Morris Bounds Sr. sits with his grandchildren on February 23, 2015, in Ansted, West Virginia. AP/Chris Tilley
Washington, D.C. —(ENEWSPF)–February 16, 2017. In 2017, February 16 is Valentine’s Day for millionaires—the day the last of America’s millionaires stop contributing to Social Security for the entire year. An updated analysis from the Center for American Progress demonstrates the extent to which rising earnings inequality has negatively affected Social Security, threatening the program’s long-term financial health. The analysis reveals how stagnant wages for working families—coupled with soaring incomes for top earners—have substantially reduced revenues to Social Security’s trust funds.
“President Donald Trump campaigned on a promise to protect Social Security. If Trump is serious about keeping his promise to America’s working families, he will not only reject the deep, damaging cuts proposed by his fellow Republicans—he will also act to strengthen Social Security’s finances,” said Rachel West, an Associate Director with the Poverty to Prosperity Program at CAP and co-author of the analysis. “That includes combating rising wage inequality and ensuring that multimillionaires like him pay their fair share to fund Social Security’s modest but critical benefits.”
CAP experts discussed the findings of the analysis at a news conference today with Sens. Bernie Sanders (I-VT), Ron Wyden (D-OR), and members of the U.S. House.
“With the speed and volume of the news today, it’s easy to lose focus on the bedrock issues that really matter. That’s why today’s rally to protect Social Security is more important than ever before,” Senator Wyden said. “This president and lawmakers on Capitol Hill need to hear loud and clear: Social Security is the most effective and efficient insurance policy in the country. Social Security should not be cut, and we need to make it even stronger. Millionaires need to help keep Social Security strong just like everyone else.”
“We are the wealthiest nation in the world at the wealthiest moment in our history,” said Nancy Altman, founding co-director of Social Security Works. “But with income and wealth inequality rising and the middle class vanishing, it does not feel that way for millions of hardworking American families. Expanding Social Security and ensuring that millionaires and billionaires pay their fair share is a solution to income and wealth inequality, as well as other challenges, including a looming retirement income crisis.
Rising inequality has meant, for instance, that a growing share of total earnings has escaped Social Security taxes because workers’ annual earnings are not taxed once they exceed the payroll tax cap, which is $127,200 in 2017. That means millionaire and billionaire earners stop paying into Social Security early in the year, even though most American workers contribute to Social Security all year long. Among those who received this special Valentine’s Day gift for millionaires is President Trump: If Trump earns the income his campaign claims—$557 million in 2015—he stopped contributing to Social Security just 40 minutes into New Year’s Day in 2017.
Specifically, CAP’s analysis shows that if the share of taxable earnings had been fixed at 90 percent of earnings since 1983, Social Security’s trust funds would have been $1.3 trillion greater by the end of 2015—this alone would cover more than 11 percent of the program’s expected 75-year shortfall. The analysis also found that if workers’ wages had grown at the same rate as their productivity since 1983, Social Security’s trust funds would have been $559.7 billion greater by the end of 2015.
Click here to read “Rising Earnings Inequality Is Taking a Mounting Toll on Social Security” by Rachel West and Rebecca Vallas.