At Work

Just increase the Social Security payroll tax

The current payroll tax on workers and their employers is 6.2% or 12.4% total.

To keep Social Security solvent for the next 75 years the Trustees project the tax must increase 2.78 percentage points to 15.18 percent; 7.59% on workers and employers.

The question then becomes how much more are we willing to pay in taxes to increase Social Security benefits for future beneficiaries.

Some advocates see a simple answer; just raise the taxable wage cap or eliminate it. Doing that does not even keep the Trust solvent for 75 years, let alone provide for higher benefits. In addition, raising the taxable wage cap without a comparable increase in future benefits moves what was to be a self-funded program closer to welfare.

As it is today the benefit calculation already provides a higher benefit to lower income workers. In other words, you get less and less a return on your money the more you earn and the more you pay in taxes.

How much more in taxes do you want to pay for a higher benefit in retirement?

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6 replies »

  1. I do think the yearly limit should be taken off. We KNOW that CEOs are done paying 2/1. This will increase the fund. Since 1965 Congress has been using our SS as in 1965; it paid to start up the Peace Corp. that wasn’t to help a senior here in US. It has been used every year since up to 2016.
    That is 55 years of OUR money and OUR employer’s money for other reasons. It lost all the interest it could have earned being invested; and in those years; interest was at 17% 15% 10%.
    the baby boomers are 1946-1964. We turned 18 that year. you need to be 62 at least to start collected reduced SS. That’s 44 more years to 62. So the very first one would be in 2008.
    We were the biggest generation up to now. So Congress had a lot of money to siphon off for whatever they wanted to spend it on. That’s why they changed the name to Entitlements.
    Now they have a big Unearned Pension fund. I feel part or all of that fund should be converted to SS and they must follow the same rules as us to get it. That would help pay back the IOUs that are in the fund. With term limits; they keep what they go in with, continue using the same funds as they had, continue SS payments, so when they leave, they don’t loose anything. Time served counts as a job. These lifetime jobs have no idea of what’s going on in the real world.
    We may have to raise the FICA tax which is already a tax being done. They are talking about raising the age to retire and collect SS.
    We pay FICA taxes in TRUST to the government as Insurance for our retirement. We TRUST them to use it wisely and invest whatever is left over for the next generation. NO FEDERAL dollars are used for this program. It was a dedicated fund until they saw a pot of gold in 1965.
    The families of those who earned it also collect. Wife, husband and the kids under certain situations. NO ONE else should be getting it but Congress gave it away to many who never earned it directly or by marriage.

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    • You are not correct. The Trust was not used by congress. The trust is invested in Treasury bonds that last year paid the trust about $80 billion in interest. The government is free to use the proceeds from those bonds in any way it needs, just like all other bonds. Today the trust has started to redeem those bonds.

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  2. Those citizens under forty have a more favorable view of social and political policies from the left than those over sixty. Social security will not be put on a sustainable fiscal path until probably 2028 or thereabouts, ie, when it is close to having to slash benefits under the still current system. My guess is that it will tilt to a more welfare program system. Means testing. Soak the rich. The more productive will pay the most and receive the least.

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    • Should be interesting in 2028 or any date after 2025 when the Trump tax cuts expire. When faced with a choice of increasing the social security withholding tax after an almost doubling of income tax withholding, whether or not these modern day socialists will actually be happy for what they wish for which is a nanny state taking all your earnings.

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  3. For the past eight years, ever dollar I paid and every dollar my employer paid did not raise my benefit one cent. Nor will the taxes I pay for the rest of my working life. How can that be? My AIME has not changed since I left my corporate position – so, I pay and pay and pay (no I am below the wage base) and I get nothing. The process and formulas already discriminate in favor of low wage workers and those with gaps in their work history. Taxing me more for a benefit I have already more than paid for, twice?

    Promise them anything, give em crap.

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