Everybody pays Social Security taxes. But the poor get relatively more than what they contribute into the system. In other words, the system is partially a welfare system designed to redistribute contributions of the well off to those less well off. So, the system is already means tested.
If you make the rich pay social security on their entire wages, their lifetime Social Security contributions will be very large indeed. A million dollar a year executive will have to pay $130,000 into Social Security per year (including employer contributions). Since the plan is not to increase maximum Social Security pensions commensurately, we are greatly increasing the amount of means testing. In other words, a rich person that, based on his SS contributions, should have gotten a $200,000 a year SS pension, will only get a $50,000 one. Or, in other words, the lion's share of the potential Social Security pensions of those that are very well off are used to pay the Social Security pensions of those less well off.
The above are relevant for future retirees. Current retirees, regardless of how well off they are, actually get more than they contributed into the system, courtesy of a generous Congress that kept increasing Social Security pensions, because Social Security taxes were so much bigger than the pensions. Boomer retirement was too far off into the future to think about. |
