The problem of an impending shortfall of the Social Security Trust Fund is in significant part a consequence of our rising economic inequality.
High-income people pay a smaller share of their income into Social Security because salary over $160,200 — the so-called “tax max” — is not subject to the Social Security tax.
Also, there is no Social Security tax on income from capital (including dividends, interest, capital gains and rents), which tends to go to wealthy people.
Consequently, as a larger and larger part of our national income goes to the rich, the share collected by the Social Security tax declines.
The solution is not hard to envision: Raise the “tax max” and tax income from capital.
Persons:
“ Haley, Paul Krugman, Krugman
Organizations:
Social Security, Social Security Trust Fund, Social