Washington, D.C. — February 18 is Valentine’s Day for millionaires—the day when America’s last millionaire earners will stop contributing to Social Security for the rest of the year thanks to policymakers’ refusal to adjust Social Security’s payroll tax cap for rapidly rising top incomes. To mark the occasion, the Center for American Progress is releasing an updated analysis that shows how rising income inequality and policymakers’ failure to act has threatened the health of the Social Security program.
Among the key findings of the analysis:
- February 18 is the day when people who earn exactly $1 million will stop contributing to Social Security for the rest of 2019. Those who earned more stopped contributing even earlier, giving millionaire and billionaire earners what amounts to a second Valentine’s Day each year.
- President Donald Trump ceased contributing to Social Security just 40 minutes into New Year’s Day, if his claims about his 2016 income were true. Many in his $2 billion Cabinet stopped their contributions just minutes or days into 2019.
- As pay for the richest Americans has increasingly pulled away from that of the average worker, a smaller share of the nation’s overall earnings is flowing into the Social Security trust funds each year. In 1983, 90 percent of total earnings were subject to Social Security’s payroll taxes compared to just 83.4 percent in 2017.
- If Social Security’s taxable wage base had remained fixed at 90 percent of earnings since 1983, the assets in the combined trust funds would have been $1.4 trillion greater at the end of 2017. This alone would close nearly 11 percent of Social Security’s anticipated 75-year funding shortfall.
- If the average worker’s wages had kept pace with their productivity since 1983 rather than remaining largely flat, the assets in the combined trust funds would have been $570 billion greater at the end of 2017.
This analysis comes as congressional Democrats unveil a bold agenda—such as higher taxes on the rich, universal health care, and expanding Social Security. Poll after poll shows that these types of reforms have strong support not just among progressives but also across party lines.
“Every year that policymakers fail to require the richest Americans to contribute their fair share, the cost of our nation’s rising income inequality to the Social Security program continues to climb,” said Rachel West, director of poverty research at CAP. “The American people spoke in November when they elected a new Congress that committed to expanding Social Security. Social Security is overwhelmingly popular across party lines. We urge not only the House but also the Senate and President Trump to take voters’ wishes seriously and act to strengthen and expand Social Security.”
To read the new analysis, click here.
For more information or to speak to an expert, contact Julia Cusick [email protected] or 202-495-3682.