Talk:Social Security Wage Base

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It looks to me that there may be a couple of errors in the first footnote to the table (the single asterisk): (1) "The maximum employee share in 2012 is reduced to $4,624.20 ..." but the 2011 value is $4,485.60, so it actually increased by $138.60 in 2012. (2) "... in 2012 ... the maximum employer share remains at $6,826.20" but the value for 2011 is $6,621.60, an increase of $204.60. — Preceding unsigned comment added by Brian0120 (talk • contribs) 19:08, 22 December 2018 (UTC)

I don't understand the complexities of this article. Why is there a wage cap? 75.24.197.193 19:33, 26 April 2007 (UTC)

Mainly because there is a benifit cap. The more income you have, the less Social Security you get. So those that pay in little get the most and those that pay in a lot get very little. I guess at some point it just gets to be excessive robbery and redistribution of wealth, so they cap it. Also, SS is a safty net for those that weren't investing themselves. Above the wage cap, people usually invest their own money and make their own safty net (and get a much better return). That's my assessment anyway... perhaps there is a better reason. Morphh ^(talk) 19:45, 26 April 2007 (UTC)

It should also be pointed out that SS is an insurance program, at least officially, rather than a tax program as such. Hanxu9 (talk) 15:21, 17 August 2010 (UTC)

If someone earning $100,000 is taxed based on the first $94,200 (in 2006), then shouldn't the FICA tax paid here (and by all others earning $94,200 or more) be $5,840.40 (using the rate of 6.20%). I don't understand why the article lists the FICA tax paid by a person making $100,000 or more as $5,852.80. Is there a detail I'm missing that the article doesn't mention? Orangezdb 00:21, 16 August 2007 (UTC)

Hmm don't know. I think you are correct. Should be (6.2%) $5,840.40 for Social security and (1.45%) $1,450.00 for Medicare - for a total FICA of $7290.40 in 2006. 2007 uses a wage cap of $97,500. Anyone else? Morphh ^(talk) 16:53, 17 August 2007 (UTC)

I made a few changes to add some consistency. The term FICA is often used to refer to the Social Security tax, but FICA actually covers both Social Security tax and Medicare tax (actually, four different taxes - as Social Security and Medicare technically each have two separate components). To make a more apples to apples comparison, I changed the illustration to show just the effect of the Social Security tax, and I made corrections on the amount of the tax in the year 2006 illustration. Yours, Famspear 19:04, 17 August 2007 (UTC)

Follow-up: To avoid confusion, it's probably best not to refer to the Social Security tax as the "FICA" tax, since, as noted above, the FICA tax also includes the Medicare tax. I should note, however, that even seasoned tax practitioners often refer to the Social Security tax as "FICA" (as though the Medicare tax were somehow not also part of FICA, when in fact it is). Yours, Famspear 19:10, 17 August 2007 (UTC)

It is generally excepted that the employer portion comes out of employee compensation. Should we make some mention of this in the article? In theory, the tax incidence falls to the employee for a true tax burden of $11,680.80 on Social Security (in the example). Or just including the fact that the employer pays this additional tax and then some mention of economist opinion in this regard. Morphh ^(talk) 19:27, 17 August 2007 (UTC)

I have heard that some people somewhere have made this argument, and it's a weak argument in my view. I think the theory I've heard is that the employer would somehow pay the employee a bit more if the employer did not have to pay the employer's half of Social Security tax and Medicare tax. It's a theory that's very difficult to prove, and the theory also fails the logic test because it proves too much. For example, if the employer paid less than he currently pays for electricity, or janitorial services, or security, or phone service, that might also mean that the employer would pay the employee "more" -- or the employer might spend the savings on something else -- or might just pocket the difference. True, the payroll taxes are more directly related to the amount of compensation than are electric costs, etc. But to argue that the "employer's half" of payroll tax is indirectly coming out of employee compensation is pretty weak. Maybe the article should mention the theory, though, if someone kind find a third party source who believes in it. Yours, Famspear 19:36, 17 August 2007 (UTC)

The employer would obviously try to pocket some of the savings from eliminating the payroll tax expenses. However, it would put upward pressure on wages due to there being more money chasing the same number of overall employees in the economy. Hanxu9 (talk) 15:26, 17 August 2010 (UTC)

I've read many things in this regard and I'll try to see what I can find. I think almost all the studies I've read suggest this. The CBO makes this claim:[1] "Almost all economists agree that the employee share of payroll taxes is born by the employee. However, economists also almost uniformly agree that the employer share of payroll taxes falls not on the employing business, but rather on the employee: the employer shifts the burden to the employee by lowering her paycheck a corresponding amount. (This shifting may not be deliberate; rather, it reflects supply and demand in the labor market.)" Perhaps employee compensation was a poor choice of words above - I was thinking business cost tied to the employee (like health care, wages, etc.). The cost to hire the employee and the expense to the business includes those taxes. Personally, I think the tax incidence for the employer half falls to the consumer in the form of higher prices but I'll try to dig up some more. Morphh ^(talk) 13:10, 19 August 2007 (UTC)

Dear Morphh: The quoted language "Almost all economists agree..." sounds dubious to me personally, as does the statement that "economists also almost uniformly agree that the employer share of payroll taxes falls...on the employee." However, since truthandpolitics.org (and supposedly the Congressional Budget Office (CBO), or both) is/are making such a documented argument, then I would agree that it could be considered for a mention in the article. I don't know anything (pro or con) about the reliability of the statements from the organization truthinpolitics.org, though. Yours, Famspear 15:13, 19 August 2007 (UTC)

I don't know anything about the truthinpolitics.org either. I just did a search for CBO regarding payroll taxes and that was the first one that came up. Here is the actual report, where it is discussed on page 3. Morphh ^(talk) 22:48, 19 August 2007 (UTC)

Dear editor Morphh: Good work. I'll leave it to you to add it to the article, if desired. Yours, Famspear 14:18, 20 August 2007 (UTC)

I am sorrily disappointed that the article does not include when, how, or why the Cap was created, nor a link internal or external to such info. Thank you Famspear for mentioning the two-parts each of SS & MediCare. I assume SS is comprised of SSDI & retirement income. I wonder what are the 2 parts of MediCare? I would also like to mention my opinion that the discussion about whether or not the "employer contribution" should be included in calculations of employees wages to be fully inane. It is an expense of employers, just like insurance and direct compensation. From the employers' POV all the same pot. From the employees' POV, the "gross pay" wages is a fully fictitious number, merely used to calculate actual transactions or instruments - this "gross wages" dollars never actually is issued or received, by anyone. For a country born of tax revolt, our taxes are the most ridiculous mess of lies in the world. Sadsaque (talk) 18:46, 21 July 2016 (UTC)

Future SSWB levels

How is the SSWB determined for upcoming years? The percent increase column in the historical SSWB table illustrates that the increase is not constant. Is the increase dependent on CPI or other inflationary measure?

Thanks!

»» Xcohenx (talk) 07:11, 25 October 2008 (UTC)

Yes, it is indexed to CPI, which is why it did not increase in 2010. I believe an early budget proposal from the Obama administration eliminated the cap in an effort to sure up the system - meaning taxes on all earnings, with no commensurate increase in benefits. But it met with a lot of resistance and I have not read anywhere that it actually passed. —Preceding unsigned comment added by 72.248.156.66 (talk) 13:04, 19 April 2010 (UTC)

Text Updates

Although the table has been updated through the present (2012), the text is primarily written based on 2010 data, and makes 2010 references throughout. Do we have an active tax project participant willing to update and include some additional background (e.g. why after two years of 0% increases, it went up in 2012) in order to refresh the text? I am happy to do some additional research and try to update if not. JACooks (talk) 14:21, 9 April 2012 (UTC)

Update needed

The text in the section "Employee Contribution changes in 2011" says "As part of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 enacted on December 17, 2010, the employee Social Security tax rate is reduced from 6.2% to 4.2% for wages paid during the year 2011 only.... This is reflected in the above table, showing the reduction from $6,621.60 to $4,485.60." [my bolding]. But the table and its footnote say that the reduction applies to 2012 as well. Presumably there was another law that extended it to 2012. This extension needs to be reflected in a revision of the above quote. Duoduoduo (talk) 20:02, 28 September 2012 (UTC)

Why the external link?

Since the article doesn't mention any sort of disagreement with the existance of a cap on SS, why is there an external link about that subject? Note that the resolution to this could go either way, discussing the controversy of the wage base or by deleting the link. Either works for me.--Fredrik Coulter (talk) 16:55, 23 October 2013 (UTC)

Social security

Social security wages 67.60.147.112 (talk) 19:02, 16 April 2022 (UTC)