Once again this year my December paycheck is a few hundred dollars fatter than those of previous months. That's because December is when my gross annual income hits the ceiling for Social Security taxes. The government collects 6.2 cents from every dollar I earn up to $102,000. Then it stops, and I begin getting what I call a "prosperity bonus."
So am I happy about the windfall? Nope. I don't want it. My message to President-elect Barack Obama and to the Democratic-controlled Congress is this: Tax me more.
Signed into law in 1935 by President Franklin D. Roosevelt, Social Security is one of the most important and successful social programs in the United States. I have seen how well it works.
My college roommate's parents both died when he was still in high school. Social Security survivors benefits helped him finish college.
My sister, Terry, after decades of working and paying in to Social Security, was diagnosed in her 50s with early onset Alzheimer's. Her job delivering home meals to senior citizens paid modestly and included no pension program. Her only asset was her home, and Social Security disability has helped her remain solvent.
My 84-year-old mother, twice widowed, is partly supported by a monthly Social Security retirement check thanks to her years of clerical work in county administration.
Today, with a declining proportion of American workers covered by traditional pensions, and with the plunging stock market exposing the vulnerability of 401(k) retirement accounts, it's more important than ever for Americans to be able to rely on Social Security retirement benefits.
Part of ensuring the long-term solvency of the system lies simply in making it fair on the front end. Everybody should pay his or her share. As it works now, once a person has paid $6,300 (the amount will go up a bit next year), the prosperity bonus kicks in.
Consider a doctor who earned $200,000 this year: She paid a little over 3% of that amount in Social Security taxes, and she began receiving her monthly prosperity bonus in July. Or ponder the corporate executive who earned $5 million this year: This guy paid only .01% of his income in Social Security tax, and he started receiving his prosperity bonus in early January.
The prosperity bonus puts millions of dollars into the pockets of the highest earners while depriving the Social Security system of much-needed revenue that would help to ensure its long-term solvency. The Washington-based Economic Policy Institute estimates that removing the cap on Social Security taxes and making the top 6% of workers pay their fair share would by itself eliminate 75% of the projected shortfall predicted by doomsayers.
Opponents of raising (or eliminating) the Social Security tax ceiling argue that higher earners won't benefit from Social Security payments in the same way that lower earners eventually will. Balderdash.
A 45-year-old father who's lucky to be earning $300,000 can die (as my college friend's doctor father did), leaving his kids partly dependent on the survivors benefits. Or the same man could find himself downsized, outsourced and downwardly mobile by age 55, facing his retirement years with a threadbare 401(k). A woman with a solid professional-class job can have an accident or a life-threatening disease the way my sister did and find herself falling back on the safety net of Social Security disability.
Those who argue against fairness in the system are viewing Social Security as an individual savings or insurance system. Social Security is not an individual retirement account. The genius of Social Security -- and what makes it so civilized -- is its social nature: It says to each and every one of us that we will take care of each other. Changing the system so that people pay into it fairly across the income spectrum is an important start of putting the "social" back in Social Security.