cross-posted from Working America's Main Street blog where I am a featured guest blogger
Sam Seder has a great new video now featured on StrengthenSocialSecurity.org on what working people think about the attempts to weaken Social Security while giving tax breaks to the rich.
Rather than extending tax breaks for those who already have plenty of money and cutting Social Security, a fair tax approach could actually strengthen and expand Social Security. That's exactly what EPI economist Monique Morrissey proposed earlier this year, and highlighted in a brief New York Times Op-Ed piece on Sunday:
Do you want to know how much LeBron James pays in Social Security taxes each year? Bill Gates? Oprah? Your dermatologist? $6,622. That’s the maximum anyone pays in Social Security taxes, because earnings above $106,800 are not taxed.
By slowly raising the cap — say, 2 percent each year, though increasing it faster would raise more revenue — so that it eventually covered 90 percent of all income, we could eliminate roughly a third of Social Security’s projected shortfall. Next year, people like Mr. James would pay slightly more than they pay now while eventually receiving slightly higher benefits.
That would help restore a balance to our tax base that has disappeared over the past few decades, as incomes among top earners have grown so much more than incomes among those earning below the cap. Indeed, 16 percent of earnings in this country are completely untaxed by Social Security — a huge windfall for the rich and a terrible shortfall for the benefits program.
Better yet, we could close about 70 percent of the shortfall if we immediately eliminated the cap on the employer side. Both employers and employees pay a 6.2 percent Social Security tax on earnings only up to $106,800. Instead, employers should pay their share of the tax on their employees’ full salaries.
I'm sure someone, somewhere would complain that this just makes too much sense.
The author is the winner of the 2010 CREDO Mobile/Netroots Nation award for Blog Activist of the Year.