The Social Security Tax Question?

Why don't we tax those earning over $176,000.00 per year for social security?

The current structure of Social Security taxes is designed with a cap on the amount of income that is subject to taxation for Social Security benefits. As of now, this cap is set at $176,000.00 which means that any income earned above this amount are not subject to Social Security taxes and do not count toward the benefit calculation.

Why do we not tax on the amounts over that cap? Why don't we tax for social security if you earn 250,000.00 or 400,000.00?

I had those questions myself and although I understand the argument, I am not sure I agree with it totally. The cap has been raised a number times, and some Democrats have been trying to raise it again, although I am not sure most of that is not politically motivated.

Social Security was established as a social insurance program, designed to provide support to individuals in retirement, as well as to those who are disabled or survivors of deceased workers. That is to say for those people who did not for one reason or another have enough in investments to provide an income in their retirement. But, let’s be honest the average worker did not make enough to invest and these programs began back in the 1930's. And since 401k's came into popularity in the 1980's, retirement funds have been raided many times.

The benefits a person receives are based on their earnings history, and the cap is intended to maintain a balance between contributions and benefits. Does that sound like nonsense? That's because it is. I didn't understand it either.

The plain and simple truth is, there is a cap on what they will receive no matter how much they make. If someone make a million dollars a year, the cap they will receive is about $5,000. per month. If they make 8 million a year, the cap is $5,000.00. And so on. $5,000.00 per month is not chump change to most people, but that's the system.

To be fair, if you were to follow the formula for calculation and they were to receive social security benefits based on the actual formula, you would have people getting social security checks for absurd amounts of money they really have no need for. That is the reason for the cap. So. Why not just keep taxing them and they don't actually get the benefit amount? Sounds fair to me. But it would be easier to tax the wealthy using the many suggestions that have been made over the years. That has not worked so well. Do the wealthy pay their fair share of taxes? NO! Also, they don't use tax preparer's that only cost less than $100.00!

Getting back to social security taxes, proponents of the current system say that there are economic implications to consider.

Some economists argue that increasing the tax on higher earners could discourage productivity and innovation. They say that high-income earners play a crucial role in driving economic growth through investment and entrepreneurship and if these individuals face higher taxes, it may lead to a decrease in their willingness to invest in new ventures or expand existing businesses.

I say that is more nonsense, because entrepreneurs will do whatever is necessary to not work for someone else. Because they are AUTOCRATIC! They will use their wealth to find a way to still reduce their tax burden, and in the meantime the social security fund can grow. Maybe.

In addition, there is also a political dimension to this issue. The topic of taxation, especially concerning higher earners, provokes strong reactions from the wealthy segments of the population. There are concerns that increasing taxes on the wealthy could lead to a backlash, potentially resulting in political ramifications for those advocating for such changes. In other words, political donations would dry up.

This creates a complex landscape loaded with land mines where policymakers must navigate the competing interests of fairness in taxation, economic growth, and the sustainability of the Social Security program itself. All the while sucking up to the wealthy influential donors that keep the policymakers in a position of power.

Do we all see the conundrum?

Somebody is always talking about social security whether to tax higher earners more. It's a great talking point around election time. However, there will always be the perceived economic consequences and the sentiment of the wealthy. Because, after all, they are in charge.

Think about it and be sure to VOTE!

Jack Wilson

Opinion