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Social Security cap

If we have issues with funding Social Security, why not get rid of the $128000 cap and taxe all revenue as the little guy is taxed.  This would certainly help bring money to the fund.

What is AARP is doing about that?

Honored Social Butterfly

There is a reason for a cap. Other countries also have caps in their ss-like programs. SS is not a welfare program, it's insurance. You pay into the program, you earn a set of benefits, and you collect your fair share.

   If the rich are continuously taxed with no cap, it becomes a welfare program with the rich subsidizing the program.

  If you think that is the proper solution, lobby for it. 


"...Why is everyone a victim? Take personal responsibility for your life..."
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A House bill Social Security 2100 Act has  been reintroduced. In the bill is raises the income cap subject to social security payroll tax to $400,000 from $127,200. Here are two reasons why this should happen.For 42 working years I had the payroll deduction.Now I collect my social security  income.I am taxed on that income because my wife and I have over $32,000 in income. This threshold was established in 1983 and not indexed for inflation for 35 years. Very UNFAIR to Retirees.The bill adjusts that threshold to $100,000, a 35 year change that is long overdue. Here is the reality of that. This increase would reduce the tax revenue from current Retirees funding Social Security. I already funded it for 42years, I shouldn't be taxed again. The increased cap adding revenue replaces the money coming from retirees. This is a FAIR tradeoff.I have emailed my Legislators asking them to support this bill.There is no good reason why these changes shouldn't be made.

Honored Social Butterfly


@DDiam5112 wrote:

A House bill Social Security 2100 Act has  been reintroduced. In the bill is raises the income cap subject to social security payroll tax to $400,000 from $127,200. Here are two reasons why this should happen.For 42 working years I had the payroll deduction.Now I collect my social security  income.I am taxed on that income because my wife and I have over $32,000 in income. This threshold was established in 1983 and not indexed for inflation for 35 years. Very UNFAIR to Retirees.The bill adjusts that threshold to $100,000, a 35 year change that is long overdue. Here is the reality of that. This increase would reduce the tax revenue from current Retirees funding Social Security. I already funded it for 42years, I shouldn't be taxed again. The increased cap adding revenue replaces the money coming from retirees. This is a FAIR tradeoff.I have emailed my Legislators asking them to support this bill.There is no good reason why these changes shouldn't be made.


For those who do not know about this prior legislation - a recap -

Motley Fool 01/22/2019 - This Social Security Reform Bill Could Be Back on the Table

 

I haven't seen it introduced YET - but perhaps they are just scrutinizing it once more before introduction.

 

Your interpretation of raising the cap within this (prior) legislation is incorrect. 

The current cap stays in place - think it is $ 132,900 now - but wages and self employment income ABOVE the $ 400,000 limit will be taxed and once the standard cap has reach

$ 400,000 as the regular cap rises - all earned income will be taxed.

 

As to the taxation of benefits - again you are interpreting the taxation incorrectly - While working you did NOT pay any tax on the part of your contributions which your employer paid (50%) and neither did the employer pay any tax on it either - that is the part of your benefits that are taxed if you meet the income thresholds.  Based on the IRS taxation worksheet - only 50% of the figure is taxed (see step #2 of the worksheet)  https://taxmap.irs.gov/taxmap/pubs/p915-005.htm#en_us_publink1000263043

 

With this proposed legislation, based on the prior edition, the income limits for benefit taxation are just being raised.

Higher income thresholds for tax-free benefits, with the income levels at which a portion of Social Security can become included in taxable income rising from $25,000 to $50,000 for single filers and from $32,000 to $100,000 for joint filers.

 

This is from the same one introduced back in April 2017 -

Social Security Administration Actuary Report 04/05/2017 on The Social Security 2100 Act

 

If it is changed at all before intro again, it will have to go through the actuary process again rather than just be updated.

 

 

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