True fact about Social Security

[Kurt_and_Hunter]

A substantial reason that SS taxes have fallen somewhat short of the level of surplus anticipated is that:

* SS tax is not collected on income over $106K
* Wealth and income have become increasingly unequal over time

Increasing wage inequality is a specific and substantial cause of the shortfall.

The formulas were designed to capture taxes on something like 90% of the total of all wages. They made assumptions about the distribution of wage income.

Increasing inequality has pushed a disproportionate percentage of SS taxable income over the cap. More and more income is concentrated in the upper (untaxed) stratum.

So we collect taxes on only something like 87% of the total of all wages. (90% and 87% are not the precise numbers, but close enough to accurately convey the idea.)

This is not some wacky left-wing theory.

The SS trustees reports acknowledge the effect as basic and uncontroversial economic fact accounting for much of the reduced current surplus.

[DURHAM D]

1. I assume that the cap is adjusted by a fixed percent each year.

I assume that the percentage increase has been in place for a long time.

Do you know if the percentage increase can be changed up?

Do you know who makes this determination?

I am not asking to be argumentative. I just don't know the answer.

[PBS Poll-435]

3. It is indexed

2009 FICA Tax Limit -$106,800

2010 FICA Tax Limit – $106,800

Prior Years:

2005 – $90,000

2006 – $94,200

2007 – $97,500

2008 – $102,000

[unblock]

4. therein lies the problem. it's indexed to inflation, not to income distribution

if it were indexed to the 90th percentile of payroll income, then presumably we would be more in line.

[Kurt_and_Hunter]

6. Correct. Here's a chart.

doing what you suggest covers a chunk of the shortfall

[nashville_brook]

2. k and r

[Little Star]

5. k&r