Category : Blogs

Sub Category : Politics

There are those in Congress that think the best way to save Social Security & Medicare from insolvency is to cut back on future payouts and/or privatize the programs. I say no to both.

Cut backs are a non-starter and privatization is too risky, dependent on the stock market's performance timed with when a person needs to withdraw their money. We already have enough of this crap shoot risk with our IRA or 401k plans. We deserve certainty equal to a pension plan, as Social Security was originally conceived.

Under 2016 rules, employers pay in 6.2% for Social Security and 1.45% in Medicare on employee wages, with no upper limit.

Employees pay in the same %s up to a max amount of $118,500 for Social Security (likely to increase to $126,000 in 2017). The Medicare rate increases to 2.35% on earnings above $200k single filer or $250k joint filer. Nothing paid on amounts above $118,500 on Social Security. 

We know that if the earnings cap were increased or phased out entirely, this would effect only 6.1% of our wage earners. Doing this is the only fair approach. Why? Someone earning twice the cap, $237,000, now has an effective Social Security tax tate of 3.1%. Those earning more pay even less a %. Why is it fair that those earning less pay a higher % relative to their income? 

I see no reason that an equitable tax rate schedule cannot be put in place, even if on a sliding scale, to have all wage earners paying into the program on their entire income. If someone making hundreds of thousands or millions of dollars has a problem paying their fair share, even if only a fraction of the rate above the cap, they should ask their employer to cut their wages to $118,500 so they won't have to pay above the cap.

Congress, it is time for you to do your job and fix our retirement system. Citizens, it is our job to hold our elected officals accountable. Ask them by phone, letter or in person what their stand on this issue is and tell them yours. Obviously, they are not motivated to fix the problem without our encouragement.