Starting in 2014, the maximum tax on income for Social Security will be $117,000 per year. That means nothing more is paid into Social Security exceeding this amount. What that means is that the average working person pays the full 6.2% and that the wealthy Wall Street banker type and CEO’s making a million dollars per year are paying less than 1% of their income into Social Security. The higher their income, the less percentage they pay. To put it another way, a person making a million dollars per year only has to work 15 hours to pay their Social Security tax and the average worker is working all year to pay their Social Security tax. A billionaire pays the same tax in less than a minute.
Notwithstanding the fact that Social Security is financially sound for the next 20 years or more and does not contribute one cent to the Federal deficit, some are proposing to cut benefits by imposing a new cost of living formula called the “Chained CPI.”
Any long term concerns about Social Security funding can be substantially addressed by scrapping the cap and leaving the CPI (consumer price index) formula alone which would mean no cuts to Social Security benefits.
Today, when traditional pension plans are under attack and the “three legged stool” of retirement income consisting of one’s pension, Social Security, and savings is becoming unstable, is no time to cut Social Security benefits.
Bill Gibbons, PACE Representative for SOAR
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