Reply #7: I saw a study on the progressivity of Social Security if analyzed as a retirement fund. [View All]

[dkf]

I'm not sure you want to make it less attractive for the higher earners, especially after we've defined the middle class up to a million dollars.

Here is the study done in 1999.

http://www.nber.org/chapters/c10923.pdf

According to the National Bureau of Economic Research, low earners earn a 5.19% internal rate of return on their contributions to Social Security, while high earners get just 0.54%. They also measure the effective Social Security tax rate—the tax which represents a pure tax rather than a claim on a future benefit. From that perspective Social Security taxes actually look fairly progressive. On average 67 cents of every Social Security tax dollar is a pure tax, but the pure tax rate is negative for low-income earners and 79 cents for high earners.

http://www.economist.com/blogs/freeexchange/2009/04/are_payroll_taxes_regressive