“Tax the Rich” viewed as a panacea by some – but will it save Social Security? - Money Digest
Each year, the amount of earnings subject to Social Security payroll tax inexorably increases, causing affluent Americans to pay even more into the Social Security program. To illustrate, the so-called “taxable maximum” for Social Security has increased from $142,600 just five years ago, to $184,500 in 2026. In a nutshell, that means that everyone in that higher earnings bracket is going pay more FICA (or SECA self-employment) tax to Social Security. Since the American “upper class” is generally viewed as those whose annual income is about $170,000, the new 2026 SS taxable maximum means more of the upper class (e.g., “the rich”) will see their tax bill go up.
And that’s fine, according to some experts who have no sympathy for “the rich” and more affluent among us. But will raising the SS taxable maximum really “save” Social Security as some pundits suggest. Well, it will obviously help, but it definitely is not a panacea which will resolve all of Social Security’s financial problems. This Money Digest article by Colin Boyd discusses the annual raising of the SS taxable maximum and how it relates to the problem of Social Security insolvency.
While some other organizations only verbally lament this looming insolvency crisis, The Association of Mature American Citizens (AMAC) is actively engaged in providing Congress with ideas for a long-term solution. As an example of leading thinking on reforming Social Security, AMAC believes Social Security must be preserved and modernized to serve future generations. AMAC’s position is that this can be achieved without payroll tax increases through relatively minor program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating initial benefits for higher-income beneficiaries. Changes to the age for maximizing benefits are included in AMAC’s position, along with (1) an increase in the thresholds where benefits are subject to income tax; (2) indexing of these thresholds annually to account for inflation; (3) changing the taxable maximum formula to address the unintended loss of revenue; (4) improving survivor benefits, (5) eliminating the reduction in benefits for those choosing to work before full retirement age; and (6) improving savings tools for future retirees, including a savings account that builds estate value. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade. See AMAC’s proposal for Social Security reform here.