Eliminating The F.I.C.A. Cap Would Solve Social Security's Long Term Financing Problems And Would Affect Few Americans
One proposal to eliminate the long term financing problem for the Social Security trust funds is to eliminate the cap, currently $110,100, on earnings covered by the F.I.C.A.tax that supports the trust funds. The Center for Economic and Policy Research (CEPR) has done a study on who would be affected if this becomes law. CEPR also studied an alternate proposal to raise the F.I.C.A. cap to $250,000. The alternate proposal would not completely eliminate the long term financing problem but would dramatically reduce it. The CEPR gives figures for various demographic groups and for each state but the chart below shows the gist of what the study found -- only a small percentage of the population would be affected by increasing the cap to $250,000 and only a tiny additional percentage would be affected by lifting the cap altogether.
The cap on the Medicare portion of the F.I.C.A. tax was eliminated years ago. It wasn't even particularly controversial then. Why should eliminating the F.I.C.A. cap be that big a problem now?
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