Not everyone is aware of this, but as of this year anyone earning over $97.500 will not be subject to the 12.4% social security tax above that amount (6.2% if not self employed). That means even if you make 1 million this year, you could pay as little as $6045 in taxes on earned income. And most millionares have unearned income (investments) that are not even touched by this tax. If you are "middle class" and earn 45k as a self emloyed "whatever" you would have to pay $5,580. What do you think about reversing the cap. The first 10k is not subject to S.S. tax $620. Then raise the upper cap to $107.500. A person making over 100 grand would pay an extra $620 in taxes. Who needs the extra money more? The person making 10,000 a year or 100 grand?
2007-01-18 06:12:13 · 6 answers · asked by Kari 4 in Business & Finance ➔ Taxes ➔ United States
Either the cap should be raised to 120k (with a slightly increased benefit that doesn't directly correspond to the increase) or the amount that the employee is subject to should be slightly raised. But something has to be done to save the SS. I personally would like to see the assets being invested in the market (but not by the individuals...but by managers). People say that doing so would be socialism...I say that we are doing that now with the PBGC!
As for eliminating the tax for those making less than 10k...Not a matter of who needs it more, but equity. The cap on the tax is there because there is a cap on the benefit. Those that earn 10k still receive a benefit from the IRS. Increasing the benefit (even through a reduction in tax) is not fair and doesn't encourage economic growth.
2007-01-18 06:58:49 · answer #1 · answered by digdowndeepnseattle 6 · 1⤊ 0⤋
Bad idea. If you reverse the cap, then you are basically giving money away. Think of all of the unemployed and people earning below poverty level that would get social security that they never paid for. You would basically be creating more of a welfare state than we have now where the poor is living off of the middle class.
Like Wayne said, the benefits you receive are capped at a certain amount based on your age on retirement, and the money you made during your working years. If someone is going to receive a maximum benefit of $x, and there was no cap in the OASDI taxes they paid in, then they would never "get back" anywhere near what they paid in.
Look at your other employment taxes that are capped....unemployment and disability. These taxes also have an earnings cap as well since there is a corresponding benefits cap. Would you suggest that these caps be removed as well.
2007-01-18 06:32:04 · answer #2 · answered by jseah114 6 · 1⤊ 0⤋
Yes, I think it should be lowered to about $20,000. Anyone earning above that amount could opt to put money in a private account. Adjust the benefits downward to reflect the lower contribution limits. Also the amount of SS tax you pay should be a deduction. Why are you paying income tax on the money withheld for SS tax only to be taxed on up to 85% of it when you retire?
2007-01-18 06:54:38 · answer #3 · answered by daoco 4 · 0⤊ 0⤋
Though the cap should be raised it doesn't make sense when you take in to account that the social security that you get paid when you retire maxes out. It doesn't make a ton of sense to make people pay on absolutely everything when they won't get an increased benefit on the back end.
2007-01-18 06:18:17 · answer #4 · answered by Wayne Z 7 · 1⤊ 0⤋
Remove the cap completely
2016-05-07 23:01:08 · answer #5 · answered by James K 1 · 0⤊ 0⤋
it would want to save social protection from going bankrupt, in step with a GAO (authorities Accounting workplace) study. even as there are in reality some workers (CEO, CFO) in step with corporation that make better than the present minimize (about $100K). There human beings many times make $100M to $600M in step with 3 hundred and sixty 5 days each and each. as a effect, by eliminating the minimize, this can upload $15M to $90M a three hundred and sixty 5 days for one and all to the social protection fund. this can provide the social protection fund a lot money that they could quite arise with the money for to extend reward to the traditional worker even as they retire! the position does this money come from? The shareholders of the corporation. agencies do not funds a puzzling and quickly quantity for payroll even as it includes paying those men. they provide them as a lot money because the shareholders will submit with as this reduces the dividends to them.
2016-11-25 01:41:08 · answer #6 · answered by pfeifer 4 · 0⤊ 0⤋