Increase the maximum taxable earnings cap on the Social Security payroll tax. Despite the indexing of...

  

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Increase the maximum taxable earnings cap on the Social Security payroll tax. Despite the indexing of payroll taxes, the overall percentage of earnings in the country subject to the payroll tax has slipped in the past decade because earnings for the highest-paid workers have grown faster than the average. Thus, in 2018, 83 percent of wages fell below the maximum taxable amount. This option would increase the cap to 285,000, which covers 90 percent of wages -- where it was set in 1983. Effect on deficit: -$785 billion. Supporters of this proposal say: Increasing the maximum taxable earnings for the payroll tax improves Social Security's long-term financial outlook. This option would make the payroll tax less regressive. Currently the poor are taxed on 100% of their earnings while the rich are not Because individuals are not taxed on any earnings above the ceiling, expanding the wages subject to the tax asks higher income individuals to pay more to help make Social Security sustainable Opponents of this proposal say: Raising the earnings cap could weaken the link between the taxes that workers pay into the system and the benefits they receive. The rich currently pay more into social security overall, but receive proportionately fewer benefits relative to what they paid in. This option would reduce the rewards of working for people with earnings above the current maximum. As a result, many such earners may work less -- or push for more kinds of benefits that are not subject to the payroll tax at all. What do you say? Should the US raise the cap on Social Security Taxes? What you consider to be the advantages and disadvantages of enacting this measure. What are some reasons why it would be a good idea to enact this? Increase the maximum taxable earnings cap on the Social Security payroll tax. Despite the indexing of payroll taxes, the overall percentage of earnings in the country subject to the payroll tax has slipped in the past decade because earnings for the highest-paid workers have grown faster than the average. Thus, in 2018, 83 percent of wages fell below the maximum taxable amount. This option would increase the cap to 285,000, which covers 90 percent of wages -- where it was set in 1983. Effect on deficit: -$785 billion. Supporters of this proposal say: Increasing the maximum taxable earnings for the payroll tax improves Social Security's long-term financial outlook. This option would make the payroll tax less regressive. Currently the poor are taxed on 100% of their earnings while the rich are not Because individuals are not taxed on any earnings above the ceiling, expanding the wages subject to the tax asks higher income individuals to pay more to help make Social Security sustainable Opponents of this proposal say: Raising the earnings cap could weaken the link between the taxes that workers pay into the system and the benefits they receive. The rich currently pay more into social security overall, but receive proportionately fewer benefits relative to what they paid in. This option would reduce the rewards of working for people with earnings above the current maximum. As a result, many such earners may work less -- or push for more kinds of benefits that are not subject to the payroll tax at all. What do you say? Should the US raise the cap on Social Security Taxes? What you consider to be the advantages and disadvantages of enacting this measure. What are some reasons why it would be a good idea to enact this?

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