Social Security is a vital safety net for millions of Americans, providing financial support in retirement and during times of need.
However, a significant loophole in the system disproportionately benefits the wealthy, allowing them to stop contributing to Social Security far earlier than the average American worker.
This discrepancy has led to growing inequality and threatens the program’s stability. It’s time to address this issue by requiring affluent individuals to pay into Social Security all year, just like the rest of us.
Currently, the Social Security tax cap 2023 is set at $160,200, beyond which income is not subject to Social Security taxation.
This means that high earners, such as television host Tucker Carlson and podcaster Joe Rogan, quickly reach this threshold and cease contributing early in the year.
Even more egregiously, many billionaires receive a substantial portion of their income through bonuses and stock options, which are not considered “wage income” and, therefore, are not subject to Social Security taxes.
This income gap has led to a situation where the wealthiest individuals contribute a smaller percentage of their income to Social Security than working-class Americans.
Right-wing politicians and cable news pundits often argue that Social Security is financially unsustainable and propose benefit cuts as a solution. Instead, a more equitable approach would require the wealthiest to pay their fair share.
The Social Security Expansion Act and Social Security 2100: A Sacred Trust are two legislative proposals addressing this issue.
The Social Security Expansion Act would require individuals over $250,000, including investment income, to contribute to Social Security throughout the year.
The additional revenue generated would increase Social Security benefits and strengthen the program. Similarly, Social Security 2100 seeks to lift the contribution cap and use the income to expand benefits. It garnered substantial support from House Democrats in the last Congress.
The idea of requiring the wealthy to pay into Social Security all year long enjoys widespread support among the American public, with 76 percent of all voters and 65 percent of Republican voters favoring this change.
Unfortunately, some Republican politicians remain resistant to this notion. The Republican Study Committee, which includes 156 House Republicans, proposed a budget that slashes Social Security benefits and fails to raise additional revenue from the wealthy.
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Inequality and the Social Security Trust Fund
The growing income inequality in America has led to an alarming situation where a record share of all earnings exceeds the $160,200 cap on Social Security contributions.
In 1983, when the last significant reforms were made to Social Security, the cap covered 90 percent of all wage income, leaving only 10 percent above the threshold.
However, by 2021, the percentage of income above the cap had nearly doubled, not accounting for investment income, which forms a significant part of the wealthiest individuals’ earnings.
The Economic Policy Institute estimates that this rising inequality has cost the Social Security Trust Fund a staggering $1.4 trillion, depriving the program of essential funding. This represents a significant windfall for the wealthy but a massive loss for the millions of Americans who rely on Social Security.
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