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| Thursday, February 24, 2005 |
| Social Security: The Simple Solution |
I've said it before, but it's worth repeating. The easiest way to eliminate the projected shortfall in Social Security is to eliminate (or at least raise) the cap on taxable income from its current level of $90,000. It's an immensely popular solution - 81% (the number of the day) support it, versus less than 50% who support benefit cuts, retirement age increases, etc.
American Prospect notes something I had not yet considered: this plan makes even more sense when you consider the fact that inequality between top and bottom wage earners has grown significantly over the last two decades.
The average earnings of those who earn more than the cap grew by 98 percent between 1980 and 2000. In contrast, the earnings for a typical worker have risen only modestly over the last two decades. For instance, the earnings of someone in his or her early 40s today are only 11 percent higher than someone comparably aged in 1980. Similarly, the earnings of the median worker -- the “middling worker” who earns, by definition, more than half of all workers and less than the other half -- rose 20 percent over that same time period, with the median male’s earnings up only 6 percent. Consequently, the distance between high earners (those earning more than the cap) and typical earners has increased markedly: In 1980, a high earner had ages 4.8 times more than the typical earner, a ratio that reached 7.9 in 2000.
Thus more wages (those of the highest earners), are out of reach of the social security payroll tax than ever before. This is sensible fix. |
posted by CB @ 2:21 PM   |
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