How the super rich are killing Social Security

July 7th, 2023

Awake Goy

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Here’s the real reason Social Security is in danger that nobody’s talking about.

It’s not just because too many boomers like me are retiring. It’s because of inequality.

Now, I don’t want to alarm you. Social Security is still helping us oldies enjoy our golden years—but only for so long.

Social Security is one of the most popular and successful government programs ever created, not only helping retirees—but it’s also keeping 26 million people out of poverty. Yet here is the problem:

It’s going to run out of money before you can ever receive it if the rich don’t start paying their fair share.

The trustees of Social Security—of which yours truly was once a member back when I had thicker hair—say the program will only be able to pay full benefits until 2033. After that, Social Security will only be able to dole out roughly 77 percent of benefits.

Why? It’s not the reason that many seem to think.

Boomer retirees like me might be soaking up some sun, but we’re not soaking up all of the program’s funds.

The Social Security trustees anticipated the boom in boomer retirements. This is why Social Security was amended back in 1983, to gradually increase the age for collecting full retirement benefits from age 65 to 67. That change is helping finance the boomers’ retirement.

What did the trustees fail to anticipate? How much income would be going to the top.

A big part of the American working population today is earning less than the Social Security trustees anticipated years ago—reducing revenue flowing into the program.

At the same time, a much larger chunk of the nation’s total income is now going to the top compared to decades ago.

But income subject to the Social Security payroll tax is capped. No dollar of earnings above the cap is taxed. The cap in 2023 is $160,200.

So, as the rich have become far richer, more and more of the nation’s total income has escaped the Social Security payroll tax.

For example, a CEO earning $20 million a year pays Social Security taxes on roughly 1% of their income, while a worker earning under the cap pays Social Security taxes on 100% of their income. But they both end up paying the same amount of money into the program.

The rise in the amount of income above the cap due to inequality has cost the Social Security Trust Fund reserve an estimated $1.4 trillion since 1983.

The solution is obvious: it’s time to scrap the cap, and make the rich pay more in Social Security taxes.

One plan introduced in Congress would eliminate the cap on earnings over $250,000 and also subject investment income to Social Security taxes. It’s estimated that this would extend the solvency of Social Security for the next 75 years without raising taxes on 93% of American households.

This is where you come in. Share this video and help spread the word about the real threat to Social Security.

If we want to ensure Social Security’s long term future, and that working people can retire with dignity, we must make the wealthy pay their fair share.

Read it on Robert Reich’s blog.