Social Security and the Rich

    It's always been a scandal: most people don't know that the rich don't pay their fair share into Social Security. The payroll tax that funds Social Security is capped at $90,000 per year--every bit of income above that level escapes the payroll tax.

    So, today, The Wall Street Journal has an interesting piece (subscription required) that points out that the growing divide between rich and poor is a factor in the eroding tax base available to pay into Social Security. As the articles observes, "Social Security payroll taxes are levied on wages up to a certain cap, currently $90,000 a year, which rises annually with the average wage. In the past 25 years, a growing share of income has been paid to people who earn more than the cap. This increasing concentration of income at the upper strata of society is an important reason why, from 1980 through 2000, taxable payroll fell to 83% of wages of contributing workers from 90%"

    I still maintain that we shouldn't get all in a tizzy about the so-called "crisis" in Social Security--it isn't. We can make fixes in the program over time that will keep it solid and solvent.  One fix is a no-brainer--lift the cap and make the rich pay a fair share towards the program.

Comments

[Tony]

The rich *do* pay their fair share for Social Security. Yes, they are only taxed up to $90k, but they only receive benefits based on how much they pay into the system. A person averaging $200,000/year over their career will get the same benefit as someone averaging $90,000/year over their career. They both pay the same amount into the system.

[ron baker]

Thats true but I will trade my $40,000 a year job for your $200,000 a year position and be glad to continue paying social security on all of it.

[Bob Dew]

Maybe their return is in ratio to what they put in but the money they save from the cap can be invested and earn even more. Rich people also live longer and consequently can collect more of their Social Security benefits than the average worker. Bottom line: Rich people DON'T NEED Social Security benefits.

[Adriel]

I agree, Remove the cap on social security, kick all the wealthy those making over 250,000 for more than 15 years in thier life time completely off social security. Throw this whole idea of social security being a pension plan out the window because it is not. Not currently or in the past. make Social Security a welfare program based on need. Hey, rich people will just have to suck it up for the good of out countries budget. The rich don't need the benefits so they should not recieve them. I have paid taxes since I've been working and I've never collected welfare and you don't see me complaining. I have not needed so I have not reaped the benefits of it even though I have paid into it. Social Security should be the same way!!!

[Don J.]

Taxes for those who earn above $250,000 have been lowered from around 50% to little over 30%, saving them $25,000 to hundreds of thousands of dollars a year. These windfall tax cuts should have included a phasing out of Social Security benefits for those making over $250,000 per year. I think those scarce dollars are more important to those that must survive on Social Security alone or other facets of Social Security based upon need.

[gdf]

The cap is the greatest thing ever. You pay for what you get. I'm a liberal and believe the government can solve a lot of problems, however I don't like leeches who decided to spend all their money and not save during their lifetime(that includes little things like turning off the lights and saving electricity! Deciding not to buy that much furniture and not buying a gas guzzler car). I do not believe the public should ever become dependent on the government. There should ONLY be safety nets, that cause people to have incentives to not be in it.
Social security is NOT A PENSION, that's right social is NOT A PENSION, it was never meant to allow people to retire, it NOT meant to be considered AN INCOME
To help WORKING OLD PEOPLE get by, NOT RETIRED PEOPLE.
People are not supposed to be dependent. NO DEPENDENCY.
THE GOVERNMENT IS NOT SUPPOSED TO NANNY YOU
Truth be told the "rich" are taxed a lot and pay for practically everything. Did you know that MOST of the revenues for government come from the income taxes of the "rich" (250k+, college educated with student loans) and corporate taxes. The rich pay for everything, and they are the minority and therefore weak and will be forced to pay for everything again. What's teh point of trying to become rich, when after you're taxed you're actually poorer even though you worked harder? The poor don't pay taxes, they get money from the government. Well off families have higher standards of living that can be considered necessities for those who aren't deprived, which a lot of people are unfortunately. These include: Living in a good neighborhood with good public schools so they don't have to worry about gangs and crimes and bleh (better location, the more cost. Also property taxes Big payment), Good health care (Yeah, good health care isn't considered a right, who wants to live off of medicaid?), paying off their children's college expenses (Don't wan your children to be burried in debt now), time off to do family activities and exercise and cook(so they don't neglect their children), having enough savings to retire with the same quality of life(retiring is not a right, it's a luxury.)
SOCIAL SECURITY IS NOT A PENSION.

[David Rogers]

Return to pre Regan tax rates , keep the 106 k stop on S.S. And restate it after 250k this would make people invest in building something to save on there taxes 30years of Regan economics has got us nothing all the jobs are gone we build nothing all we have is a few really rich people with a loud voice on Fox news

[J. Seitz]

Yeah, I sure would hate to be rich! Those poor rich people, man I wish I could be poorer so I could get all the benefits!

[David Rogers]

What a stupid comment

[john.y]

OK I agree socal securtie is not a pension. but the key word your missing is SUCRTIE. the wealthy are aiready secure fianancally. so these funds should go to those who are not. why give funding to those who have the most, when it should go to those who have the least. why do the wealthy get a ssi. check. yes they paid into it all their life, but they do not need it. thats like a fat person who has all the food they will ever need,then going to a malnurished persons house and taking the last of their food. GREED that is the reason. if benifits wernt paid to those who dont need it [the wealthy] just think how much could this country could save. congress says these cuts in funding are going to hurt all of us, but where is their pain going to be felt. [NOWHERE], thats the sad truth. what if all congress forfited their salary to the budget, wouldnt that help,they are already rich. i would, because its the rite thing to do. we as the human race have the power to make these changes but dont. mans greed out weighs his compassion and morals. tax big corprations close loop holes in the tax laws, take from the top before you start at the bottom. why in this country do people go hungry why do, animals get abused and neglected ect. if you can help but do not you are the PROBLEM, we should stop thinking so much about me, and think about us. if we all cared about these issues and did somethink to help they wouldnt be issues. you should help, and then thank those you helped for letting you fianally feel good about your self. rember its up to us when,,,we step up!

[john.y]

p.s please excuse my spelling i was in a hurry

[Bonnie C]

All this nonsense about the rich paying for "practically everything." More and more of the nation's wealth goes to fewer and fewer people. At the same time the upper classes have gotten many tax breaks and pay less.
As a PERCENT of total income, the lower and middle classes pay so much more: payroll taxes, real estate taxes, gasoline taxes, sales taxes. Those who do not have enough left over to pay Federal taxes too, are erroneously blamed for the deficit.
The middle class (and therefore their spending and tax paying abilities) are shrinking fast. There are fewer well paying jobs, more jobs shipped overseas and higher productivity for those who are still working here.
Social Security taxes should be paid on all income. It is INSURANCE, NOT an entitlement, NOT welfare.

[Shawn T]

I think that they should lift the cap for Social Security. The most wealthy part of the nation should have the same responsibility that I do. I am required to pay roughly 10% of my wages between Social Security and Medicare, both of which I may or may not ever have an opportunity to reap the rewards. I don't have the option of bowing out of paying on my entire salary, even though I contribute to 401k, private investing and company pension plan (which is being discontinued very soon. If I am required to pay a percentage of every cent, so should the wealthy. I also think that democrats and lower income people need to make concessions on spending. All these social programs need to be cut back. Im not willing to let people die on the streets, and starve, with no helping hand, but people who are living off of govt programs should not have the same lifestyle, or be able to make the same choices as someone who is busting there butt for $15 an hour. Lets get the rich to pay on there entire income, lets make the social programs less comfortable to be on, and lets get our national debt under control.