Income inequality has been increasing rapidly in the United States. This means that a larger proportion of the nation’s wealth is held by a small percentage of its population. This could have a significant effect on Social Security, especially for seniors.
Recent research from Axios reveals that this inequality means that the amount of Americans’ incomes that are subject to payroll taxes is at a 50-year low. The maximum amount of earnings subject to Social Security taxes, known as the payroll tax cap, is $160,200. Just 11 million Americans earn more than this amount, but because of rising inequality, these high earners account for a much larger proportion of total earnings than before.
People whose income exceeds this cap don’t have to pay Social Security taxes on earnings above this amount. This means that fewer dollars are going into Social Security, and it could have serious implications for seniors who rely on Social Security for their retirement income.
It also means that the Social Security Trust Fund, which is used to pay out benefits to seniors, could be at risk of running out sooner than expected. The Seniors Center has a plan to fix Social Security solvency that would address rising inequality, but it will take action from Congress to implement those reforms. That’s why we’re calling on you to make your voice heard by signing our online petition and following us on Twitter and Facebook. Together, we can ensure that Social Security will be around for generations to come.