The Social Security Fix - so simple and yet so difficult

[ThomWV]

This is one of those little things that its easy to assume everyone knows, and surprising to find that everyone doesn't know. So here goes

The fix for Social Security's financial problems is simply to lift the cap. "What's the cap?", some of you might ask. The cap is the maximum gross earnings on which Social Security tax is due. Huh?

Some folks don't know it but each year a maximum amount of gross earnings is set and earnings above that amount are not subject to the 6.2% Social Security tax that 'all workers pay'. This year the cap is $106,800, last year it was $102,000.

So a person making $10,000 a year pays in $620. A person making $106,800 pays in $6,622, but a person making $1,000,000 still only pays in $6,622, not the sixty thousand plus that you'd expect.

There is also a match, which is to say that your employer must pay in an amount matching your contribution - so in effect the cap acts as a subsidy to business for its highest paid employees because the companies too are exempted from paying social security tax on gross pay amounts greater than the cap.

So if you want to see solvency in Social Security its easy enough to achieve. Legislate the cap out of existence. You'd think this would be politically possible - after all, the vast majority of workers are under the cap and this would have no effect on them at all - only those who's gross pay is well over one hundred thousand per year.