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Raise the Cap on Social Security
There is no need to cut Social Security benefits in order to maintain the program's stability. Eliminating the Social Security payroll tax cap will keep the program stable for the long term.
Social security provides guaranteed income to millions of Americans who are retired, disabled, or dependent survivors of deceased workers. Everyone who pays into it, gets something out of it.
Cutting benefits to preserve the long term stability of the Social Security program is a bad idea. Most elderly beneifiaries rely on Social Security for the majority of their income — about two-thirds rely on Social Security for over half of their income and one-quarter rely exclusively on their monthly benefits.
Social security is pariticulary important for women and minorities, who rely more heavily on benefits in retirement. Among beneficiaries over 65, 35% of whites, 42% of Asian-Americans, 49% of Blacks, and 55% of Hispanics are dependent on social security for 90% of their income. Women rely more heavily on social security because they tend to earn less than men, take more time out of the paid workforce, live longer, accumulate less savings, and receive smaller pensions.
Every worker pays social security taxes on their earned income, but there is no tax on annual pay above $113,700. Of those workers with earnings above that amount, 100% are high income, roughly 81% are white, and roughly 77% are men. Those who can most afford to contribute to the social security pot are given an unneccesary and costly free ride.
Why should we eliminate the cap?
Social Security can pay full benefits through 2033 without any changes. To address the eventual budget shortfalls for social security, we have two fundamental options: (1) reduce benefits, or (2) increase funds for the program.
Reducing benefits would have a drastic impact on the ability of social security recipients to meet their basic needs, disproportionately affecting the poor, women, and people of color. Social Security benefits keep more than 21 million seniors out of poverty each year. Reducing social security benefits would actually cost the government more, as more beneficiaries would sink into poverty and require more from other public assistance programs.
Eliminating the cap for those who can best afford to pay is the most logical step. When the social security payroll tax cap was created, it used to mean that up to 90% of all workers paid taxes on their entire wages and salaries. By 2014, that percentage will decrease to 83%. Currently, only about one in 20 workers hits the $113,700 earnings cap. Yet if we taxed their earnings above the cap, this alone would close the long-term gap in the Social Security trust fund.
We must strengthen, not undermine, this well-functioning system by eliminating the cap and requiring the wealthy to pay their fair share.
Check out & download our fact sheet here.