Unless you are a tax preparer or earn a six-figure salary, most people don't realize that there is an $110,100 income limit on paying Social Security Tax. This means that earnings are only taxed for SS up to this amount. For example, a person earning a million dollar annual salary has to only pay SS taxes on $110,100 and is exempt from paying taxes on the rest, the difference being over $37K that could be contributed to Social Security. Yes, even those CEOs from Hostess "earning" millions in bonus money from their "bankrupt" company have only paid $4624 in SS taxes this year. That's right-the most all those wealthy celebrities or ANYONE in this country will pay INTO Social Security for 2012 is $4624.
How is it that there is so much talk about Social Security running out within "my" lifetime, yet no one speaks up about the Social Security income limit? It is projected that twenty years from now when I'm hoping to retire, there will be little or no Social Security benefits to retire on; I guess I may as well just plan on working 'til the day I die. The SS taxes I've paid into for over thirty years and will continue for twenty more may as well be some sort of Occupational Privilege Tax I'm never going to see again.
Our lawmakers most assuredly know about the SS income limit as they are at or above that tax bracket. It is unlikely that any of them are going to propose a mandate that will shoot themselves in their wallets; however, we deserve an explanation as to the logic of an income limit on Social Security tax if the reserves really are drying up as they claim.
Be part of the solution. Contact your representatives in Washington today and insist that lifting or eliminating the Social Security Tax income limit be brought into the conversation. Our societal ignorance of this tax law is their bliss.