I will be on Mark Thompson’s Make It Plain show on Sirius/XM – I’m actually on every Friday – and we tape early, so I can tell you that one of the things I’ll talk about is how Social Security’s long-term funding is an artifact of rampant US inequality. See, we have a payroll tax funding Social Security that gets capped at around $113,700 a year. That means that every dollar above that cap gets untaxed to pay for Social Security. When inequality widens, as it has, more and more compensation goes untaxed, draining the Social Security system of funds. Historically speaking, at least 90% of compensation gets captured by the Social Security system. Today that’s down to about 82%, the last I read.
So to the extent that Social Security needs to be fixed – and by “fixed” I don’t just mean brought into a 75-year balance, but made more adequate so less seniors slip into poverty – you need to raise that tax cap and capture more income. Sen. Mark Begich (D-AK) has an excellent piece of legislation that would do just this.