{"id":55584,"date":"2025-01-02T09:46:08","date_gmt":"2025-01-02T09:46:08","guid":{"rendered":"https:\/\/innodebt.com\/?p=55584"},"modified":"2025-01-02T09:46:09","modified_gmt":"2025-01-02T09:46:09","slug":"many-rich-americans-have-already-paid-their-2025-social-security-taxes","status":"publish","type":"post","link":"https:\/\/innodebt.com\/?p=55584","title":{"rendered":"Many Rich Americans Have Already Paid Their 2025 Social Security Taxes"},"content":{"rendered":"
\n

Shortly After Midnight On New Year\u2019s Eve, 229 Americans Have Already Paid Their Social Security Tax<\/h2>\n

Earnings over $176,100 per year, which is the cap on earnings taxed by Social Security, escape tax. A civil engineer earning $176,100 per year looks the same as Elon Musk in the eyes of the Social Security system.<\/p>\n

According to public data on Musk\u2019s income, 15 minutes past midnight on New Year\u2019s Eve, he likely has paid all of his Social Security tax on earnings from Tesla. If all of Musk\u2019s income was taxed, he would have been able to pay all his Social Security tax in about 60 seconds.<\/p>\n

Alexander Karp, CEO of Palantir likely pays all his Social Security tax (OASDI) in about 19 minutes past midnight January 1; Hock Tan, CEO of Broadcom and Brian Armstrong, CEO of Coinbase, could have paid theirs by about 12:30 a.m. In the first few hours of 2025, more than 229 U.S. workers earning above $50 million per year will have likely paid all their Social Security taxes for the entire year. (Only salaries from executives at public companies are disclosed so there are likely more rich executives at private companies who have paid all their Social Security within half an hour in the new year.)<\/p>\n

163 Million Americans Pay Social Security Tax All Year Long<\/h2>\n

In contrast, over 164 million workers (about 94% of us) pay Social Security taxes all year long. The point is a lot of income escapes the Social Security system; and the escaping income is that from the wealthiest Americans.<\/p>\n

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If federal policy makers raised the cap on the maximum earnings subject to Social Security taxes, and included more income \u2014 interest, business receipts, capital gains \u2014 in the definition of earnings (like Medicare does), we could close the solvency gap. Taxing the expanded base could more than pay for promised Social Security benefits for 35 years and there would even be some money to eliminate poverty among all Social Security recipients.<\/p>\n

A Primer On Social Security Finances<\/h2>\n

The payroll tax for Social Security Old Age and Survivors\u2019 benefits is 12.4% (statutorily split between employees and employers) and is assessed on earnings up to the earnings maximum (which increases every year). In 2025 the cap is $176,100. In 2023 (the most recent figures) about 176 million Americans and their employers contributed $1.1 trillion (see Table 5) to the Old Age, Survivors, and Disability system in 2023.<\/p>\n

If the cap for Social Security had not existed (there is no cap on Medicare taxes) the some 6% of U.S. workers who earn more than Social Security\u2019s taxable maximum would contribute more than $388 billion to Social Security. If the earnings maximum had been eliminated, just the handful of people \u2014 a bit more than 229 \u2014 earning over $50 million a year would have paid $3.6 billion in Social Security tax, which is more than 77% of American workers \u2014 earning less than $57,000 per year \u2013 paid in Social Security tax.<\/p>\n

Let me repeat: 229 of the highest-paid Americans \u2014 if the law would change and they paid Social Security tax all year round \u2014 would pay as much tax as 77% of Americans.<\/p>\n

If Congress and the president do nothing to find more revenue for Social Security, in 2033 Social Security benefits will suddenly drop by 21%.<\/p>\n

To restore Social Security solvency decades past 2033, the tax rate could increase and\/or the tax base could expand to include all income. Social Security\u2019s deficit is expressed by how much the payroll tax must increase to pay promised benefits for 75 years. And that amount is relatively small, just 3.62 percentage points (1.81 percentage points to each the worker and employer). So, the tax increase would be fairly painless.<\/p>\n

But I, and most of economists, agree a better, more efficient, solution is to expand the tax base by raising the earnings cap and expand the definition of income to include income from capital according to a report by the Congressional Research Service.<\/p>\n

Legislation Can Make Social Security Solvent<\/h2>\n

In the House of Representatives, Rep. John Larson (D-Conn.) has led proposals for years to expand Social Security benefits and revenues by expanding the tax base. In the Senate, \u201cThe Social Security Expansion Act,\u201d introduced by Senators Bernie Sanders (I-Vt.) Elizabeth Warren (D-Mass.) and Congresswomen Jan Schakowsky (D-Ill.) and Val Hoyle (D-Ore.) would raise the taxable earnings cap to $250,000, and like Larson\u2019s bill, include investment income.<\/p>\n

Their measure would raise more money than needed to solve the long run deficit, so the Act uses additional revenue to increase Social Security\u2019s benefits to eliminate most elder poverty. (The Office of the Chief Actuary of Social Security, Steve Goss, and Social Security Works, a nonprofit Social Security think tank, are good sources for updates on Social Security legislation.)<\/p>\n

Political Hope For Social Security Fixes<\/h2>\n

There is hope. In December 2024, Republicans and Democrats raised Social Security benefits for more than 2 million people by repealing the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).<\/p>\n

The hope is that the bipartisan support for the expansion of Social Security benefits may mean Congress is listening to the majority of Americans \u2014 Republicans and Democrats \u2014 who want more revenue for Social Security and do not want benefit cuts.<\/p>\n

The bad news is that recently House Republicans advocated cutting Social Security benefits by (about 8%) by raising the full retirement age to 69 and President-elect Donald Trump\u2019s only Social Security proposal would drain Social Security of revenue by $23 billion, according to a report by the thorough Committee for a Responsible Federal Budget.<\/p>\n

The Social Security Trustees wrote in the last actuarial report, lawmakers have all the options laid before them to eliminate Social Security\u2019s long-term financing shortfalls and raise benefits: \u201cTaking action sooner rather than later will allow consideration of a broader range of solutions.\u201d<\/p>\n

The quickest and most effective action to fix Social Security just might be to ask the small fraction of the highest-income Americans, like Elon Musk and other wealthy CEOs, to pay all year long.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Shortly After Midnight On New Year\u2019s Eve, 229 Americans Have Already Paid Their Social Security Tax Earnings over $176,100 per year, which is the cap on earnings taxed by Social Security, escape tax. A civil engineer earning $176,100 per year looks the same as Elon Musk in the eyes of the Social Security system. According […]<\/p>\n","protected":false},"author":1,"featured_media":55585,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[24],"tags":[],"class_list":{"0":"post-55584","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance"},"yoast_head":"\nMany Rich Americans Have Already Paid Their 2025 Social Security Taxes | Innodebt<\/title>\n<meta name=\"description\" content=\"Shortly After Midnight On New Year\u2019s Eve, 229 Americans Have Already Paid Their Social Security Tax Earnings over $176,100 per year, which is the cap on\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/innodebt.com\/?p=55584\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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