About Raising the Social Security Tax Cap

[cthulu2016]

Raising the cap is not about taxing the rich. Since the rich live longer, raising the cap is probably a net benefit to the rich — each dollar you pay into social security is a very good investment if you live to collect.

The cap should, however, be raised. It is good policy to do so. The purpose of raising the cap is cash flow. Not taking in more or paying out less in total money, but changing the calendar of intake and outflow.

Currently, income over $106,800 is not subject to SS withholding. If income up to $400,000 were subject to social security then those people would be paying in more today and would be entitled to some very large SS checks down the road.

The key phrase is, "down the road." With a higher cap, a 40 year old making $400K today would pay in a lot more money today, and be entitled to a lot more money in benefits tomorrow.

SS would have the money today to cover the cost of the baby-boom demographic bulge of retirees. That's the whole point of the idea of raising the cap.

Raising the cap is not magic money. It's just a form of borrowing against the future.

It makes sense in the case of SS because a demographic population bulge of retirees will put a major cash-flow demand on SS that will then later ease somewhat, and raising the cap today would collect more money now when it is needed more, while paying the larger future benefits later, when net demand on SS is lower.

[randome]

1. People already are paying in more than they receive.

http://business.time.com/2012/08/07/social-security-now-takes-more-than-it-gives/

So I say raise the cap and cap the benefits. We ALL benefit -rich and poor- if the safety net is there for everyone.

[HERVEPA]

2. The benefits are already capped

I will get the max and I certainly make less than the $110,000 cap

[tibbiit]

5. I don't think that's true about paying in more

I was looking at my report from the SS dept yesterday. I have paid in $130,000 and my employers have paid on $33,000 over a forty year period. At 66 I will get around 2300.00 per month. That's not a bad deal IMO, my 401s and Ira's have done abysmal. I will no where near come to 2300 per month from those investments with more money going into them over time then my SS money I paid in. Plus in a day and age where you don't wAnt to put all your eggs in one bAsket SS is a defined benefit plan like all retirement used to be before the Reagan failed Econ experiment took place!
Tib

Ps edit. In other words SS is a great program!

[SugarShack]

3. Bill Clinton suggested raising it to 140K and they laughed at him....there should be NO cap

[HiPointDem]

4. The cap is raised nearly every year. More than $2.5 TRILLION has already been borrowed from

workers. It needs to be paid down before we let them borrow more.