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Who Pays if We Raise the Social Security Payroll Tax Cap? (2019 update)

February 13, 2019

Most Americans know that their earnings are subject to the Social Security payroll tax. Not as many are aware that the amount of earnings subject to the tax, while liable to change, is capped at the same level for everyone, regardless of total earnings. This year, the maximum wage earnings subject to the payroll tax is $132,900.The cap on the Social Security payroll tax means that those with the highest earnings effectively pay a lower rate. People who earn a million dollars a year pay this tax on about an eighth of their earnings. People who earn a quarter of a million dollars pay the tax on just over half their earnings. It is important to note that this just applies to wage earnings, not other forms of income. If the individual earning $250,000 a year makes another $250,000 from investments, then they end up paying the Social Security tax on about a fourth of their income. The vast majority of workers fall below the $132,900 cap though, and have significantly less stock or other income, if any. As a result, all or most of their income is subject to the payroll tax.

Who Pays if We Raise the Social Security Payroll Tax Cap?

February 1, 2017

Most Americans know that their earnings are subject to the Social Security payroll tax. Not as many are aware that the amount of earnings subject to the tax, while subject to change, is capped at the same level for everyone, regardless of total earnings. This year, the maximum wage earnings subject to the payroll tax is $127,200. The cap on the Social Security payroll tax means that those with the highest earnings pay a lower rate.Using Census Bureau data from the latest American Community Survey (ACS), this issue brief updates previous CEPR research to determine how many people would be affected if the payroll tax cap were raised or eliminated.

The Price We Pay: Economic Costs of Barriers to Employment for Former Prisoners and People Convicted of Felonies

June 16, 2016

Despite modest declines in recent years, the large and decades-long blossoming of the prison population ensure that it will take many years before the United States sees a corresponding decrease in the number of former prisoners. Using data from the Bureau of Justice Statistics (BJS), this report estimates that there were between 14 and 15.8 million working-age people with felony convictions in 2014, of whom between 6.1 and 6.9 million were former prisoners.

The Social Security Benefits of Sitting Senators in 2015

January 27, 2015

This issue brief presents the scheduled Social Security benefit for each current member of the Senate. The issue brief is intended to inform Senators -- and the general public -- about Social Security and, assuming no changes to current policy, demonstrate that it will pay full benefits through 2030 and roughly 75 percent of benefits from 2031 on.

The Chained CPI: A Painful Cut in Social Security Benefits and a Stealth Tax Hike

December 13, 2012

In the debate over federal budget deficits, several politicians have proposed to change the formulas that determine benefit levels for Social Security and other government programs as well as income tax brackets. Switching to a relatively new formula, the Chained CPI, would help the federal government save money by slowing increases in benefits and raising additional tax revenue. Proponents of this proposal argue that the Chained CPI is a more accurate formula and any impact on beneficiaries of the government programs affected would be mitigated by increased tax revenue from the wealthy. However, this issue brief effectively refutes those arguments by showing that switching to the Chained CPI would result in cuts to already modest Social Security benefits, that it is likely that the Chained CPI is not an accurate measure of the inflation rate seen by seniors and that the Chained CPI would lead to income tax increases for working Americans.