Removing the Social Security Tax Cap Would Benefit Most Workers

[Jefferson23]

CEPR's Nicole Woo says a phase-out of the tax cap could eliminate up to 80% of the projected shortfall in social security funding


January 20, 2015



Bio: Nicole Woo is the Director of Domestic Policy at the Center for Economic and Policy Research. She covers a broad range of U.S. economic policy areas including labor markets, financial reform, federal budgets, and social insurance.

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Transcript

JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.

It's a new year, and if you're one of those early birds, you've started on your taxes. But did you know that if you earn more than $118,500 year, the government can't tax those earnings under the Social Security tax, which is also known as the payroll tax cap? That means that someone who makes twice the cap this year pays the tax on only half of his or her wages. It's a big issue, considering the future of Social Security is continuously being debated in Washington.

Our guest today is Nicole Woo. She is the director of domestic policy at the Center for Economic and Policy Research in Washington, D.C. Her new paper is titled Who Would Pay More If the Social Security Payroll Tax Cap Were Raised Were Scrapped?

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=13017

[Indydem]

1. You can't do this without killing SS.

Social Security was sold as an insurance program. It is not welfare or redistribution.

If you raise the cap on pay-in, you must raise the cap on benefits. You can't tax someone on 1 million in income and then give them benefits based on $110,000.

If you make it welfare, it will be much easier to dismantle and destroy this essential and important program.

[msongs]

2. ss routinely cheats people out of money we have earned. nothing new bout that nt

[FBaggins]

3. Yes and no

There's no chance of removing the cap entirely - and for just the reasons that you mentioned...

... but that doesn't mean that the cap can't be raised a reasonable amount. The program is already quite progressive (that worker at the current cap doesn't get anywhere near the benefit payount per dollar paid in that those closer to the minimum wage get)... and has become moreso over the years.

Having said that... none of the proposals that Woo spins as the more moderate options (raising the cap to $250k or $400k) have any shot at all (even without a red congress). But making such proposals as a starting point could leave room for a less-obvious progressive move (say... to $150k over a few years).

[bvar22]

4. This guy thought Raising-the-Cap was a good idea too!

...never mentioned again after the election.

[Jefferson23]

5. Yes, because it is a very good idea.

Thanks