Using America's billionaire president as a perfect illustration of the "absurdity," deep inequity, and untapped potential of Social Security in its current state, Sen. Bernie Sanders (I-Vt.) on Wednesday presented a striking data point during a press conference unveiling the Social Security Expansion Act.
"Donald Trump made $694 million in 2016. That means he stopped paying Social Security taxes 40 minutes into the year. Meanwhile a middle-class worker paid Social Security taxes the entire year. I say to Trump: pay your fair share. Let's scrap the cap."
—Sen. Bernie Sanders"Donald Trump claimed that he made $694 million in 2016," Sanders said, with the caveat that the president doesn't always tell the truth about his finances. "If that is accurate, he stopped paying Social Security payroll tax 40 minutes into January 1st of that year."
"Meanwhile, the average middle class person paid Social Security taxes for the entire year," the Vermont senator continued. "That is absurd, and that has got to end."
Under the current system, all income above the $132,900 cap is completely exempt from the Social Security payroll tax. Denouncing this approach as "absolutely regressive," Sanders declared on Wednesday, "It is time to scrap the cap."
The Social Security Expansion Act, which Sanders introduced on Wednesday alongside several congressional Democrats, would subject all income over $250,000 to the Social Security payroll tax—a far more progressive tax structure that would help fund more generous benefits to low-income retirees while also ensuring the popular program's solvency for more than five decades.
"Because of the earnings cap on Social Security taxes, a multi-billionaire pays exactly the same amount of money into Social Security as someone who earns $132,900 a year," Sanders declared. "Today we say that is going to end."
Donald Trump made $694 million in 2016. That means he stopped paying Social Security taxes 40 minutes into the year.
Meanwhile a middle-class worker paid Social Security taxes the entire year.
I say to Trump: pay your fair share. Let's scrap the cap and expand Social Security.
— Bernie Sanders (@SenSanders) February 13, 2019
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As Our Revolution executive director Heather Gautney argued in Jacobin on Wednesday, Sanders' legislative push to "scrap the cap" is "not a radical idea."
"Americans are sick of having to do more with less. Billionaires and millionaires are going to have to pay up."
—Heather Gautney, Our Revolution"The wealthiest have captured an increasing share of income gains above the taxable earnings cap, while workers' wages have flat-lined. This trend has shrunk the share of national wages being taxed to fund Social Security," Gautney observed. "[L]awmakers have raised the cap several times over the years and in 1994 eliminated it entirely for Medicare. Plus, it would only affect a small portion of the population."
According to a fact sheet put out by Sanders' office, 98.2 percent of wage-earners would not see their taxes go up by "one penny" under the Social Security Expansion Act.
"Americans are sick of having to do more with less," Gautney concluded. "Billionaires and millionaires are going to have to pay up."
As advocacy groups backing Sanders' legislation pointed out on social media, many of the wealthiest Americans stopped paying Social Security taxes today, just weeks into 2019. According to Kevin Cashman, senior associate at the Center for Economic and Policy Research, the last of America's millionaires will have paid into Social Security by next Monday, Feb. 18.
It’s that time of year when folks making $1M have stopped paying into Social Security for 2019.
— SocialSecurityWorks (@SSWorks) February 13, 2019
"If a person made $50,000 in 2019, for example, they'd pay taxes until December 31st—and have an effective tax rate of 6.2 percent," Cashman notes. "But someone making $1,000,000 in 2019 would stop paying Social Security taxes on February 18th and see a bump in their pay afterwards. This person's effective tax rate would be just 0.8 percent. The burden of Social Security taxes falls more heavily on those who make less."
Progressive advocacy groups applauded Sanders' legislation on Wednesday as a long-overdue and politically "wise" step toward shifting the tax burden back onto the wealthiest Americans.
"Social Security's importance to American workers and their families will only grow as the United States faces an approaching retirement crisis," Social Security Works declared on Twitter. "It's time to #ScrapTheCap."