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Debate on should the cap be raised on Social Security Payroll Taxes on Fox News.
Social Security Series Part 3
Basically the social security system in the USA has been in such bad shape because of this pay as you go system that there is no way to raise taxes enough to pay all the promised benefits over the next 40 years. Is the problem that we have not raised taxes fast enough in the past. Take a look.
The tax was implemented in 1937 at 1.0% of the first $3,000 of wages. It stands today at 6.20% on the first $106,800 of wages. Inflation between 1937 and 2010 was 3.76% annually, whereas the wage limit has risen at 4.95%. Hence, even if the original 1.0% tax had remained constant, the amount collected on the limit would have increased substantially more than the rate of inflation due to the more rapidly increasing wage limit. However, with increases in both the limit and the rate, the tax in dollar terms has increased on the wage limit from $30 to $6,622, a 7.57% annual increase, which is double the rate of inflation between 1937 and 2010.
The main point I want you to take away from this post is: Social Security Payroll Taxes are two high now. Raising them further kills investment in the economy. Liberals have suggested raising the payroll taxes by 50% but that still would not take care of all the future promises that Social Security has made.
In less than six years, the federal government will be paying out more in Social Security benefits than the taxes that it takes in to fund it. Our Social Security Administration is getting $788 billion in fiscal year 2011. That breaks out to $6,500 per U.S. household.
You write a check for that? Can you write a check for that? ‘Cause that’s what we’re doing
The Daily Hatch 