The current cap is $113,700. People who earn less than the cap pay FICA (Federal Insurance Contributions Act) taxes on every dollar in wages they earn. People who earn more than the cap pay FICA - the money we pay to fund Social Security - on every dollar they earn until they hit the cap. All dollars above the cap are FICA tax-free for them.
The result is a highly regressive tax that makes the poor pay a higher percentage of their income than those who are wealthy. As a result, a person earning twice the cap - $227,400 - will pay half the rate paid by people earning less than $113,700 a year for Social Security, Another consequence of the cap is that Social Security is not as well funded as it could be.
See http://bit.ly/YRHYhH for more.
This is historical material “frozen in time”. The website is no longer updated and links to external websites and some internal pages may not work.
