If Congress did nothing but lift the cap entirely and therefore subjected all wages to the tax, Social Security would be financially balanced for 75 years, though the system would again face trouble after that, according to one economic analysis.
I do not have much of a problem with raising the ceiling on the amount of income that is subject to the payroll tax. Keep in mind, this proposal will not raise the rates, but will still vastly increase government revenues.
The only problem I have is that half of that tax is provided by businesses. So, this is sort of a stealth tax on businesses. And, as anyone who knows anything about economics can tell you, raising taxes on business ultimately leads to those businesses that are affected raising their prices accordingly.
So, this proposal is somewhat inflationary. (Of course, so is the federal budget deficit...)
But, if this is what it takes to get Dems and wavering Republicans to pass serious and needed Social Security reforms, then so be it.
IMO, of course...
Article comments
1 - kuros
read my lips?
2 - Dave Nalle
Seems like a reasonable solution to me, so long as it's coupled with a healthy dose of privatization. If I have to pay more I want to know that the money is being used wisely not just frittered away as it is under the existing system.
Dave
3 - Maurice
This is an excellant solution. I have always wondered why there was a cap in the firest place. There is no corresponding cap for income tax.
4 - bhw
If you remove the cap entirely, the amount that the higher earners put in would FAR exceed how much they'll get out because there's a cap on how much gets paid out, too. There has to be. So I think the tax cap is an attempt to minimize that pay in/pay out inequity.
5 - Maurice
bhw
your analysis might explain the original intent. But if that is the case, I would contend it is flawed thinking. I don't think anybody really expects to get 'their' money back. Again going to the income tax - higher earners pay the lions share of the tax and expect the least amount of benefit.
6 - bhw
I agree, Maurice, but those higher earners don't want to be doing that, and they won't want to pay additional $$ into SS while not getting any increased benefit, which is the best case scenario. The worst case is that they cap would be removed AND their benefits would be cut.
7 - Temple Stark
There's a principal to the thing, I guess, but I've always wondered about rich people, millionares who continue to accept their Social Security as they age.
They don't have to take it. I know. i know, I'm not saying they don't have the right.
It brings to mind something I saw - probably here - rebates set up to allow people to pay the price they can afford through Office Depot and so forth. People who can afford it won't bother. People who can't often end up wasting more time and money tryig to collect.
8 - Maurice
TS-
were you cleaning out the bong when you made that post? What a free flowing stream of conciousness!
My best guess is you think rich people (people that make more money than you) should give their money to poor people (people that make less than you) so the world can be a better place. I'm probably way off.
9 - lr johnson
why is there a cap on the income on which the social security tax must be paid?what is the rational for this cap?
10 - lr johnson
one estimate by a bush kiss a-- states that aprivate fund would grow at a 7%rate.where would such a number come from?
11 - lr johnson
if bush and the gop believe private funds invested in stocks will grow larger than the present social security trust fund investments.why doesn't bush and company push for a change to the fund being invested in stocks?
12 - lr johnson
since private funds taken from a persons social security payroll tax will not in any way fix the concern of the fund running out of money in 42 years and will cost the fund $1+trillion,what could bush possibly get out of pushing this scheme except a bush pay off to wall street brokers who supplies a big chunk of his campaign money?
13 - RJ
Donald Luskin offers a different assessment here
14 - RJ
Sigh...
Lemme try again...