Distributional Effects of Raising the Social Security Taxable Maximum

by Kevin Whitman
Policy Brief No. 2009-01 (released July 2009)
Table equivalent for Chart 1. The tax-max value under current law and the proposed max 90 options, 2008–2017
Year Max 90 options Current law
2008 100,160 108,300
2009 104,107 121,500
2010 108,387 136,200
2011 112,747 152,400
2012 117,267 170,400
2013 121,919 190,500
2014 126,795 213,300
2015 131,714 238,500
2016 136,851 267,000
2017 142,188 297,600
 
Table equivalent for Chart 2. Persons aged 62 or older in 2070 exceeding the scheduled tax max, by number of years (starting in 2008) their earnings exceed the tax max (in percent)
Number of years over the tax max Percent of persons earning above the tax max
Never 76.94
1 4.05
2–5 6.02
6–10 3.86
11–15 1.76
16–20 2.43
21–25 1.83
26–30 1.35
31 or more 1.76
 
Table equivalent for Chart 3. Taxes on higher lifetime earners increase, on average, under all policy options compared with current law
Policy option set Lifetime shared-earnings percentile
Top 25% Top 10% Top 5%
No Max 0.15 1.92 5.84
Max 90 0.15 1.91 5.00
 
Table equivalent for Chart 4. Most progressive policy option: No max
5-year birth cohort Progressivity index value
Current law Tax rate increase No Max No Max Plus Benefits Max 90 Max 90 Plus Benefits
1930 0.26 0.26 0.26 0.26 0.26 0.26
1935 0.21 0.21 0.21 0.21 0.21 0.21
1940 0.18 0.18 0.18 0.18 0.18 0.18
1945 0.18 0.18 0.18 0.18 0.18 0.18
1950 0.15 0.15 0.16 0.15 0.15 0.15
1955 0.15 0.15 0.16 0.15 0.15 0.15
1960 0.15 0.15 0.17 0.15 0.16 0.15
1965 0.15 0.15 0.19 0.16 0.16 0.15
1970 0.15 0.15 0.20 0.16 0.17 0.15
1975 0.15 0.15 0.25 0.20 0.18 0.16
1980 0.16 0.17 0.24 0.18 0.20 0.17
1985 0.18 0.19 0.27 0.21 0.22 0.20
1990 0.17 0.17 0.25 0.19 0.21 0.18
1995 0.17 0.17 0.23 0.18 0.21 0.18
2000 0.17 0.17 0.26 0.20 0.21 0.18
2005 0.17 0.17 0.27 0.20 0.21 0.18
2010 0.17 0.17 0.24 0.19 0.21 0.18