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Today, only two months into 2022, millionaires stop paying their Social Security tax.
They pay 1%. You pay 6%.
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February 24th begins the Social Security give-away to America’s millionaire class.
From now on and for the rest of the 2022 year, millionaires stop making any contribution to Social Security.
See, Social Security contributions are capped at the first $147,000 of wage income.
So, someone who earns $1,000,000 per year stops paying into the program less than two months into the year.
Because such a small amount of their income is taxed for Social Security a millionaire’s effective tax rate is less than 1 percent.
If you earn less than $147,000 a year your tax rate is 6.2%
You may have heard that the Social Security system’s financial solvency is threatened.
That’s no surprise when 18 percent of wage income will be over the tax cap in the next 10 years. When the tax cap was put in place the number above the cap was 10 percent.
As a teacher, this is particularly galling.
For twenty years I worked in the private sector and paid into Social Security.
Because of two federal laws known at the WEP/GPO, my Social Security benefit is reduced by two thirds. The contribution to Social Security that I and my employer paid into Social Security is stolen. Millionaires pay nothing after today.
Some have blamed the Social Security’s threatened shortfall on the growth of the aging population. But the problem is actually rooted in the growth of income inequality.
How does income inequality undermine Social Security? The payroll tax is the primary source of Social Security’s revenue, so the program suffers when more income shifts to those who make above the cap.
The obvious solution here is to do away with the Social Security tax cap.