Saturday, April 13, 2013

The Cap on FICA Contributions

One December in the earlier 1990s — while I still was getting paper paychecks instead of direct deposits — I looked at my paper paycheck and discovered my net salary was higher than expected.  When I received my second December paycheck, my net was even higher.  I pulled out some earlier pay stubs, and discovered the difference resulted from reduced FICA contributions.  Thanks to a good union, years on the job, and earning enough extra post-graduate credits, I'd gone past the cap on Social Security contributions.

January came around, and my net pay went down again.  I remember thinking, back then, that if my pay hadn't gone up in December, I wouldn't have noticed.  So why was there a cap on FICA contributions?  Frankly, it didn't seem fair.  It was a regressive tax.

Right now, the FICA cap is a bit over $114,000.  To me, that sounds like a pretty high income for one worker, and I doubt that if those making $120,000 didn't get their December "bonus," nor if those making over $250,000 didn't get their October through December bonuses, they really would have paid much attention.  I guess those making seven million would notice because the $434,000 they owed all would come out of their first paychecks of the year, so they'd get only about 150 grand for January, and to which I say, tough shit.

Eliminating the cap would make Social Security solvent, with no "chained CPI" needed.  Even if we increased maximum Social Security payments to those who paid more, it would work.  A "sliding scale" for the super-rich would make it work even better.  If Jaimie Dimon collected five or six grand a month in Social Security payments, it wouldn't make a hell of a lot of difference to the rest of us — nor to Jamie Dimon.

Will somebody please slap Obama upside the head and knock a little sense into him?  Michelle?

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