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Are Social Security Taxes Heading Even Higher?

Social Security relies on payroll taxes for the money it pays out in benefits. But some lawmakers want to pay more in Social Security benefits, and they're looking at eliminating the current $117,000 wage limit on Social Security taxes in order to boost revenue for the program. That has led to controversy between proponents and opponents of the measure.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at both sides of the Social Security wage cap controversy. On one hand, taking away the wage cap makes Social Security taxes less regressive, requiring high-income earners to pay the same percentage of their total income as everyone else. But currently, those who earn more than the wage cap also don't get additional benefits, with the benefit calculation also maxing out at the wage-cap limit. Dan concludes that the issue will continue to be contentious, but it could have ramifications not just for high-income earners but for millions of Social Security recipients as well.

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Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 20, 2014, at 9:16 AM, sol wrote:

    Social security tax should apply to all income, not just wages and especially not just wages below a cap. If it applied to all income the rate could be lowered which would be a true tax cut for low and middle income people. For many of them social security is the largest federal tax they pay. It is currently the most regressive of all taxes in our system.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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