It's February 20. Why Are People With Million-Dollar Salaries Celebrating?

The Pete Buttigieg Memorial Wine Cave Club. Members shown celebrating their early freedom from Social Security taxes.

by Thomas Neuburger

It's February 20. Why are people with million-dollar salaries celebrating? Because as of yesterday, they stopped having to pay for Social Security.

That's right. While the very very very wealthy, people like Jeff Bezos, stopped paying for Social Security a month ago, the only very wealthy, those with salaries of a mere million per year, stopped paying just after Presidents' Day.

These are the people who want to cut benefits for those far less wealthy than they, the working poor and struggling middle class. These people also finance candidates who, prior to campaigning for the presidency, happily proposed such cuts. See, for example, "Klobuchar: Grand bargain still within reach" from 2013.

Brendan Cole, writing at Newsweek (emphasis added):

Americans With Million-dollar Salaries Stop Paying Into Social Security Before March While Everyone Else Continues

The burden of sustaining Social Security is not being carried fairly by the rich, a U.S. think tank has said as it noted an American earning an annual salary of $1 million will effectively stop paying into the scheme on Wednesday, fewer than seven weeks into 2020.

Social Security, which provides retirement, disability, and survivor benefits to one fifth of the U.S. population, is funded by a payroll tax capped at the first $137,700 of earned wages, and excludes income from other sources such as capital gains.

Sarah Rawlins, from the Center for Economic and Policy Research (CEPR) noted that someone who earns $1,000,000 a year would have reached that cap by Wednesday, February 19.

"That makes a millionaire's effective tax rate well below the 6.2 percent of income that most Americans pay," Rawlins said. "Instead, it is less than one percent of a millionaire's income.

"The burden of Social Security taxes falls more heavily on those who make less," Rawlins noted, suggesting that to make the system more progressive, the government should look at "scrapping the payroll tax cap entirely and making everyone pay the same tax rate."

"Scraping the payroll tax cap entirely" is a fine idea. Unfortunately it's been co-opted by half-measures Democrats, who wish merely to raise it a little. Thus Pete Buttigieg wants to raise the cap from its current setting to just $250,000. Thus Amy Klobuchar with the same proposal.

In other words, under these proposals million-dollar earners would be taxed on 25% of their salaried income instead of 14%, while the rest of us, who earn below $137,700 per year, would continue to be taxed on 100% of our income.

Needless to say, this what democracy in an oligarchy looks like. But I think you knew that already.