

Eliminating or raising the cap is doable and should be pushed...and pushed right now.

[WinkyDink]

7. I dream big. :-)

[stray cat]

2. but the extra income doesn't get them any more in SS over the cap

[stopbush]

9. So what?

There are many people who pay into SS for their entire lives and never draw a cent because they die before they reach retirement age. Their paying into SS didn't get them anything.

[Obamanaut]

36. But their dependents will get some benefits. Spouse if the decedant's amount

is the greater amount, kids, etc.

People who buy a life insurance policy don't get any benefit, but the survivors do.

[sasha031]

3. the Democrats should campaign loud and clear about this.

it hasn't been adjusted since Reagan.
Obama campaigned on this fact, wish I could find video for it.

[LiberalFighter]

21. Hasn't been changed since Reagan? By that you mean what?

The cap in 1981 was 29,700. It has changed every year that the Consumer Price Index has changed.

Apparently the cap is based on the 1977 base of $79,200.

Current and Past Contribution and Benefit Bases 1937-2011

[sasha031]

24. before I make statements I should check facts

:o
thank you for the info.

[LiberalFighter]

34. Your more than welcome.

At least you took time to check it out after being provided a source.

Just consider how many don't understand even the fact that there is a cap on SS taxes.

Another pet peeve of mine is that the vast majority believe the marginal tax rate for income tax purposes is what they pay on all of their income (I hope they at least believe it is just on taxable at least). When in reality their tax is different for each level of income.

[gateley]

5. How can we explain to and educate the masses what the real

results have been and will continue to be if this is allowed to continue?

I wish Obama could explain things as clearly and succinctly as Rachel. I always feel he's trying to get too much info into too little time, so we often miss the point. There are a lot of politicians who do that, come to think of it.

[dkofos]

6. Don't let the teabaggers find out.

[Travis_0004]

8. The reason is, social security was a compromise

It is progressive, in the fact that the lower income brackets get a higher percent of what they paid in when they retire. If you are putting in the full 106,800.

The idea behind social secuirty is YOU pay for YOUR retirement (with a bit of a progressive twist), so the reason its capped at 106,800, is you don't receive any more benefits after that amount. Like it or not, its not changing anytime soon.

[stopbush]

12. I understand the idea and the compromise, but there are plenty of people

who pay into SS and then die before they draw a cent. Their heirs don't get their payments refunded back to them.

Others pay in their entire lives and then die after a few years on SS, leaving plenty of "their" money in the system.

One way or the other, a case could be made that "I didn't receive my full benefit."

One compromise would be to raise the cap to $250,000 and allow a tax deduction as a progressive percentage of anything paid over the $106,800 cap. As long as the tax deduction was less than the amount paid into SS it would work.

[eallen]

38. It's not intended to be savings, but insurance, against outliving your savings.

Think of it more like an annuity than like savings. Your heirs won't receive any benefit from it, except perhaps in not being crippled having to support you. And you won't benefit if you don't live long enough. But you also can't lose it because of bad investment decisions, poor market performance, incompetent mistakes made after you go senile, judgment against you, or for any other reason.

:hippie:

[Warren Stupidity]

10. SS generally runs a surplus and is not part of the budget deficit problem

On the other hand, raising fica taxes to hide the deficit is bullshit. In addition, fica taxes are capped because ss benefits are capped.

The way to have the rich pay their fair share is to raise income taxes on higher incomes, to add more brackets with higher rates, not to increase the regressive fica tax.

[stopbush]

14. But that won't be the case forever.

An adjustment to the system now would help to fully fund SS in the out years, even if the Feds continue to use the SS surplus each year to pay for other programs. At some point, the added revenues would fund increased SS payments, because by law, the SS fund must first fund all benefits before any surplus can accrue to be diverted to other programs (and leaving that huge chit in the SS trust fund).

[Warren Stupidity]

16. It is the case for the next 29 years under the most pessimistic forecast.

So lumping SS into the 'budget problem', the current deficit problem, not a future one 30 years out, is an attempt to once again use the fica surplus to hide the deficit and subsidize income tax cuts for the very well off.

Until the income tax system is adjusted to actually sustain government without using the fica surplus, we are engaged in a dishonest debate.

[Dragonfli]

28. For some reason very few here appear to know that SS is not part of the budget

Or the deficit, even the NYT interactive "you fix the budget" app includes it as if it is and no one in the thread about it appears to know that it does not belong there.

Could you please write an OP to teach all the uneducated here this simple fact? I understand why the robber barons would like to pretend otherwise they want to steal our funds, but what is the excuse to not know this on this board?

I would write the OP myself, but I do not know enough details to survive the attack on the truth that would be sure to follow.

In any event, thank you very much for mentioning the truth in this thread.
:patriot:

[Warren Stupidity]

31. I've tried. Others here have too.

It is pretty hopeless. The barrage of disinformation has worked well. I end up defending the 'cap' and being accused of harboring rich people in my mansion.

We are being sold another increase in the regressive FICA, along with benefit cuts in the form of increased taxes on pensions and increased retirement age, so that the truly rich can keep their 35% marginal tax rate on income, and we are buying it.

[midnight]

11. Those writing the rules don't believe in equality.....

[mopinko]

13. simple answers to complex problems are

generally inadequate. turning ss into a welfare program instead of an insurance program will only make matters worse.

[stopbush]

15. Well, it currently opearates as a slush fund to pay for all kinds of Fed spending

that has nothing to do with funding SS retirement payments.

[mopinko]

17. increasing the amount of revenue wont solve that. nt

[Warren Stupidity]

23. And increasing the FICA surplus will continue that practice.

Those extra funds will be used to subsidize tax cuts, as they have been for the last 30 years of republican budgetary voodoo.

[dkf]

18. A millionaire has a million dollars in assets, not necessarily a million in wages every year.

[stopbush]

26. I was talking about yearly wages.

You know that, otherwise you would have mentioned the assets of non-millionaires as well.

[dkf]

33. Irony is in order to retire you need to be a millionaire, preferably a couple million at minimum.

A million dollar a year salary is quite a ways beyond being a millionaire.

$500,000 a year is the 99th percentile. That would make people earning above a million dollars a year probably a fraction of a percent.

[NNN0LHI]

19. Paid my FICA off early twice in my working career

Two years in a row. Think the cap was around a hundred thousand dollars then? Had to work 7 days a week, all the holidays and 12 hours a day to do it. Think I even sold some of my vacation back for the cash and then worked that too? Was getting ready for retirement so I was trying to bulk up the savings account.

Don

[stopbush]

27. I've paid off my FICA a number of years in my career.

The added money I got in my check for Nov and Dec was negligible. I wouldn't have felt ill-abused if all of my income was taxed.

BTW - in my best-ever year, I made just over $150,000. I would have had no problem paying FICA on all of that income.

[pansypoo53219]

20. they could lower the FICA rate on those below if we just raised the limit of the

FICA tax up to 5 mil.

[MineralMan]

22. And nobody knows that better than the self-employed.

While most others just see it as another payroll deduction, self-employed people know about every penny they pay toward Social Security. Even when you have a bad year, you pay 15+% on the bottom line of your Schedule C. You may not owe a penny in income tax, but you're going to pay that self-employment tax, bad year or not.

[spin]

25. When the rich and powerful and the big corporations run the country ...

you have zero chance of getting a bill such as this to pass.

Remember most of our representatives in Congress and are bought and paid for and serve as obedient lackeys willing to do the whim of their wealth owners.

The best you can hope for is that Congress will consider the idea, just like they are considering doing away with the Bush tax cuts on the wealthy.

[bluedoggie]

29. that is

that is a RETHUGICAN Trick that Obama will SOON FIX!! once he has sports from congress to fix it!
U CAN TAKE THAT TO THE BANK!

[laughingliberal]

30. Proper framing of current situation: It punishes work.

This is the counter to the Repuke spin about 'punishing success' or 'punishing wealth.'

[Pamelita]

32. No wonder we are screwed

It is common sense that millionaires should pay MORE taxes than we do, proportionally.

[Obamanaut]

35. Isn't it also true that if one of those millionaires begins to draw SS at

age 65, there is a maximum amount they will be paid? If they pay on the other 90% of their income, in all fairness the maximum amount they would be paid in SS benefits would increase. That would be a fair, don't you agree?

[Ilsa]

37. Lift the cap, lower the rate. nt

[KansasVoter]

39. But someone paying on more than 106,000 should get paid back at a higher rate.