What is the solution to the Social Security conundrum? 1. Elected officials must not deplete the Social Security funds to pay for other expenses. 2. Remove the taxable wage cap. 3. Rescind the recent tax cuts for those earning over $200,000 4. The country cannot afford to give Social Security to non-cit zens. 5. U.S. companies must not evade paying for their off-shore employees'.
George David, CEO and Chairman of the Board of United Technologies made $88.7 million in 2004 (1). So how much did he pay into Social Security in 2006? He paid $5,840. This is exactly the same as the guy who made $94,200 taxable income.
Why? A person earning $94,200 in taxable income pays $5,840. After that he or she doesn't pay another dime. This is called a cap. Once people reach the income cap, they no long have to pay 6.2% of their taxed income into Social Security (2).
Opponents of eliminating the income cap argue this is a huge tax increase. Or is it equitable taxation? They say Social Security would go bankrupt. But would the elected officials keep stealing Social Security funds if everyone contributed proportionally? Opponents say change would reduce family budgets, but middle class income ends at $77,300 (3). Would it weaken our economy by decreasing jobs? No, because the rich do not spend extra income in their communities and on salaries or goods such as washing machines, cars, or clothing. They invest their money.
According to the Bureau of Labor Statistics, the average annual wage in this country was $39,354 in 2004 (up from $35,323 in 2000). So the average person paid 6.2% of their taxable wages into Social Security, or $2,439.94 in 2004.
Had George David paid 6.2%, he would have paid $5,499,400. The five highest paid CEO's earned an average of $55 million a year in 2005 (4). They each paid $5,840 into the Social Security fund. Not $3,410,000 each, $17,050,000 total if they paid 6.2%.
The 100 largest companies' CEO made a "median income of $1.14 million, up 46.4%, the highest in five years.(5) At 6.2% they would have paid $86,800 each, total $8,680,000. They paid only $5,840 each or $584,000 total.
With the recent tax cuts the top 1%, who earn $400,000 +/- per year, the country loses $1+ trillion in the next decade. $200,000 earners make up 40% of all the new tax cuts.
We only need $12.7 trillion to keep Social Security solvent and $30 trillion for Medicare. The solution is: Don't raid Social Security monies, rescind tax cuts for the wealthy, make citizenship a requisite, eliminate the cap and corporations paying what they owe.
1. Michael Brush, MSN Money, Company Focus, March 16, 2005. 2. Social Security Department, 2005. 3. Congressional Budget Office's Quntile System 4. Michael Brush, MSN Money, Company Focus, March 16, 2005. 5. Ibid