SS wage limits (when they stop taking it)

[Hugh Prolly-Wright]

I'm curious if anyone knows where to find stats on how much revenue would be raised by removing the limit on the wages that are subject to SS withholding. That is, I think it recently went from 147K to 160K. Someone suggested to me that if the limit were removed entirely, it would solve any funding shortfalls the program faces. However, I'm wondering if there really are enough workers earning over 160K to fully fund any projected gap?

[Rainmaker41]

According to this educational tool, eliminating the cap would solve 63% of the funding shortfall. See the Revenues tab.

https://www.crfb.org/socialsecurityreformer/

I think this is from a couple of years ago, but still probably pretty close, and it will get the big picture pieces right.

It's pretty amazing that even a small, 1% increase in the payroll tax rate is worth another 30% of the shortfall.

[b42]

The SSA has put out estimates as of the 2022 Trustee Report here for a bunch of scenarios:

https://www.ssa.gov/oact/solvency/provi ... mmary.html

I believe Section E has what you are looking for.

[fabdog]

this article from CBS quotes a study from the CBO saying it would resolve thru 2046.

https://www.cbsnews.com/news/social-sec ... -cap-2023/

this article from Peterson foundation says it would raise a trillion $. but points out some of the other issues that would have to get worked thru (such as breaking the link between earnings and benefits)

https://www.pgpf.org/blog/2023/02/shoul ... s-and-cons

So it's likely that some combo of increasing taxes/moving the full retirement age for younger folks/cutting benefits will have to be done to keep the system solvent.

the last big changes were in the 80's. The sooner change(s) are made the last wrenching they'll have to be.

Mike

[Chadnudj]

According to this educational tool, eliminating the cap would solve 63% of the funding shortfall. See the Revenues tab.

https://www.crfb.org/socialsecurityreformer/

I think this is from a couple of years ago, but still probably pretty close, and it will get the big picture pieces right.

It's pretty amazing that even a small, 1% increase in the payroll tax rate is worth another 30% of the shortfall.

True. Or if we assessed that 1% on all income (rather than just wage income), it would likely eliminate any shortfall. SSI is not a complicated problem to solve (unlike Medicare, where you're dealing with the unknowns of medical costs, etc.). Indeed, making SSI taxation slightly more progressive (i.e. eliminating the cap, assessing a small SSI tax on dividends/capital gains, maybe hiking the rate at higher income ranges) could not only eliminate the shortfall but make SSI itself more generous, which would be a huge boon to lower income retirees. No cuts or raising of retirement ages are necessary at all.

(And before you say "but then those who are wealthy won't get back what they put in," remember that SSI is an INSURANCE program, and the whole idea of insurance is that some people pay more than they get back, others get more than they put in, but everyone with it ends up with the safety net of knowing that they will not fall below an established floor).

[TomatoTomahto]

I have a selfish desire to see some of this enacted. Since our various income taxes are above 50% marginal already, it probably won’t take too much of a nudge to convince my wife to finally retire.

Any additional comment would have to be political rather than personal.

[pizzy]

Wouldn't raising the cap also raise the amount of wages used for how much someone receives in social security? Causing future liabilities to also increase?

Or are you saying raise the one cap but not the other?

[pizzy]

I have a selfish desire to see some of this enacted. Since our various income taxes are above 50% marginal already, it probably won’t take too much of a nudge to convince my wife to finally retire.

Any additional comment would have to be political rather than personal.

Why do you want your wife to retire?

She obviously thinks the amount of time you guys spend together is enough.

[TomatoTomahto]

[Texanbybirth]

The SSA has put out estimates as of the 2022 Trustee Report here for a bunch of scenarios:

https://www.ssa.gov/oact/solvency/provi ... mmary.html

I believe Section E has what you are looking for.

That's a cool website, thanks for sharing. (I know I'm a nerd.)

[Nestegg_User]

Wouldn't raising the cap also raise the amount of wages used for how much someone receives in social security? Causing future liabilities to also increase?

Or are you saying raise the one cap but not the other?

I'd think that all they would have to do is create an additional "bend point" somewhere about where they cut off for maximum now. Then have the payout percentage of indexed income be (extremely) low.... it might then survive any challenge because those affected would get "something" for their additional required contributions, just not nearly as much as they would with the current "slope" of the second bend point (just like those who don't get the same amount per slope versus those that are only within the first bend point).

Unfortunately, then the ultra-high earners would start demanding more of their income as either cap gains or some other new tax favored case, which would siphon off the income that was expected to be taxed and still then leave some hole. (It might then need to be the case where a small SS tax be made for such cap gains such that that "work around" wouldn't fully succeed, i.e. the SS funds still get something to allow the insurance program to continue.)

[Kendall]

This thread has run its course and is locked (no politics). Social Security is authorized under US law (legislation). Speculation about future legislation (what "might" happen) is prohibited by forum policy, see: Unacceptable Topics

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