Previously, we took a look at the first step The Seniors Center suggests for saving Social Security: paying back the Trust Fund. Now, we’ll explore our second proposal: Scrap the Cap.
What is the Income Cap?
Finding ways to increase contributions to Social Security that also don’t disproportionately burden low- and middle-income earners is critical to the program’s long-term health. Currently, there is an income cap that keeps some Americans from having to pay payroll taxes on their full earnings. Right now, that cap is $147,000. This means that any income after $147,000 is not subject to payroll taxes.
However, this disproportionately benefits high-income earners. In the nearly 100 years of the program’s history, the gap between the wealthiest and poorest Americans has grown exponentially. This means that the payroll tax system is not as progressive as it once was. One way to make the system more progressive would be to scrap the cap on payroll taxes. This would mean that everyone, regardless of income, would pay into Social Security on their full earnings.
How Abolishing the Income Cap Could Save Social Security
The Seniors Center believes that this is a critical step in saving Social Security for future generations. It would not only make the system more progressive, but it would also increase the amount of revenue coming into Social Security.
There are billions of dollars of revenue that are not currently being collected because of the income cap. Most Americans already pay into Social Security on their first $147,000 of earnings. Scrapping the cap would mean that high-income earners would also pay into the system on their earnings above $147,000—and some estimates put the amount that could be added to the Trust Fund at $3.5 trillion over 10 years.
The Seniors Center is calling for meaningful change. Our proposed plan to save Social Security will work—we just need to make our voice heard, and for that, we need your help. Sign your name to our petition today, and be sure to follow us on Twitter and Facebook for all of our updates!
