Today is January 3, which represents a magic day for Mitt Romney and thousands of other people like him. Last year the tax for social security was capped at $110,100. You paid a 4.2% tax before that amount, but everything after than amount was not taxed at all. Mitt Romney met that threshold on January 3rd last year and so paid no more social security tax for the remaining 363 days (remembering it was a leap year). Sounds like a pretty good deal.
In the "fiscal cliff" deal one of the things that changed was the social security tax rate. It will now increase to 6.2%, and the cap increases to $113,700. If you make $50,000 (median household income, rounded up) that means you will pay an extra $1000 in social security taxes this year. If you make $113,700, or $1 million, or $10 million or $100 million, you will only pay an extra $2425.20 in taxes. Very nice.
I have mentioned the stupidity of the cap before, and the very real solution to solving many of the problems with social security is to simply remove this cap. It would not solve all of the problems, but it would at least be the beginning of a conversation. Conservatives argue that the cap is fair because social security benefits are also capped.
To me that is a ridiculous argument on its face because of course the benefits are capped. Social Security was never intended to be a retirement plan, it was a safety net program, and so benefits should be capped, or eliminated all together if you don't need the safety net. Let's save the funds for those who actually need them.
Since Mitt was a little busy last year I don't know what he actually made, but based on prior years he is in the clear for the rest of the year for paying towards social security, so congratulations to him. The rest of us will toil away for the rest of the year to pay in our share and pray that it is still there later to help those who truly need it.
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