by Shannon Skinner, Vice-Chair of Media & Messaging, People’s Party of Washington
Social Security trustees in 2021 claim the Social Security trust fund will be exhausted by 2034.
We’ve heard this dire warning for decades.
Don’t fall for it!
The US Social Security System suffers from inequity, not insolvency.
Raise The Age vs Lift Income Cap
The last time you heard about Social Security running short of funds you probably heard someone say we’d have to raise the age of eligibility or lower the benefits. What you never hear about is the income cap enjoyed by high earners. We must ensure Social Security’s solvency by removing the income ceiling and restore high-earners’ full accountability to the system.
SSA tax on 100% of Lower Income Earnings vs 50% of Higher Incomes
For the 2021 tax year, the Social Security Administration set the income cap at $142,800. This means that a company president earning a $300,000 salary pays Social Security tax on less than 50% of earnings while a retail manager earning a $50,000 salary pays the tax on 100% of earnings.
Lift The Income Cap
Lifting the Social Security income cap is a logical way to tackle the program’s deficit. Removing the cap entirely could help eliminate the regressive Social Security tax structure and replenish the Social Security coffers.
We Are Leaving SSA Money on the Table
About 20% of US households earn $150,000 or more annually. The top 19% of US households in 2021 earn $146,000 or more. In 2018, the top 20% took in half of all US income. That’s a lot of extra tax revenue left on the table that could fortify the Social Security safety net.
Action is Needed
All signs point to Social Security’s growing importance as the primary retirement income source for most Americans. US statistics on personal retirement savings paint a dire picture. Forty-two percent of Americans have less than $10,000 saved for retirement, and fourteen percent of Americans have $0 saved for retirement.
The primary reasons Americans offer for having no savings:
- Not making enough money
- Prioritizing debt reduction
- No retirement savings plan offered by employer
- Using savings for an emergency
Congressional conservatives see the Social Security safety net as an entitlement program the government cannot afford. Meanwhile, as US wealth consolidates in the top 1%, studies show widening socioeconomic disparities. Ensuring the viability of our Social Security system is more important than ever.
Stagnant Wages = More Reliance on Social Security in Retirement
Minimum wage has not kept pace on an inflation-adjusted basis, so many Americans in effect earn less today than their parents and grandparents. Faced with diminished access to pension programs, Social Security will comprise a larger percentage, if not all, of many Americans’ retirement income.
Must Fight To Expand SSA Benefits
Given this, Congress should be planning to expand, not further limit, Social Security benefits. Raising or eliminating the income cap on Social Security taxes would be a logical first step in building greater US retirement security.
Social Security lives up to its name in two important ways: You can begin receiving income when you reach the age of eligibility, and you don’t stop receiving it until you die.
As the bedrock of American retirement income, we must fortify Social Security. To all the Social Security detractors who claim it is a broken system, we must respond by pointing out that we haven’t exhausted all the options in our toolkit.
Contact your congressmembers today! Insist that they raise or eliminate the income cap on Social Security taxes.
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