Social Security beneficiaries double-screwed by Trump
By
How much did your paychecks total last year? You know the
answer, of course. So does the Social Security Administration. The totals for
every American’s paycheck income are sitting in Social Security’s computers.
Once every year, Social Security does a serious data dump
out of those computers to let us know just how much working Americans are
actually making. The latest totals —
covering 2016 — have just appeared.
Most of us, the new numbers show, are simply not making all
that much.
In fact, nearly half of our nation’s employed — 49.3 percent
— earned less than $30,000 in 2016. A good many of these Americans lived in
poverty. In 2016, families of four that earned less than $24,339 ranked
as officially
poor.
We don’t have an “official” figure for middle class status. But the Economic Policy Institute has calculated the costs of maintaining a no-frills middle class existence in various parts of the United States.
In Houston, one of our nation’s cheaper major cities, a family of four needed $62,544 in 2016 to live a bare-bones middle class lifestyle.
Nationally, according to the new Social Security payroll
income numbers, over three-quarters of working Americans — 76.4 percent — took
home less than $60,000 in 2016.
Some Americans, on the other hand, took home a great deal
more. The Social Security Administration counts 133,119 Americans who pocketed
over $1 million in paycheck income last year.
Now which of these two groups — the millionaires or the
under-$60,000 crowd — do you think paid a greater share of its income in Social
Security taxes?
The millionaires could certainly afford to pay the bigger
share. But they didn’t.
Individuals who took home $1 million in 2016 had $16,265
deducted from their paychecks for Social Security and Medicare. Those
deductions totaled a meager 1.6 percent of their paycheck income.
Working Americans making $60,000 last year, by contrast, had 7.65 percent of their take-home deducted for Social Security and Medicare.
Working Americans making $60,000 last year, by contrast, had 7.65 percent of their take-home deducted for Social Security and Medicare.
In other words, Americans making $60,000 paid over four
times more of their income for Social Security and Medicare
than Americans who made $1 million.
How could that be?
Our tax code currently has a ceiling on earnings subject to
the Social Security tax. That ceiling this year rests at $127,200. All paycheck
income up to that level faces a 6.2 percent tax for Social Security and a 1.45
percent tax for Medicare.
Income above that ceiling faces no Social Security
tax at all.
Until the Obama years, income above the earnings ceiling
faced no payroll tax for Medicare either. But President Obama succeeded in
getting that changed. Individual income over $200,000 now faces an additional
0.9 percent Medicare tax.
If all income over $200,000 faced a Social Security tax as
well, we’d have enough new revenue to significantly improve Social Security
benefits.
The Trump administration is moving in the opposite
direction. Earlier this year, the White House tried and failed to get the Obama
Medicare tax on the rich repealed.
Now the administration is pushing a tax “reform” that
totally ignores the unfairness of the current Social Security payroll tax and
instead hands America’s wealthiest a stunningly generous assortment of tax
giveaways.
If this Trump tax plan passes, Americans making $60,000 will
still be paying over four times more of their income in
payroll taxes than Americans who make $1 million. And America’s
millionaire-packed top 1 percent will get 80 percent of the new Trump tax cuts,
the Tax Policy Center calculates.
The Trump tax plan, in other words, makes the U.S. tax code even more millionaire-friendly than the current code. The White House calls that “reform.” The rest of us ought to call it an outrage.
Sam Pizzigati, an Institute for Policy Studies associate
fellow, co-edits Inequality.org. Distributed by OtherWords.org.