Americans earning $1 million hit a milestone today: After February 23, anyone with an annual income at or above that level has hit the payroll tax cap and paid all of their Social Security taxes for the year.
In an op-ed at The Hill, Max Richtman of the nonprofit National Committee to Preserve Social Security and Medicare argues that in light of the program’s precarious finances, which could result in benefit cuts as soon as 2034, it’s time for Congress to raise the wage cap on Social Security taxes, currently set at $147,000.
“In years past, 90 percent of wages earned in this country fell below the cap,” Richtman writes. “Today only 83 percent of those earnings are subject to the Social Security payroll tax. Most Americans pay 6.2 percent of their wages into Social Security. But the effective tax rate for the wealthy is significantly lower, in some cases as little as .08 percent.”
Richtman calls on Congress to pass the Social Security 2100 Act from Rep. John Larson (D-CT), which would raise the income cap to $400,000 per year. The bill has nearly 200 co-sponsors.
“The right path for lawmakers is not to cut benefits, but to expand them to meet the needs of seniors, workers with disabilities and their families,” Richtman says. “The fairest way to fund such an expansion is by finally asking high earners to pay their fair share. If this wasn’t an obvious course before the pandemic, it certainly is now.”
Read Richtman’s op-ed here.