Should We Raise the Social Security Tax Limit?
In 2023, you only pay the Social Security portion of the FICA tax on the first $160,200. Earnings over that amount are NOT subject to this tax. And it’s this concept that has some people upset.
There are lots of folks out there who think it’s not fair that some people have to pay tax on every dime they earn, but high-income earners stop paying these taxes once they pass the limit. When you couple this with the possibility of benefit cuts in 2034, because the social security trust fund is going to be drained, it seems like an easy fix. Just raise or eliminate the Social Security tax limit.
See the history on taxable cap here
CRS Analysis of Increasing the cap
Reuters article making the case for raising the cap
The Evolution of Social Security’s Taxable Maximum
Population Profile: Taxable Maximum Earners
Political History of the SS Act
SSA page says, “The average percentage of covered earnings subject to the tax max throughout Social Security’s history is 83 percent” Biden’s “donut hole” approach would extend SS by 5 years
The CBO report references 284K in 2019
See chart on the evolution of this cap here
Annual number on % of earnings covered
Number of workers and amount of covered earnings
– Explained by Devin Carroll, RSSA
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