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Will Taxing the Rich Save Social Security? Experts Weigh in

December 14, 2020 · Retirement Life

How much money comes from the payroll tax?

A lot. With payroll taxes being the second-largest source of revenue for the federal government, you can imagine the amounts brought in are anything but negligible. In 2019, the payroll taxes brought in $1.243 trillion and $1.3 trillion have been estimated to be collected by the end of 2020, according to the Congressional Budget Office.

However, two questions still remain. How much money is left untaxed and how much money could the payroll tax really brings in if wealthy people and their higher earnings would become subject to tax?

How much money is left untaxed?

According to the Congressional Research Service, around 92 percent of income was taxed for Social Security in 1937. As of 2000, the taxable income limit dropped to 83 percent and has followed important economic cycles.

Keep in mind that these numbers don’t include unearned income. For many wealthy people, unearned income (from investments. real estate etc.) is an important source of income. Considering all these untouched amounts, how much are the wealthy costing Social Security?

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