The April 23 article on Social Security’s predicting insolvency drove me to my laptop. Insolvency is not bankruptcy – despite the dire prognostications of Republican fear-meisters.
Social Security is financed by payroll taxes on earned (wage and salary) income as reported on individuals’ W-2 forms. Income from financial assets, bonuses, rentals, proprietor’s income, interest, dividends, and capital gains is not subject to payroll taxes. So as Republican policies make income inequality worse, less and less income is subject to the Social Security payroll tax.
Social Security’s parameters have been tweaked some 37 times since its inception. Sometimes legislators increased the tax rate. Sometimes payout amounts were made more generous. And sometimes lawmakers raised the cap on earnings subject to taxes. Now is the time to lift the cap entirely, a tweak that would push Social Security’s solvency out 50-plus years.
What does that mean? Currently not a dollar of earnings over $132,000 is taxed for Social Security. (By way of contrast, when I started teaching economics in the 1980s, the cap was somewhere in the $60,000 range). Polling across gender, race, age and political persuasion finds overwhelming support for eliminating the cap on income subject to Social Security taxes.
According to a recent poll, about 75 percent of men and 69 percent of women support raising the cap to include millionaires and billionaires. Ditto for 69 percent of whites, 82 percent of African Americans and 79 percent of Latinos. Polling by age finds 70 percent of 18-29 year olds, 65 percent of 30-45 year olds, 76 percent of 46-65 year olds, and 70 percent of Americans over 65 favor taxing the rich.
This is a bipartisan view too; 87 percent of Democrats, 73 percent of independents and 53 percent of Republicans favor taxing the 1 percent to ensure the economic security of America’s seniors.
The looming Social Security shortfall is no surprise. Fiscal analysts, actuaries, legislators and informed observers have been reporting this for at least a decade. With 10,000 Americans retiring every day, now is the time to scrap the cap.
Susan Feiner
Yarmouth
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