Under the current Social Security system, payroll taxes are paid only on the first $90,000 in wages. Why not..

Question

eliminate the ceiling by making everyone pay the same percentage and make Social Security solvent indefinitely. This upsets me greatly - I feel that everyone should pay the same percentage - the rich are once again allowed to skate because of the ceiling. Isn't this a common sense approach to fixing SS, or am I missing something??

Ronald EB

I understand your point, but the rich get massive tax breaks to protect their earnings - especially during this Bush administration. In this instance, perhaps the tax breaks should be eliminated and the money received should be diverted into the SS system.

Answer 1

That's certainly one of the options, and one that I'd guess will happen at some point, although it would not fix ss although it would certainly help. One issue is that benefits are higher for higher payments in, and now they're capped because of the contribution limit. Either that would have to be changed, making it more of a welfare system, or the rich would have to get much higher benefit payments because of their higher contributions.

Answer 2

One reason I can think of is it really isn't fair as long as there is a cap on the SS benefits you can receive. You have to consider that the tax rate for social security is around 12% I believe (you pay that all if you are self-employed, about half if you work for someone). Now if you happen to make $60,000 a year, you end up paying in about $7200 a year. Now if you made $200,000 a year you would have to pay 24,000 a year in SS. That's almost 17,000 more each year. When you retire you would receive around 1,500 a month if you had made around 60,000 a year. If you had made 200,000, 500,000, or even a million a year you only get the max which is 2,170 a month. Now is it fair for someone who had to pay in 17,000 more each year to only receive 8,000 more a year in benefits. I don't think so. And what of the people who have made millions. They would have to pay in a huge sum of money each year and only receive a small fraction of that back in benefits.

Now, if they removed the cap, it would be more fair, but we would still be faced with the same situations we are faced with today. The sad part is that baby boomers are about to retire, and the work force isn't as strong as it used to be. That's one of the main reasons Social Security is running out. That's just my view on it. Take care :-).

Answer 3

when people receive retirement benefits it is based on their average income for the highest 35 yrs. This would mean that those who have very high income would receive a very big check from SSA. By placing a limit, they are able to keep the average amount of money lower also. This is because their retirement is base on only the tax amount. so, it would not help the problem if they tax the full amount,

Answer 4

Social Security benefits are based on a formula that is applied to a persons AIME (Average Indexed Monthly Earnings).
90% of the first $680 of AIME
32% of the next $3420 of AIME
15% of all the rest of AIME
The system is taking from the high earners to give to the lower wage earners. How much do you propose to take from the high paid workers to give to the lower paid workers?

Answer 5

I think youre missing the idea that yes, you stop paying SS after 90K, but that's all youre getting in the end. They wont get obscenely huge SS checks, they will be modest like everyone else's

Answer 6

For that matter, why is it that people who pay rent can not write it off on a schedule A. While I appreciate the deduction for my mortgage interest, isn't it simply another way to pad the wealthiest wallets