NAIC Online - Is Social Security Busted? (requires registration)
The [Voice of the American Shareholder] survey asked shareholders to rate their support for eight proposed changes in the Social Security system. The solution that received the most support ("strongly" or "somewhat" in favor) from 69 percent of shareholders was increasing the income level subject to Social Security tax. Social Security taxes currently are deducted from employees' income up to $90,000 per year. Raising that ceiling is a tactic also favored by many economists.
"I favor gradually lifting the income ceiling, because in effect, the current system imposes a regressive tax on those who earn less than $90,000," says Spear of Carnegie Mellon. "Someone who earns $50,000 pays a higher proportion of his income toward Social Security than someone who earns $130,000."
What kind of retirement system is it in which I pay a higher proportion of my income in Social Security taxes than Bill Gates does? Even without the $90,000.00 ceiling, the tax is regressive because it imposes a flat 7.5 percent on all incomes, unlike the graduated income tax. Particularly for people of limited means, this is a big bite out of the money they need to meet basic necessities.
It amazes me, however, that our current president can propose (a) privatizing the system so that it is subject to the whims of the stock market, or (b) turning it into a welfare program instead of a retirement program. We all know how politically popular welfare is, and making Social Security a welfare program is the first step toward destroying it. Clearly, however, the current administration is not going to do anything that might require the rich to pay the same proportion of their income toward Social Security as the rest of the country.