5.6: Taxable Maximum
GRADUALLY INCREASE THE TAXABLE MAXIMUM TO COVER 90 PERCENT OF WAGES BY 2050. Other Information:
As recently as the early 1980s, the Social Security payroll tax covered 90 percent of wages (in other words, 9 of every 10
dollars in wages were subject to the payroll tax). Since then, however, the taxable maximum wage cap (currently $106,800)
has not grown as fast as wages above the cap; as a result, less than 86 percent of wages were subject to the payroll tax in
2009, and less than 83 percent will be subject to the tax by 2020. The Commission proposes to gradually increase the taxable
maximum so that it covers 90 percent of wages by 2050. This recommendation would result in a taxable maximum of about $190,000
in 2020, versus approximately $168,000 in current law. The proposal will also de-link increases in the taxable maximum from
increases in the Cost of Living Adjustment (COLA), allowing the taxable maximum to increase even in zero-COLA years.
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