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I missed the point where the article spelled out whether it was included or not. However, the vast difference between FICA and FIT is a huge topic. That's why I did another thread.
Effective federal taxes are what a person actually pays.
"While payroll taxes eat up 6 percent of the income of Americans earning the national median income of $50,221, Mr. Romney and his wife paid just one-tenth of 1 percent of their income in payroll taxes."
So, do we remove the cap? Romney would see millions in SS coming back at him. His rate would go up, but he wouldn't really be contributing more. Do we make it progressive? If so, he still gets more back.
Please cite your source that says SS benefits were increased the many times the cap has been increased in the past?
I've seen other suggestions, like freeze benefits but remove cap. Basically, this is stating that after he's managed to cover his retirement, he should pay for everyone else's retirement with his money. This would be the most direct wealth redistribution I can see flowing through government short of taking your paycheck and handing it to the next guy.
Am I missing an option to fix it?
Yes:
Today, the richest 1 percent of Americans take home over 20 percent of the nation’s total income, almost twice as much as they did in 1983. And, thanks to the ceiling—currently set at $106,800—they pay no Social Security tax on most of what they make. As a result, the Social Security payroll tax now touches only 84 percent of the nation’s income, down from 91 percent in 1983. Lifting the cap to $180,000 would close that 7 percent gap.
Another Bad Ceiling | Commonweal magazine
"Remember, the Social Security payroll tax applies only to earnings up to a certain ceiling. (That ceiling is now $106,800.) The ceiling rises every year according to a formula roughly matching inflation.
Back in 1983, the ceiling was set so the Social Security payroll tax would hit 90 percent of all wages covered by Social Security. That 90 percent figure was built into the Greenspan Commission's fixes. The Commission assumed that, as the ceiling rose with inflation, the Social Security payroll tax would continue to hit 90 percent of total income.
Today, though, the Social Security payroll tax hits only about 84 percent of total income.
It went from 90 percent to 84 percent because a larger and larger portion of total income has gone to the top. In 1983, the richest 1 percent of Americans got 11.6 percent of total income. Today the top 1 percent takes in more than 20 percent.
If we want to go back to 90 percent, the ceiling on income subject to the Social Security tax would need to be raised to $180,000.
Presto. Social Security's long-term (beyond 26 years from now) problem would be solved."
Robert Reich: Budget Baloney: Why Social Security Isn't a Problem for 26 Years, and the Best Way to Fix It Permanently
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