Our Regressive Tax System: One Instance

An effect of inflation is that, even if the tax law doesn’t change, high earners pay a progressively lower percent of their earnings in social security taxes, but low earners pay the same percentage of their incomes as before. The cause of this disparity is that the social security tax is only exacted on the first $168,600 in annual income. Thus, if wages and prices have doubled, and you were earning $86,300 before, and you’re now earning $168,600, your social security taxes double, but if you were earning $168,600 before, and you’re now earning $325,200, your social security taxes remain unchanged. Removing the cap on social security taxes — taxing high-income earners equally with low-income earners — would ensure solvency of our social security system for decades to come.