Publication

This report looks at the effect of raising the maximum amount of annual earnings subject to the Social Security Tax (the payroll tax cap). To help alleviate Social Security’s long-term budget shortfall, raising – or even eliminating – the cap has gotten some attention from policymakers. The authors demonstrate that the extension or elimination of the cap on the payroll tax would affect only a tiny fraction of workers while strengthening Social Security for all. They find that just 1 in 20 workers – the wealthiest – would be affected if the cap were eliminated entirely, and only 1 in 75 would be affected if the cap were applied to earnings over $250,000.