Majority of Retirees Think All Wages Should be Taxed for Social Security Purposes, Says New Survey by The Senior Citizens League
WASHINGTON (PRWEB) January 28, 2020 -- Eighty-three percent of retirees think Congress should modify Social Security’s financing by applying the Social Security payroll tax to all wages, according to a new survey by The Senior Citizens League (TSCL). But, there’s widespread division over critical details, such as whether to credit those higher earnings for benefit purposes.
“The majority of older Americans feel there’s an opportunity for Congress to address Social Security’s funding shortfalls, without having to cut benefits,” says Mary Johnson, a Social Security policy analyst for The Senior Citizens League. “But there’s a considerable amount of debate on the question of whether higher income workers should receive somewhat higher benefits when a greater portion of wages are taxed,” says Johnson.
Unlike the Medicare payroll tax, which applies to all earnings, the amount of earnings subject to the Social Security payroll tax is capped. Workers with earnings above the Social Security taxable maximum, which is $137,700 in 2020, pay no Social Security taxes on earnings in excess of that amount. On the other hand, at retirement, high earners receive Social Security benefits calculated only on earnings up to the annual taxable maximum amounts rather than all of their earnings.
Lifting the amount of wages subject to Social Security taxes is coming under the spotlight as a growing share of the nation’s payroll exceeds the maximum amount of wages subject to taxation for Social Security. According to a recent report by the Congressional Budget Office (CBO), because earnings are growing faster for high earners than for low earners, a smaller share of the nation’s payroll will be subject to the Social Security payroll tax in the future, adding to Social Security’s insolvency issues. In its December 2019 report on long - term projections for Social Security, the CBO estimates that the gap between the growth rate in earnings for workers with high earnings and those with lower earnings will persist for the next 30 years.
A majority of The Senior Citizens League’s survey participants support completely lifting the taxable maximum cap and applying the Social Security payroll tax to all wages. The survey also examined support for another approach that would impose the payroll tax using a two – tier option. The payroll tax would be applied to earnings up to the annual taxable maximum, and then on a second, higher tier of wages. The survey examined support for a second-tier level applied to wages $250,000 and up. This option potentially creates a payroll tax gap for workers earning more than the taxable maximum, but less than the $250,000 amount.
The survey was conducted in 2019 and asked:
“Under current law Social Security taxes are not applied to all earnings, but only to the taxable maximum, currently $132,900 in 2019. All earnings are currently counted towards benefits. Which of the following changes to Social Security would you most support? Choose only one.”
- Apply the payroll tax to all earnings. Credit the additional earnings for benefit purposes. — 33 percent favor.
- Apply the payroll tax to all earnings. No credit of additional earnings for benefit purposes. — 29 percent favor.
- Apply the payroll tax to all earnings to the taxable maximum ($132,900 in 2019) and then to wages above $250,000. (This would leave a gap where no payroll taxes are applied on wages higher than $132,900 and lower than $250,000.) Credit the additional earnings for benefit purposes. — 12 percent favor.
- Apply the payroll tax to all earnings to the taxable maximum ($132,900 in 2019) and then to wages above $250,000. This leaves a gap of where no payroll taxes are applied on wages higher than $132,900 and lower than $250,000. No credit of the additional earnings for benefit purposes. — 10 percent favor.
- None of the above. — 17 percent.
The Senior Citizens League supports legislation that would provide a modest boost in Social Security benefits for all retirees and strengthen Social Security financing. To participate in the League’s 2020 Senior Survey, visit https://seniorsleague.org/2020-senior-survey/.
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With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors’ groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit http://www.SeniorsLeague.org for more information.
Shannon Benton, The Senior Citizens League, http://www.SeniorsLeague.org, 703-548-5568, [email protected]
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