The Social Security debate is on
For all practical purposes the rich pays little if any Social Security taxes as a proportion of their income or the benefits they extract from society. The vast majority of Americans pay Social Security on most if not all of their income. 98% of heads of households, 96% of singles, and 75% of married people filing jointly pay Social Security on all of their income income. The reason for this is that Social Security taxes are only paid on the first $118,500 of income.
But it gets worse. If one makes their income from stock appreciation, one pays nothing. In other words, if one owns a lot of stock and the value of said stock increases by $1 million, zero Social Security taxes are paid. If you are an average middle-class or poor employee you are responsible to pay north of 6%. If you are an self-employed middle class person you are responsible to pay north of 12%.
Many of the wealthy arrange to get paid with incentive stock options. This means they pay no Social Security taxes on that income at all.
Democrats are starting to ramp up the fight to remove the Social Security cap.
“If Republicans are serious about extending the solvency of Social Security beyond 2033,” Sanders said, “I hope they will join me in scrapping the cap that allows multi-millionaires to pay a much smaller percentage of their income into Social Security than the middle class.”
The Democrats’ plan while commendable, does not go far enough. If absolutely all forms of income are taxed, the rate will go down for the vast majority of Americans. It would bring a huge tax relief to small businesses as the portion of the Social Security tax they must pay for each employee would be reduced.
One should not allow those against taxing all income to conflate terms. In order to mislead, this country has defined for the most part two basic forms of income, wage income and investment income. One gets wage income from going to work. One gets investment income from either the realized appreciation of their investments/stocks or the dividends said stocks and financial instruments pay. In other words their is much income being earned by folks who need not get out of bed. By concentrating the debate on wage income, politicians and the wealthy plutocracy keep the discussion away from the money sinks.
All income should be subject to Social Security Opponents counter this with a rather silly argument.
The cap does exist for a good reason, policy experts told TPM. Social Security benefits are paid in part based on how much people pay into the system. Without a cap, it’s possible that multi-millionaires and billionaires would accrue huge Social Security benefits by the time they retire. The cap also arguably helps politically by keeping Social Security as a social insurance program instead of welfare where the rich pay in to help the poor.
It is time to remove the notion that Social Security is simply an insurance policy like one would expect in the private markets. It must not be. It must be defined as simply retirement. It should be indexed in a form that defines a minimum standard of living for a retired person. That inhibits the rich from gouging the system.
A country need not go through hoops to make it seem as if Social Security it is not some sort of transfer program. It is. It is a transfer from working people who can afford to pay to the retired who has served the country as workers to keep the most vibrant economy in the world afloat. Everyone has played their part however little.
It is true that the wealthy would pay more. That is a good thing. Their is an aberration in our economic system that does not value people based on their actual contribution to society. Intelligent redistribution mitigates this.