Op-Ed Contributors - For Social Security, a Birthday Makeover - NYTimes.com.
There were a couple of really interesting tidbits in the six suggestions offered by Social Security experts in the NYT recently.
The first one started off with this:
and went on to provide a statistic that reflects how concentrated wage income is in America today:
That means that the portion of wages above $106,800 represents 16% of total wages! The expert, Monique Morrissey of the Economic Policy Institute, doesn't tell us what percentage of wage-earners are in that particular part of the pool, or how many individuals are involved.
She says that if that cap were slowly raised -- by 2% each year until it went from 84% to 90% of all income, roughly 1/3 of the projected shortfall in SS could be eliminated.
She goes on to say that we could eliminate 70% of the current projected shortfall if we eliminated the cap on the employer side, so that while LeBron James would still pay a mere $6,622, his employer would pay $900,000 in Social Security taxes on his $14.5 million salary. (That, by the way, is the equivalent of what is paid in by 136 workers earning at the current cap level. -- and their 401(k) contributions are exempt.)
I take Morrissey's statement to mean that if we eliminated the cap on both the employer and employee amounts, the shortfall would evaporate.
Another contributor, Congressman Ted Deutch (D-Florida), includes this statement in his recommendation:
So that would suggest that the 16% of wage income which is not subject to SS taxation is coming from 5% of workers (in addition to the portion of their wages which are subject to the SS tax).
That, of course, excludes awesome amounts of what most of us would call wages which hedge fund managers report instead as capital gains.
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