Who Would Pay More if the Social Security Payroll Tax Cap Were Raised or Scrapped?

Nicole Woo, Cherrie Bucknor and John Schmitt

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: On January 1st, the maximum amount of annual earnings subject to the Social Security tax – a.k.a. the payroll tax cap – increased to $118,500. Every year, this cap is adjusted to keep up with inflation. However, many American workers are not aware that any wages above the cap are not taxed by Social Security. This issue brief analyzes Census Bureau data to determine how many workers would be affected if the Social Security payroll tax cap were raised or phased out. We find that the richest 6.1 percent of workers (less than 1 in 15) would pay more if the cap were scrapped. Only the top 1.5 percent (1 in 67) and 0.7 percent (1 in 140) would be affected if the tax were applied to earnings over $250,000 and $400,000, respectively. When we look at the wage earners according to gender, race or ethnicity, age, or state of residence, the share of workers who would be affected by increasing or phasing out the cap varies widely. Keywords: CPI, social security, social security cap, inequality, payroll tax cap,

Keywords: social security; social security cap; earnings (search for similar items in EconPapers)
JEL-codes: H H2 H3 H5 H55 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2015-01
New Economics Papers: this item is included in nep-pbe
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cepr.net/documents/ss-cap-update-2015-01.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2015-01

Access Statistics for this paper

More papers in CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR) Contact information at EDIRC.
Bibliographic data for series maintained by ().