The Payroll Tax Cap Hasn’t Kept Pace With Earnings Growth at the Top
You may be wondering why between 1980 and 2000 the percentage of taxed income fell. This is a valid point of concern that both financial advisors and politicians in charge of ‘fixing’ Social Security have looked at carefully over the years.
The Congressional Research Service provided a report that showed the culprit behind this decline is the fact that salaries for high income earners grew significantly faster than those of workers whose income stayed (or fell, in some cases) below the taxable minimum.
With this rapid growth in wages, it is no wonder that funding for Social Security has continued to decline over the years. Of note is also the fact that this trend has followed major economic cycles.
