Serious question: What is the current SS "cap", and how much would raising the cap

[panader0]

help the SS funds?

[PoliticAverse]

1. "For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100."

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/240/~/2012-social-security-tax-rate-and-maximum-taxable-earnings

[panader0]

3. Thanks for that.

It seems that the cap should be at least at the same mark of the tax deal--- $250,000.
I wonder what difference that would make in tax income.
If the repubs want to raise the limit to 400 or 500 thousand, then tie the cap to that raise.

[Pachamama]

11. I think that is a great idea - only part is I hate the suggestion of any kind that SS is part of the

..."problem"...but if it was a bargaining point to get the Republicans to move , great. But Im at a point where although I think a solution to "saving" and guaranteeing that SS is solvent forever is to eliminate the $110,000 cap, I dont believe the democrats should budge at all on the $250k income threshold for taxes. But, perhaps, if they are going to budge, to say $400k or $500k, then by all means, tie with that the SS level to which one pays for.

[peacebird]

2. Last year it was 108k. If everyone paid on every dollar earned it would help a lot.

Why should someone stop paying into the system on money over the first 108k earned? It seems we should all pay on all $$ earned.

[FreakinDJ]

4. It would help if Congress would get their hand out of the cookie jar

they have been spending the surplus like drunken sailors for 20 years

[peacebird]

5. Well, yes... That too. : )

[Nye Bevan]

9. Because the benefits are based only on the first 108k earned.

Someone who earns $5 million per year for their entire working life gets the same Social Security benefit as someone who earns $108k per year, because their contributions are the same. If you abolish the cap, the person who earns $5 million will get a massively higher Social Security benefit in retirement.

[peacebird]

15. The benefit cap could remain, those making 5 mil probably do not depend on SS for their expenses.

[louslobbs]

10. That's absolutely true, because of my earning capacity, I stop paying into the fund after 3 months.

Why not raise the cap and continue taking from my pay and people who earn higher incomes like most of those I work with? I would not even feel the deductions and I despise a corporate controlled government who refuses to do this simple thing, but would rather force further draconian cuts and suffering upon those who can least afford it and in no way deserve it
Lou.

[CreekDog]

16. they could even leave the cap where it is but remove it over 200/250k

this way the promise to not raise taxes on those individuals making less than 200k or families making less than 250k would be kept.

social security taxed up to about 110k
110k-200k not taxed
200k+ taxed for individuals

[panader0]

6. Raise the cap!

I hope some DUer with better skills than myself can provide a chart or stats to show the benefits of raising the cap.

[democrattotheend]

7. In case anyone is curious, the maximum benefit is $30,156

That assumes retiring at full retirement age (67?). http://www.ssa.gov/pressoffice/colafacts.htm

Does anyone know what the average salary someone had to make to pay in enough to get the maximum is?

[PoliticAverse]

8. You would have to have earned the maximum taxable amount for every year since age 21...

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/maximum-social-security-retirement-benefit :

The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at age 66 in 2012, the amount is $2,513. This figure is based on earnings at the maximum taxable amount for every year after age 21.

Table of maximum taxable salary by year:
http://www.ssa.gov/planners/maxtax.htm

[Major Nikon]

13. I'm almost there

I think I hit the SS maximum at about age 24 or 25. I'd have to go back and look at my last SS benefits statement.

[Yo_Mama]

12. For 2013 it's $113,700

Each year it is adjusted to account for inflation:
http://www.ssa.gov/oact/cola/cbb.html

If you raised the wage cap by statute, the effect it would have would depend on how much you raised it, whether you raised it just for employees or for employers also, and whether those subject to the increased taxation would get a corresponding increase in benefits later on.

If you didn't increase benefits, it would mean that we have fundamentally changed the nature of SS.

Also if you raise the cap and make the employers pay in FICA, you might end with a very negative side effect in that employers would cut wage compensation to control their increased costs. Because higher earners pay a much higher marginal income tax rate (presumably higher next year), you might get less overall revenue as a result - income tax rates at that level are 28% and up, which is much more than SS rates 12.4%.

So if you had an employer that was paying 3 million out over the SS cap, and they planned to increase those wages by 2% next year, instead with no wage increase at all they would be increasing their cost by 6.2% - or about three year's worth of scheduled salary increases. Well, they'd probably cut salaries to compensate, and if they did, your actual take might not be that much.

[HiPointDem]

14. The cap is raised every year. 2012 = $110K, 2013 will be $113K. It's currently set to cover

somewhere between 85%-90% of all wage income, which means the *most* that would be gained (assuming rates stayed the same) is 10-15% more tax money than is currently collected.

There are good reasons not to completely uncap Social Security, though.

1. $2.5+ trillion has already been collected in excess SS funds and was supposed to be paid down as the boomers retired. That money should be paid down to historically normal levels before giving the feds more money to borrow.

2. Uncapping SS altogether means the wealthiest 5-10% of wage earners would be paying somewhere between 30%-50% of the cost of the program. That bodes ill for the solidarity of the coalition that supports SS. Top wage earners don't need the program. If they are paying most of the costs (but getting only a small fraction of the benefits) the program is ripe to be demagogued as 'welfare'.