The sustainability of the Social Security system has been an issue for years, and solutions are oft debated but rarely agreed upon. But in the eyes of the public, one idea is more desirable than the rest: raising the Social Security wage tax.
Details on the survey, from Think Advisor:
The majority of Americans are willing to increase the Social Security wage tax in order to extend benefit coverage out to 75 years, and also improve benefits along the way.
That is a key finding of the new study, “Americans Make Hard Choices on Social Security: A Survey with Trade-Off Analysis,” recently released by the National Academy of Social Insurance, a nonprofit, nonpartisan organization made up of leading experts on social insurance.
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“In the trade-off analysis, we included 12 different policy changes. Four were revenue increases. Four were benefit reductions. Four were benefit increases,” Reno said. “The one that was favored by seven out of 10 respondents would gradually increase [Social Security] taxes in two ways.”
First up is gradually – over 10 years – phasing out the cap on earnings below which Social Security wages are levied. That is currently $117,500, and increasing to $118,000 in 2015. In this option, 6 percent of workers who earn more than the cap would pay into Social Security all year, as other workers do, and in return would get slightly higher benefits.
The second part involves gradually – over 20 years – increasing the contribution rate from 6.2 percent to 7.2 percent for both workers and employers alike. This part of the plan wouldn’t start for another five years, but once in effect would increase Social Security tax withholdings by 1/20 of 1 percent each year for the 20 years. A worker earning $50,000 annually would pay an additional 50 cents per week into Social Security, as would their employer.
Read the full survey results here.
Photo Credit: 401(K) 2012 via Flickr Creative Commons License
