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> As far as the finances, as I understand things, simply raising the cap on income would extend things out a bit, FICA doesn't get collected past 105k or someth
by anamax 16y ago
> As far as the finances, as I understand things, simply raising the cap on income would extend things out a bit, FICA doesn't get collected past 105k or something.
Since benefits are roughly related to FICA, extending the cap doesn't help much. It helps some, because the benefits system is progressive, in that folks who contribute a lot get less return on their contributions than folks who contribute just a little, but ....
The folks who designed SS thought that the cap was essential. Their argument was that SS wouldn't survive if it paid folks like Ross Perot $500k/year in benefits or if it was a tax with no benefits to folks like Ross Perot. The cap means that Perot doesn't get $500k/year but don't care because he didn't put much in.
Are they wrong?
- grandalf 16y agoThe rich at the time might very well have opposed having to pay the 1% social security tax. The inception of the program was based on a variety of too good to be true premises, the 1% payroll tax being the most notable, so I interpret the cap more as a symptom of this fantasy... and possibly a consideration of the stigma attached to welfare programs in those days.
- anamax 16y agoI understated things a bit - it wasn't just the originators, but SS advocates, at least until recently. If you want to remove the cap, then either you're willing to pay Ross Perot $500k/year in benefits or you're going to have uncapped taxes and capped benefits, that is, another 15% tax. Do you really think that rich people today won't object to another 15% tax?