There is a cap on social security tax so after you earn past the cap you don't pay anything extra.

Elon Musk pays the same amount as a person who makes 190k a year.

Take away the cap and social security would be funded forever and a day.

I learned a lot about this by watching Sam Seder talk about SS. It is one of his hot topics.

i mean social security is taxes tho

we were TAXING THE EVERLOVING FUCK OUT OF RICH PEOPLE.

Tax avoidance during this period was also at historic highs. One of the perks of the payroll tax was that it collected at the point of the employer rather than being paid directly by the employee. This put the liability for missed payments on the business (which is risk averse) rather than the individual (which often is not) and shrank the labor required for administration from "everyone with an income" to "everyone who pays a salary".

Curiously, we choose not to do this for stock transactions and other big ticket revenue generating sales. Rather than demanding Wall Street assume liability for the vast number of brokerage sales the big clearing houses oversee, we politely ask that each individual stockholder report gains and losses at the end of the year. Private businesses are even worse. Rather than assessing their revenues through the major transaction arteries - banks and commodities/wholesale exchanges - we wait for businesses to self-report.

All this creates enormous blind spots in how taxation is accessed and collected in a way that practically invites business owners (especially small and low-volume business owners) to lie, cheat, and steal.

EAT. THE. RICH.

It's a great bumper sticker slogan. But I don't see any blood on your gums.

I've had the desire to write a satirical swiftian letter to the editor to a national paper talking about how to tax Americans "fairly" where every single American pays the same amount in taxes regardless of age and income. Billionaires and babies owing the same amount, some ridiculous amount like $50k per person. Then I realized some people might take it as an actual suggestion and try to put it into practice.

It was a tactical decision to turn people off of socialism/communism.

I think you'll find it's no longer needed.

The original name was "Horse and Sparrow" as in if we give the horse enough to eat, there will be enough undigested food in his shit for the sparrow

The other thing to get rid of is long term capital gains taxes and just tax capital gains as regular income.

So what you're saying is, social security should be, like...social?

This is mostly right but I think missing the point. It's not 12.2% on the first bracket and 2.2% on the second. It's 12.4% on the first $184,000 and ZERO On the rest. The 2.2% is not the marginal rate they are currently paying, it is the effective rate if you add up all the taxes paid divided by all the income. It's so low because people with salaries beyond 184k stop having to pay any of this tax on their next marginal dollar.

And the reason this is a big deal is because this tax revenue is what is used to fund social security payments for older folks. The social security reserve fund that is running out (which will result in a significant reduction in payment to these old folks) could possibly be all or mostly funded if we made people making more than $184,000 pay the same rate as everyone else.

Similar amount maybe, not same rate. If the first 100k is taxes at 30% and the rest is at 2%, someone making 100k pays 30k. But someone making 1 million also pays around 30k + 18k maybe. But for the 100k person the total paid was 30%, and for the 1 million person the total paid was maybe 5% of their total. Warsaw away lower.

It is. And it's wrong. But part of how we got here is it was sold as not being a tax, even though it absolutely is.

The claim was it was a mandatory retirement investment program. Because the wealthy have their own retirements figured out they don't need their payouts to continue to scale with their income, so their payments in shouldn't scale proportionally either, under this flawed premise, since it is "not a tax."

But why it is a tax is, one, most of us will never see a payout because the program is going to collapse before most of us retire, and therefore it is NOT a mandatory retirement program. And second, all payments in and out of government are fungible, so it really is a tax and a separate retirement supplemental program, where we use language around them to pretend they are one program.

Ironically, if we took all the money that was paid into Social Security and invested it in a real portfolio (actual investment), our generation would actually get something, and current generations would be getting significantly more retirement. The issue is that because whether you like government or not, it is a money loser. It's basically designed to be one. That means using the government as an investment vehicle is in pure investment terms really really bad. Plus it also sets up a regressive tax as you pointed out.

Social Security is not designed to redistribute a ton of money from the rich to the poor. And it isn't used to fund the government so it doesn't make the rich pay their "fair share". It's intended to force people to save so we don't have a ton of poor seniors around.

Rich people are taxed up to a certain amount. So the rich and super rich pay in the same maximum dollar amount. But on the other side the benefits that they get out are capped in the same way.

It's not supposed to be like a retirement plan where you assume you're going to live on 80% of your income in retirement. It's just there to ensure you have "enough". The most money an individual can get out of social security, the maximum benefit, is $5181/month.

To be a little more accurate, Social Security Disability Insurance is redistributive by design.

Social Securiry benefits are paid out based in how much you earned during your working years. If you earned more money while working, you get higher monthly benefits when you retire. Up to a certian point:

These benefits cap out at a certain limit. Accordingly, the social security taxes also cap out at a certain limit. Beyond that income you do ‘t get any higher Social Security benefits and you don’t pay any higher Social Security taxes.

This is because Social Security is not designed to be a progressive tax like the income tax is.

Our tax system overall should be more progressive. Maybe social security should be part of that. But it was never designed to do this.

Social Security is capped at $184,500

SS tax is 6.2% for individual and 6.2% for employer.

Employee A makes $184,500. $11,439 paid by individual and $11,439 paid by employer. $22,878 total.

22,878/184500=.124 or 12.4% tax.

Employee B makes $1,000,000. SS is capped at $184,500. $11,439 paid by individual and $11,439 paid by employer. $22,878 total.

22,878/1,000,000=.022 or 2.2% tax.

So someone making a million dollars would only have to give up 1.1% to SS tax and their employer 1.1% SS tax.

They will both pay the exact same amount into SS but the percentage isn't as high because $815,500 of the million is not getting taxed.

There's a cap on how much you (and your employer) pay per SSN / year. So, for particularly high wages or salaries, the percentage goes down, for every dollar made above the cap.

Also, things like stock( option)s often made up a significant portion of compensation for high earners and those aren't subject to SSI tax at all, IIRC.