Reply #26: Lift the Cap

[BKLawyer]

on Social Security taxes if you want to raise revenue. Lifting the cap will affect those who make over 106,800. So, not hitting the poor. There are no loopholes - cannot be avoided. The FICA taxes are horribly regressive. A person's social security tax hit is maxed out at $4485.60 for anyone over $106,800. Thus, a person making a $100,000 salary will pay 4.2% of their income in FICA tax, while a person with a $500,000 salary will pay only 0.89% of their salary in FICA tax. A person making a $1,000,000 in salary pays only 0.45% in FICA tax.

I know it's been mentioned here, but not to great fanfare, but social security really needs to be means tested. We cannot have well off senior citizens collecting social security. My friend relayed a story to me several years ago about a 70 year old designer at Ford who was still at his job making his $200,000 salary, while collecting his investment income of another $200,000 per year. No reason to pay out max benefits to this guy who insisted on collecting his social security. What justification can there be? The wage earners of today are paying for this guy. A guy making $400,000 at age 70 doesn't need social security. Even then, if he quit his job, rolling in $200,000 per year should render him ineligible.

JMHO.