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Postponing the inevitable at Social Secu­­rity?

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in Small Business Tax

The Social Secu­­rity Administration (SSA) estimates that the Social Secu­­rity program’s assets will gradually decline until they are exhausted in 2033 due the heavy influx of baby boomers entering the retirement benefits system. 

A new study by the Congressional Research Service (CRS) provides four options for closing the financing gap. Although these options differ slightly, they all reflect a raise in the wage base to $214,500, with varying tax rates. The four proposed rate options, combining the employer and employee portions of Social Security tax, are:

  1. 12.4% (i.e., the current rate);
  2. 11.9%;
  3. 11.4%; and
  4. the current 12.4% rate with a 2% payroll tax rate on earnings above the limit.

The upshot: An increase appears to be inevitable.

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