There’s an easy fix to fund Social Security. Does Congress have the courage to do it? | Opinion

There is an easy solution to Social Security funding — should Congress have the courage to pursue it. The Federal Insurance Contributions Act is a U.S. federal payroll tax. All workers pay FICA, which is deducted from each paycheck. However, there are a few things most people do not know about these taxes.

First, there are two components to the tax: Social Security (6.2%) and Medicare (1.45%). These amounts, which come up to 7.65%, are also matched by your employer and credited to your account. Social Security is the money you receive each month after you retire, which could be as early as age 62. Medicare is your government-provided health care benefits, which you typically begin to collect at age 65. Either benefit can start earlier based on certain circumstances.

But what many people do not know is that the 6.2% Social Security tax is only paid on annual income below $168,600 for 2024. This ceiling number increases each year with inflation. And self-employed people pay both the employer and employee portion for themselves, totaling 12.4% up to the earnings cap.

So, when high earners reach this ceiling, they stop paying for the year. It’s like getting a temporary raise for some. Yet, the 1.45% Medicare tax continues to be paid on all earnings, with no cap.

According to the Social Security Administration, roughly 6% of covered workers exceed the earnings cap every year. That leaves most of us — 94% — to pay the tax on all of our earnings.

My question is why do those 6% of high earners get to stop paying while others who earn less have to pay on all of their income each year? And at the same time, because such high earners can afford to, they normally take more income tax deductions and deferrals than the rest of us — including things such as contributing more to their 401(K) accounts, health savings accounts and individual retirement accounts, deducting mortgage interest, deferring compensation, taking advantage of breaks for stock ownership and so on.

So now, in my opinion, we can realize the most rational solution to the Social Security funding issue. Besides cutting all the unnecessary political pork barrel and quid pro quo spending, the Social Security tax should be paid on all income by all workers, as it is currently done with the Medicare tax. If not that, another option would be to reduce the Social Security rate after a certain income level is met to something like 3% instead of capping it altogether. This still would not only ensure Social Security benefits for future generations, but it would also provide additional funding to support other critical federal and state programs.

And easy solution, yes. Congress having the courage to do it, not so much.

Now I know this suggestion will cause some angst among some high earners. And since I was once one of them, I understand the feeling. So, if someone has a more equitable solution for saving this critical benefit for current and future generations, please speak up.

Don Bendetti retired after 30 years of experience as a human resource executive with large domestic and international organizations and eight years teaching at the graduate and undergraduate university level. He lives in Kansas City, Missouri.