Above Photo: (Photo: 401(K) 2012/Flickr)
If You Want to Collect Social Security, Trump’s Tax Plan Is an Outrage
You probably pay about four times more of your income to Social Security than millionaires, who want to cut their taxes and your benefits.
How much did your paychecks total last year? You know the answer, of course. So does the Social Security Administration. The totals for every American’s paycheck income are sitting in Social Security’s computers.
Once every year, Social Security does a serious data dump out of those computers to let us know just how much working Americans are actually making. The latest totals — covering 2016 — have just appeared.
Most of us, the new numbers show, are simply not making all that much.
In fact, nearly half of our nation’s employed — 49.3 percent — earned less than $30,000 in 2016. A good many of these Americans lived in poverty. In 2016, families of four that earned less than $24,339 ranked as officially poor.
We don’t have an “official” figure for middle class status. But the Economic Policy Institute has calculated the costs of maintaining a no-frills middle class existence in various parts of the United States. In Houston, one of our nation’s cheaper major cities, a family of four needed $62,544 in 2016 to live a bare-bones middle class lifestyle.
Nationally, according to the new Social Security payroll income numbers, over three-quarters of working Americans — 76.4 percent — took home less than $60,000 in 2016.
Some Americans, on the other hand, took home a great deal more. The Social Security Administration counts 133,119 Americans who pocketed over $1 million in paycheck income last year.
Now which of these two groups — the millionaires or the under-$60,000 crowd — do you think paid a greater share of its income in Social Security taxes?
The millionaires could certainly afford to pay the bigger share. But they didn’t.
Individuals who took home $1 million in 2016 had $16,265 deducted from their paychecks for Social Security and Medicare. Those deductions totaled a meager 1.6 percent of their paycheck income. Working Americans making $60,000 last year, by contrast, had 7.65 percent of their take-home deducted for Social Security and Medicare.
In other words, Americans making $60,000 paid over four times more of their income for Social Security and Medicare than Americans who made $1 million.
How could that be?
Our tax code currently has a ceiling on earnings subject to the Social Security tax. That ceiling this year rests at $127,200. All paycheck income up to that level faces a 6.2 percent tax for Social Security and a 1.45 percent tax for Medicare.
Income above that ceiling faces no Social Security tax at all.
Until the Obama years, income above the earnings ceiling faced no payroll tax for Medicare either. But President Obama succeeded in getting that changed. Individual income over $200,000 now faces an additional 0.9 percent Medicare tax.
If all income over $200,000 faced a Social Security tax as well, we’d have enough new revenue to significantly improve Social Security benefits.
The Trump administration is moving in the opposite direction. Earlier this year, the White House tried and failed to get the Obama Medicare tax on the rich repealed.
Now the administration is pushing a tax “reform” that totally ignores the unfairness of the current Social Security payroll tax and instead hands America’s wealthiest a stunningly generous assortment of tax giveaways.
If this Trump tax plan passes, Americans making $60,000 will still be paying over four times more of their income in payroll taxes than Americans who make $1 million. And America’s millionaire-packed top 1 percent will get 80 percent of the new Trump tax cuts, the Tax Policy Center calculates.
The Trump tax plan, in other words, makes the U.S. tax code even more millionaire-friendly than the current code. The White House calls that “reform.” The rest of us ought to call it an outrage.