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Will Taxing the Rich Save Social Security? Experts Weigh in

December 14, 2020 · Retirement Life

How much could a revised Social Security tax bring in?

This depends on the plan to be adopted. One proposal, for instance, is the Social Security 2100 Act which would eliminate Social Security’s long-term disparities. The act would modify the method to calculate benefits and provide a universal increase of the taxable percentage of earned income below the taxable maximum. It would also impose a tax on any earned income higher than $400,000.

As estimated by the Committee for a Responsible Federal Budget, the Social Security 2100 Act tax would bring an extra $150 billion per year to Social Security if higher earnings would be taxed. This means that by 2029, the increase would bring around $1.5 trillion in revenue.

See also 26 States That Do Not Tax Your Social Security Benefits.

An active senior woman enjoying a walk in a sunny public park.
A smiling senior walks through a sunny park, illustrating the retirement security provided by payroll taxes.

How fast the wealthy reach the tax cap

According to Forbes, 211 people who made more than $50 million in 2018 would have been able to pay their whole Social Security tax for the year in the first 12 hours of 2019. Talk about fast!

More than that, the Long Angeles Times mentioned that approximately 1,000 people would have likely paid their Social Security tax on the first working day of the new year. For example, Safra Catz, the CEO of Oracle Corporation paid her Social Security tax before midday on New Year’s Day, as reported to Forbes.

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