If this Trump tax plan passes, Americans making $60,000 will still be paying over four times more of their income in payroll taxes than Americans who make $1 million.
What the article willfully ignores is that BOTH TAXES and BENEFITS are capped. Someone earning more than $128,700 (for 2018) neither pays taxes nor accrues benefits on wages above that limit.
For as long as Social Security has been in existence, the wage limit and the benefits limit have been in synch. Benefits have been tied to covered wages. Social Security is supposed to function in the manner of a pension plan. The author is advocating breaking the underlying Social Security design that has been in existence since Social Security started.
He should at least be honest enough to admit it.
Nothing in the article suggested that the benefits should be capped. In fact, I don’t believe that benefits really are capped in the law… There just happens to be a maximum benefit because of the tax/contributions cap. If the tax cap were removed then I believe current law would create a higher benefit than the current maximum.
I’ll have to wade through the law more carefully to be sure of that - but as far as I know the max benefit is just a reflection of the maximum average taxed wages over 35 years and nothing more.
Gee, what a surprise. I guess they think they should be rewarded because they “spend” more. really? Most of the rich invest I hear but do not buy items that others actually need.
The fact that he is decrying the fact that income above the benefits calculation ceiling is not being taxed and that the ceiling should be removed, suggests to me that the author, like most of those who advocate removing the cap on income subject to Social Security taxes, wants to de-link covered compensation and taxed compensation.
You are correct, that under current law, any increase in the ceiling on covered wages operates to increase both taxes and benefits. Given that the author states:
If all income over $200,000 faced a Social Security tax as well, we’d have enough new revenue to significantly improve Social Security benefits.
the implication is the benefits will not flow to those paying the higher taxes.
Sorry - there is no such implication. While low income workers do earn more in benefits than they pay into Social Security - the opposite is true at the high end.
The marginal benefit rate under current law is 15% of 35-year average salary for the highest income level. Thus $1000 of taxed income pays $124 into the system (at the current 12.4% tax rate) which earns interest at about double the inflation rate until the person retires at which point that worker takes out 0.15* $1000/35 = $4.28/year in benefits from retirement until death.
That does indeed already provide enough new revenue to significantly improve Social Security benefits (considering current life table assumptions for upper income people). So the author was correct and your presumptions are just in your own biases as far as I can tell.