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Social Security Tax Limit May Go Up

Contributed by mm | December 20, 2004 4:08 PM PST

Now that the President and his team are starting to mentally prepare people for the upcoming Social Security reform, different theories are circulating across all financial media every day. This Associated Press story is speculating that the reform may mean more Social Security tax for the "riches" by raising or eliminating the tax cutoff -- currently one does not need to pay more Social Security tax once he earns more than $87,900 this year, or $90,000 next year.

Kerry M. Kerstetter discussed this at his Tax Guru-Ker$tetter Letter:

"As I've long predicted, the cap on earnings subject to FICA will be removed just as it was for Medicare. To make matters even worse for those people, my other prediction still stands. They will most likely be frozen out of ever receiving any or all of their promised benefits when a means testing threshold is instituted. Regardless of how much they may have paid in over their lifetimes, evil rich people have no right to recover their contributions according to our rulers in DC. The definition of "evil rich" will be debated; but it can't get much worse than the one they already use to tax Social Security benefits; $25,000 AGI for singles and $32,000 for married couples."

While I am supportive of a private account out of my Social Security tax contributions, I will certainly stand to lose should the cutoff be raised or removed. It is just logically (if not morally) wrong: I am using after-tax money to pay for Social Security tax with the understanding that my Social Security benefits will be free from tax. Now, not only the government will tax part of my Social Security income (it is happening today), it also says I am not entitled to what I am contributing, not to mention any reasonable capital appreciation.

This Post Has Received 1 Comment. Share Your Opinions Too.


Rick Commented on December 21, 2004

"morally wrong" LOL.


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