The Third Rail - Social Security

One fine point, the 1983 social security reform act was supposed to fix the system for a long time. It actually did for 50 years. But one reason the fix didn’t last longer has to do with the wage cap, and income inequality.

When the act was passed, it was designed to tax roughly 90% all wages, and that was the basis of the income cap. However as income has become much more divergent from top to bottom, the FICA tax cap results in only 82% of earnings being taxed, not 90%. If the cap had increased all along to stay at 90%, the system would have lasted decades longer.

 

Perhaps another pandemic will help shore up SS

 

A boomer specific virus.

 

may have reduced some future benefits but also reduced payroll tax revenues during the pandemic.

 

Close to a wash from what I’ve read.

 

Thanks Pfizer