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0 pointsForHackernews10y ago0 comments

> removing the maximum wage for Social Security contributions

This sounds like a great idea to me. It's absurd that only the first $118,500 of earnings are subject to to social security tax, and it means that our tax structure is much less progressive than it appears at first glance (which is one reason certain people strenuously avoid talking about any taxes except Federal Income Taxes).

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twoodfin10y ago

It's not absurd: Social Security's benefits formula has significant "bend points" that make it an increasingly bad "investment" for higher income workers. Eliminating the wage cap would remove any remaining fig leaf covering its essentially redistributive nature: High income workers would have to live to 140 to get back what they "paid in" even without interest.

mikeash10y ago

Why do we need to keep a fig leaf to cover up what everybody already knows is there? We should either accept that Social Security is a form of welfare and rationalize it accordingly (my preference) or we should overhaul it to actually be the mandated savings scheme that it's said to be.

bmelton10y ago

Because welfare isn't popular, it makes it more subject to the political climate, and because as a mandated savings scheme, social security isn't terribly performant.

jmulho10y ago

The goal of the tax is not redistribution of wealth. The goal is to fund the benefits. The tax is capped because the benefits are capped.

plonh10y ago

That is nonsense. The first social security recipients paid 0 in. SS has always been a redistribution from workers to retirees, with no actuarial basis for the connection between how much you put it and how much you get out.

andyv10y ago

The social security tax is capped because the benefits are also capped. Billionaires don't need $100k/month in SS benefits.

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