Pay of Top Earners Erodes Social Security
Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data -- without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.
The pay of employees who receive more than the Social Security wage base -- now $106,800 -- increased by 78%, or nearly $1 trillion, over the past decade, exceeding the 61% increase for other workers, according to the analysis. In the five years ending in 2007, earnings for American workers rose 24%, half the 48% gain for the top-paid. The result: The top-paid represent 33% of the total, up from 28% in 2002.(...)
Social Security Administration actuaries estimate removing the earnings ceiling could eliminate the trust fund's deficit altogether for the next 75 years, or nearly eliminate it if credit toward benefits was provided for the additional taxable earnings.
There is a specific US issue here that Social Security contributions are subject to a cap (a profoundly regressive rule), but you can find similar mechanisms in each country (in France, you have the bouclier fiscal, which caps the marginal tax rate and has the same effect) and the conclusion is that major chunks of public deficits - and of future social benefits "holes" - that we are fearmongered into worrying about could be completely eliminated by taking care of such incredibly unfair loophooles that favor the rich.
And it needs to be underlined that increasing inequality, and massively boosted incomes at the top mean that an ever larger chunk of incomes and GDP escape taxation (or social contributions), thus worsening the deficits of governments, pensions and healthcare systems.
Thankfully, that also points to an easy solution to all of these "problems": as they were created by lower taxes on the rich, they can be solved by higher taxes on the rich.