There is one change to Social Security I do adamantly support

[bluestateguy]

Lift the earnings cap upon which the payroll taxes are collected. Right now it stands at about $106,000. This would shore up Social Security forever and is also a matter of fundamental fairness. The bottom line is that rich folks pay a smaller percentage of their income in SS taxes than everybody else. All I ask is that all citizens pay the same percentage.

You could phase in the lifting of the cap by creating a dount hole between those who make between $106,000 and say $1,000,000; for a few years the cap would remain in place but gradually be increased year after year until it was phased out all together. So, in the first year, the cap would be at $106,000, but after $1,000,000 the payroll tax would kick in again. Then the next year the payroll tax would kick in at $800,000, and $500,000 the next year and so on and on until the donut hole was closed.

[closeupready]

1. I support that also. It's a very reasonable demand.

Too bad it's not unreasonable, as Congress seems committed to enacting unreasonable measures in response to just about everything.

[Vincardog]

2. When can we lower the retirement age to 55?

[Cleita]

3. If they did that, they wouldn't need to do anything else.

They need to do it for Medicare and Social Security and both programs would be set for years ahead.

[joeunderdog]

4. They'll probably lower it and offer a kickback.

That's just how they roll.

[mysuzuki2]

5. There is one issue with that idea that I don't believe anyone

has mentioned. SS payments are based on average earnings on which SS taxes are paid over a lifetime. If the tax cap is lifted or eliminated, those with higher incomes will have a higher average earnings and will therefor receive higher SS benefits. I'm not saying it is a bad idea, just that it may not entirely solve the problem by itself. To do so would also require a change in how benefits at the top end are calculated.

[n2doc]

6. Well, we tax SS benefits

So it seems to me some of that would be taken care of, especially if we increased the top income tax rate.

[Jim Lane]

18. That has been mentioned, but it's not a huge obstacle.

The formula for calculating benefits isn't linear. Instead, it has a progressive component. The result is that, if you eliminate the cap and allow benefits to increase using the current formula, the net effect will be to improve the system's finances. That's even aside from the recapture of some of the increased payments through income taxes, as mentioned by n2doc.

There might be some psychological problems if people see a rich retiree drawing a seven-figure annual Social Security benefit. A more modest proposal that's been advanced is to raise the cap somewhat so that about 90% of total wage and salary income is taxed. That's how it was originally set up. The percentage has declined because of increasing income inequality.

[Bluenorthwest]

23. Social Security has a top benefit level that is set.

There are not higher and higher no matter how much you earn, there is a limit. This is the same with many pension plans which include high earners, many have a cap on benefits, and earnings over and above just do not increase your benefit. Currently about 2.360 per month.

[mysuzuki2]

26. No there is not a set maximum benefit rate

there is only an effective maximum based on the formula and the taxable maximum. If the latter rises, so will the effective max benefit. I worked for social security for 30 years before retiring recently. This could be fixed by changing the benefit formula. Te current formula states that 90% of the first $x of average lifetime earnings (x varies year to year) plus 45% of the next $x plus 15% of the remaining average monthly earnings constitutes the full benefit amount. To really affect the health of the system a new bracket of $0 over a certain amount would need to be added. Perhaps this should be done. But merely eliminating the SS taxable max is not enough.

[bvar22]

7. I support this change too.

But you're OP contains an error.

Right Now we are enjoying a "Payroll Tax Holiday" that is supposed to last for One Year.
I am curious to see HOW Obama plans to Raise Taxes (end the tax holiday) during an election year.
I have a deep foreboding now that we have violated that which was previously inviolable.

[xchrom]

12. +1 - it's going to be hard to put it back. Nt

[damntexdem]

8. Lift or eliminate.

That will fix SS. It will also offer some help for Medicare.

[dflprincess]

21. There is no income cap for Medicare.

The income cap only applies to the SS tax.

The Medicare tax is only 1.45% - it may be necessary to raise that.

[quiller4]

9. I, too, favor a lifting of the cap on earnings subject to payroll tax.

I think the cap should be immediately raised to $150,000, then $200,000 and eliminated completely over a 12 year period.

[daa]

10. SCRAP THE CAP!!! eom

[FreeJoe]

11. Good idea

I would make a few other shifts. I would apply FICA taxes to all income, not just earned income. I would adjust the benefits formula so that the relationship between payments into the system and benefits is more progressive. The challenge is getting past people's mentality that SS is like an investment that accumulates over time. It's a transfer system and people should proudly accept it as such.

I have to admit that I would miss my springtime "raise" each year. Still, better to lose that than to have cut benefits for those dependent on it.

[RC]

13. A better idea

Get our living wage jobs back into this country.

It would help get rid of the deficit and help shore up Social Security.

[Cleita]

14. If Social Security has a $2.6 trillion surplus, it seems to

me that it would be years before it needs to be shored up. I agree with you about living wages and bringing our jobs back.

[Life Long Liberal]

15. Would those people then get more money when they retire?

[hugo_from_TN]

16. Yes, benefits are tied to SS wages.

If you raise or eliminate the cap it will increase the benefits.

[Life Long Liberal]

17. Then it makes sense. Sounds 100% fair to me.

[BzaDem]

19. No, it likely wouldn't. Raising the cap would likely be for the purpose of fixing the out-year

shortfall. But if you give the rich proportionate benefits to the tax increase, it does NOTHING to address the shortfall, and you are right back to where you started. So taxes will be raised but the rich won't get higher benefits (which is fine, since they are doing fine).

[hugo_from_TN]

20. Decoupling benefits from contributions kills SS

That is a non-starter for the President or the Dems in congress.

[Bluenorthwest]

25. They are coupled, but also limited

There is a maximum benefit. It is under 3,000 a month right now. If greater contributions are made, all benefits could be adjusted upward, of course. But no one gets more than the maximum as set by law no matter how much they contribute. That is the way it is.

[Sirveri]

27. There is no maximum benefit. There is only a theoretical maximum due to the cap.

Removing the cap would simply return 10% on every dollar above cap as benefits when they hit retirement age. This is why they need to raise it slowly to avoid shocking the system. Even the fiscal commission wanted to increase the cap so that it would capture 90% of income.

[Logical]

22. I agree!

[upi402]

24. FICA cap is a symbol of our betrayal

and the media is silent. Instead, cutting SS is adult discussion... :puke:

[Enthusiast]

28. That would be nice.

Before it's over we will be lucky if social security isn't dissolved entirely. What you advocate is a tax increase. The Tea Party government don't do no tax increases.

[JCMach1]

29. Lift the cap and means testing at the very upper end of incomes

[Keith Bee]

30. K&R