Because the entire social security system is predicated on people
paying into a system in rough proportion to the benefit they ultimately receive. It is not a gov't welfare program, it's not a transfer of money from rich to poor (or vice versa). Poor people get a better benefit relative to their contributions than rich people (and I'm OK with that), but they are still paying for (a good portion) of their future benefit. There's no charity involved just a gov't forced minimum retirement program.
Currently you pay into the system at a rate of 6.2% (plus 6.2% from your employer) on your first $118.5K of income. From $0 to $118,500, as your income and contributions increase, your benefit also increases. Above $118,500, you stop paying taxes, BUT YOUR BENEFITS ALSO MAX OUT. If you tax investment income, or income above $250K, you destroy the fundamental structure of social security. one that I would argue has made it successful and universally popular.
In addition to the issue with taxing investment income, eliminating the cap also increases the top marginal tax rate which is already at 41.95% at the federal level (43.4% if you include the employer portion of medicare or for self employed individuals). Eliminate the cap on social security, and the top marginal tax rate at the federal level goes to 48.15% (or 55.8% if you include the employer portion or for self employed). And if you have the misfortune of living in California, you can tack another 11% state tax on top of that (it's not purely additive because you can deduct your state taxes but they also get phased out).
And this is ON TOP OF Bernie's desire to raise the top marginal income tax rate to 52%. Add in medicare, social security, his NEW payroll taxes, and the ACA surtax (employee and employer portion for both) and the top marginal tax rate at the federal level goes to 76.6%. Throw in state taxes and you're above 80%. It's craziness. Laugh all you want about the Laffer curve, but usually people at the very top brackets don't NEED to work. Try taking 80% of their marginal income and I bet the shit to pay ratio tilts in the wrong direction and you will see high earners exit the workforce.
[Post edited by BocaHoo91 at 02/18/2016 7:01PM]
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In response to this post by Hoodafan)
Posted: 02/18/2016 at 6:59PM