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Should Social Security tax be raised on people making over $128,400? For 2018,the maximum amount of taxable earnings is $128,400. A person making $128,400 ayear is paying the same SS tax as a person making $10 million dollars.
Technically SS tax isnu2019t the same as income tax.SS was originally intended as a supplement to retirement savings. It was neverintended to be a major or only postemployment income source.The rationale for the cap lies in the original intention. Conceptually it wasthought that higher income earners had both the sophistication and surplusincome to provide for their own retirement.Hence u2018the person making 10 million dollarsu2022 is not subject to SS tax abovethe annually indexed level.Remember high income individuals are unlikely to be receiving most of thisincome in the form of wages and salaries. High income individuals are morelikely to earn most if not all their income from capital gains dividendsinterest and rental payments none of which are subject to SS tax.
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