Sunday, April 17, 2005

Raze the Ceiling

There's nothing like an intrusive moral dilemma (Schiavo), a famous person's death (Pope JP2) or a celebrity trial (Jackson) to sweep a key political issue off of the front page. A short time ago, there were quite a few headlines about the Bush Administration's push to GUT Social Security. Yet, as noted above, this pivotal issue has been pushed to the back page.

We might not be hearing about it as much, but please don't think for a minute that Team Bush isn't plunging ahead. I'm certain they are hoping it can be slipped in under the public radar like the so-called Patriot Act.

If Team Bush was GENUINELY concerned about the solvency of the Social Security Trust Fund, there is one solution that could easily eliminate any potential near-future or later problems -- raze (not raise) the wage ceiling.

Right now only the first $90,000 in wages are subject to the tax. What this means is that the weight of the tax falls hardest on middle and low wage workers. The wages of a person who makes $20,000 or $40,000 per year are taxed at 100% -- in other words, every penny they earn is subject to the Social Security tax.

The wages of a person who earns $150,000 per year are ONLY taxed at a 60% rate. The first $90,000 are taxed and the remaining $60,000 are not. (Of course, such wages ARE subject to other taxes, but not Social Security.)

The more a person earns through wages, the lower the percentage. And this doesn't even take into account the fact that many of the rich receive income that is not in the form of wages at all. Consequently, a big corporate CEO pays a fraction of the percentage that a school teacher pays!

Imagine how much money the Social Security Fund would hold if there was no wage ceiling. Instead of concerns that the fund will begin to encounter problems with adequate pay outs in 2042, the fund would be flush with money.

All it would take to turn a possible shortfall into a robust account is this one simple change. Unfortunately, simplicity isn't popular on Capitol Hill because it doesn't enrich the special interests. It's that simple. :>0

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