Elected officials, candidates who would like to be elected officials, and the media have reached a consensus that Social Security is broke and in need of immediate reform to ensure its long-term health. That consensus is false: the program has sustained itself for 75 years and is fully-funded until at least 2037, far longer than any of the other vital programs the government operates.
If lawmakers want to “fix” Social Security beyond that date, though, there is an easy solution: raise taxes on people like Kobe Bryant, the Los Angeles Lakers star who will earn nearly $30 million next year on the basketball court alone.
Bryant’s 2012-2013 salary, according to HoopsHype.com, is $27.8 million. Over the next two years, he will make more than $58 million. But because the amount of income that can be taxed to pay for Social Security will be capped at $113,700 in 2013, it will take Bryant just one-third of one pay day (counting his 82 game days as pay days) to maximize his contribution to the program, sports accountant Robert Raiola noted on Twitter yesterday:
— Robert Raiola, CPA (@SportsTaxMan) October 22, 2012
Even giving Bryant credit for working 260 days, he would reach the cap after just more than one day.
Put simply, the Social Security cap forces a worker making America’s median income of $50,054 — or any income below $113,700 next year — to pay payroll taxes on 100 percent of their income, while nearly $27.7 million of Bryant’s income is exempt.
Lifting that cap, according to the Congressional Research service, would ensure Social Security’s solvency for the next 75 years while creating a long-term surplus for the program. That’s a far bigger fix than what would result from means testing benefits for the wealthy or raising the retirement age, the two most popular reforms among the “Social Security is broke” consensus.