Activists participate in a rally calling for the expansion of Social Security benefits in front of the White House July 13, 2015 in Washington, D.C. (Photo: Win McNamee/Getty Images)

 

On Wednesday, not even two full months into 2020, millionaires will stop paying into Social Security for the year due to the program’s payroll tax cap.

The cap limits annual wages subject to the Social Security payroll tax to the first $137,700. Sarah Rawlins, program associate at the Center for Economic and Policy Research (CEPR), wrote Tuesday that the cap means “someone who makes $1,000,000 per year stops paying into the program on February 19, 2020.”

“That makes a millionaire’s effective tax rate well below the 6.2% of income that most Americans pay,” Rawlins noted. “Instead, it is less than 1% of a millionaire’s income. The Social Security tax is only levied on wages, excluding income from other sources like capital gains, meaning those with wages over the cap likely have an effective tax rate even lower than this estimate.”

“The burden of Social Security taxes falls more heavily on those who make less,” Rawlins added.(Jake Johnson)

Posted by The non-Conformist