During the hearing, Murray pressed on tax fairness between the ultra-high-net-worth and other class sizes, claiming that if wealthier Americans paid their “fair share” of Social Security taxes, the program’s insolvency could diminish.
“If you make around $160,000 a year—you are paying the same amount into Social Security each year as a billionaire, Murray added. “Someone can make over 12 thousand times your salary—and yet their Social Security tax rate is a fraction of a fraction of what your rate is … It should be totally uncontroversial to suggest that we find ways to increase Social Security’s revenue in order to extend its solvency, and to make the system a little more fair.”
401k Specialist
Yes, and their benefits, if any, are still based on the taxable wage base. Fact is most of the super rich don’t have earned income and thus are not eligible for Social Security benefits. Their income is virtually all associated with the stock market, investments and interest and dividends.
Arguments such as the one above are just red herring political pandering. Making Social Security fully sustainable is and always has been easy while staying within the current design of the program.
Congress has not done its job in keeping the program solvent and some Members now seek to divert the blame by claiming the wealthy don’t pay their fair share. That is nonsense.
Let’s preserve Social Security as designed, a social insurance program funded by the people benefiting and proportionally to their income and the benefits delivered.
Yes, find ways to increase SS revenue. That’s what Congress should have been gradually doing every year for the last twenty years.
QUINNSCOMMENTARY 
You say: “To be fare the SS benefit should be based on all SS taxable earnings.” Perhaps, depending on your definition of fare, who should pay the fare.
But, if you are talking about “fair”, fair means treating me as an individual, as I believe I should be treated. Raising taxes on wage earnings > $160,000 while only improving benefits at the lowest tier of the formula ain’t “fair” for those affected.
You say: “Let’s preserve Social Security as designed, a social insurance program funded by the people benefiting and proportionally to their income and the benefits delivered.”
Just not true. Social Security, Medicare and Medicaid are all social insurance programs where the benefits are designed to be ultra progressive – where those who pay the most in FICA, FICA-MED, and FIT taxes do not receive benefits proportion to their income. Remember Social Security is funded primarily by FICA, and Medicare Part A Hospialization is funded primarily by FICA-MED.
Medicare B and D are funded primarily by those paying income taxes, as is the situation for Medicaid (however, because of annual deficits of $2+ Trillion, a good portion of that spend will be paid by future taxpayers).
And, lest you wonder just how progressive, the easiest example to demonstrate is to look at what it takes to qualify for non-contributory Medicare Part A. Here’s my calculation, if you were age 65 and retired and commenced Medicare last year: An individual born in 1957, started working at age 21 in 1978, worked for 10 years with wages that just met the quarterly minimum for 40 quarters, retired @ 65 in 2022, and paid only $180.76 in taxes over their working years to qualify for lifetime non-contributory hospital coverage for himself and his spouse. Remember, both may also have lifetime, non-contributory Medicare and Medicaid because one in 5 of all Medicare beneficiaries are dual eligible.
Keep in mind that one month of premium for one person for Medicare Part A Hospital Insurance, with its $1,600 deductible per stay is priced at $506 in 2023!
“Fair” or “Fare”?
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Failed to mention that in 1978, only 20% of American households paid no income tax, while in 2022 40% did not. It is obvious to anyone who is paying attention that Social Security, Medicare, and Medicaid are income/wealth distribution schemes and have been for decades. That is, they don’t call it social insurance for nothing.
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No matter how characterized, they are essential given the poor -and unlikely to get better – state of most Americans saving and preparing for retirement. Human behavior causes bad things to happen and always will.
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Hey – Enjoy your weekly updates. I’m about to retire next year and very much appreciate your insights into Social Security, Health Insurance, IRA. etc…
Comment: You say “Fact is most of the super rich don’t have earned income and thus are not eligible for Social Security benefits.”
But surely many people have annual wages of more than 160K. Why limits the amount of earnings subject to taxation for a given year? Why not have a continued sliding scale? The more you earn in wages, the more you contribute in SS tax?
This won’t fix the problem but why is it not an equitable part of the solution?
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The benefit one receives is based on earning and the SS formula. To be fare the SS benefit should be based on all SS taxable earnings. That is today, no earnings above $160,000 count for any benefit and the way the formula works, lower paid workers receive a higher proportional benefit. Actually, if taxes were taken on higher amounts along with some accumulation of added benefits it would be a gain overall for the trust.
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Here’s a link with a transcript of the entire hearing…it was eye opening for me.
https://open.substack.com/pub/philmoeller/p/social-security?r=39bg6&utm_campaign=post&utm_medium=web
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I’m not a socialist, but I am a tax the rich guy. Only not with Social Security. Make incremental changes to the program as it is to keep it solvent.
I don’t recall what the limit was in the early seventies, but I recall earning less than eight hundred a month, and we all looked forward to the end of the year, because we all maxed out and didn’t have SS deducted the last four to six weeks of the year. That would probably make the max around $10,000. We didn’t know how rich we were.
And do not raise the retirement age. Don’t tell me we can’t afford it.
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$9,000 max in 72
$10,800 max in 73
I think 73 was the last year I maxed out.
It went up fast after that, and I didn’t.
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I don’t care about defending the rich, only about a social security that operates year in and year out. Since the payroll taxes have to go up, I’m leaning toward a more hefty benefit that would take the pressure off people to save 10-20% in addition to the higher taxes. That way way the bottom half or more of wage earners could retire decently. The discussion about the rich is a smokescreen in my opinion.
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And since their income is not earned income, the higher tax will not deliver the added revenue required to save social security. Also if they did pay payroll wage FICA taxes, they would get the same maximum benefit just like everyone else that qualifies meaning the the high wage earned gets back only a fraction of the benefit to wage ratio compared to the low income wage earners who see a higher percentage of their wage to benefit ratio.
I say so what. Social Security is not suppose to be a welfare program but insurance. If you want a bigger benefit, earn more and pay more in FICA taxes. Don’t rob the rich.
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