Today, some people believe that Social Security will not be there for them even though there are equitable solutions that will fully fund Social Security for the foreseeable future. In planning for the future of Social Security, we need to recognize that it is no small thing to break our long-standing intergenerational obligation to ensure that Social Security retains its role in protecting its recipients.
One obvious solution – or it would be an obvious solution if most people were aware of it – is to raise the Social Security cap or eliminate it completely. The current cap is $113,700. People who earn less than the cap pay FICA (Federal Insurance Contributions Act) taxes on every dollar in wages they earn. People who earn more than the cap pay FICA – the money we pay to fund Social Security – on every dollar they earn until they hit the cap. All dollars above the cap are FICA tax-free for them.
The result is a highly regressive tax that makes the poor pay a higher percentage of their income than those who are wealthy. As a result, a person earning twice the cap – $227,400 – will pay half the rate paid by people earning less than $113,700 a year for Social Security, Another consequence of the cap is that Social Security is not as well funded as it could be.
The Social Security cap on payments reflects a philosophy of “From those to whom much has been given, little or nothing is expected.” Eliminating the cap and taxing everyone at the same rate, or raising the cap, would be a good fit with Social Security’s tradition of collective and intergenerational obligations.
— Excerpt from TRUTHOUT (February 13, 2013)