How much revenue would be saved if we raised the cap on taxable payroll...

income from 91k (i think that is where it is at now, though I could be wrong) to something modest like 120k or maybe 200k? Or maybe $1 million dollars or even remove the cap. Wouldn't that increase in revenues more than make up for the projected shortfall that the Republicans are crying about? A plan like that would not create any new beauracracies, cost anything to restructure, work immediately, keep Social Security secure. It seems like the logical way to fix the problem (if there really is one). That way, we can get on to biiger problems, like fixing Medicare and Medicaid. Does anyone have any links to numbers on how much would be brought in by a cap increase?

would like to if we could not get rid of 'pork barrel" spending.

because you will get more people paying in, but not getting anything out (yet). Longer term - this will either leave Social Security in the same lurch or (as I explain below) make its situation worse.

The more you pay into Social Security, the more you get when you retire. So if you raise the cap, you get more $ in, but you also pay out more. Yes, you remove the cap, you get more from Bill Gates, but when he retires you will have to start paying him $50,000/month Social Security payments. And guess what - people who will start getting those $20K/month, $30K/month checks from Social Security will in general live longer, thus the drain on the Social Security will be higher.

realize that rich people, having access to higher quality health care, and leading a generally healthier lifestyle, live longer.

earlier.

You are correct that a no wage base would meam million dollar monthly checks 25 years from now as the higher wages phased in to the benedit calculation.

But the tax increase is day one, larger payouts are 25 years later

and those larger payouts use the 15% factor for the extra wages included in the benefit calculation - meaning the progressive nature of Soc Security overcharges the rich a little bit -

Indeed as those million dollar benefit checks go out the door, the rest of us will be paying a lower payroll tax than we would have had the wage cap remained.

SO RAISE THE WAGE CAP! :thumbsup:

:toast:

:-)

There is a cap on benefit amounts. So if you earn $200,000 a year you get the same SS payment as someone who earns $80,000 (the numbers are hypothetical. I don't know the actual amounts.) Also, if the cap was raised then additional limits on SS payments for higher income workers could be imposed.

If you're proposing that there should be one, please try to "frame" such a cap in a way that would make it seem less like highway robbery. "We take more money from you in Social Security payments, but you won't get back any more than others who pay less than you". Why not just confiscate the money from the rich while you're at it?

payroll taxes. That's essentially what * plans to do.

The higher your taxable earnings, the more you receive in benefits. Since there is a cap on the amount of earnings you must pay taxes on, there is also a corresponding cap on the amount of benefits you can receive. If you increase that cap on taxable earnings, you're also increasing the cap on benefits. I don't know what the net effect would be.

now of perhaps half that (the SS benefit calc is "progressive" in that it provides a much better "deal" for low paid than it does for high paid)

According to Thursday's Wall Street Journal
"Top Social Security Question Unanswered: How" Jackie Calmes, p. A12

"Mr. Bush has ruled out raising payroll taxes. But many Republicans in Congress say that while Mr. Bush is dead-set against raising the 12.4% payroll-tax rate, the administration has left the door open to raising the cap on the amount of wages taxed, now set at $90,000. Repealing the cap altogether - as with Medicare's smaller payroll tax - would close Social Security's porjected 75-year funding gap."

Say this number is equivalent to 10% of the workforce. Assuming you aren't coupling this with a reduction in the tax rate, or an exemption of the first, say, ten grand of income, that's 12.6% (I think) of every dollar from $91 up to $200K, but keep in mind that the population curve steepens quite a bit after $100K, so that the majority of this pool of people will make between $91 and $100K. Thus, you would have to raise the cap a LOT to get ever-diminishing benefits in return.

Just doing the math. In short, just raising the cap might not suffice. You'd have to eliminate it.

and don't take it as payroll. To maximize 401(K) deductions you need an income of $205,000. After that most take earnings as dividends or some other way. I think raising the cap to match the 401(K) salary or $205,000 is a great idea.

Could you please explain how you came up with this? This must be something in YOUR 401(k) Plan. I am a payroll/benefits administrator and know the regs pretty well. I was able to contribute $14,000 to my 401k last year and I make waaay less than $205,000

but various clients have told me that's the amount they have to collect in payroll to avoid penalties. I'm not in the business. This was idle chit chat. I'm a different type of consultant. Some make huge amounts of money.

THis is where the $205,000 comes from. It increases to $210,000 for 2005.
This might be a good wage limit for SS. THe actuaries would need to figure out how much more SS payroll taxes would be collected and if that would be enough to shore up the system



IRC § 401(a)(17) limits the amount of compensation that can be taken into account by the plan to
$205,000 in 2004. For private-sector plans, even if a plan member earns more than this amount, only
$205,000 may be used in 2004 to calculate employee contributions to, or benefits provided by, the
qualified plan

I appreciate your expertise.

Oh, wait, that would hurt rich people unfairly. Better to let the elderly die in the gutter.