First, the tax cap is raised almost every year. SS income caps
In 2000 the cap was $76,200. In 2017, it will be $127,200.
Removing the cap entirely would amount to one of the biggest tax hikes in our history. It would have a major impact on business. The cap is already removed on the Healthcare portion of the payroll tax and it has not prevented Medicare from running in the red since 2008.
And by removing the cap, you would also increase retirement benefits.
Please don’t misunderstand me. I am not suggesting that I support the removal, I just believe it is the most politically viable move. As far as Medicare goes by law we can only collect 25% of the funds from the Medicare tax the rest comes from the general funds. That’s like saying I want to buy car insurance but I’m only going to pay 25% from my income for it and charge the rest.
Right now 65% of the federal budget goes to three areas; defense 16%, Social Security 24%, and healthcare 25%. Then 6% is interest on the debt, that is a total of 71% of the budget. So if you got rid of the other 29% of spending that would give us a surplus of about 1.2 trillion dollars. If we then kept spending in check and used the surplus to pay off the debt it would take us 20 years. Of course this isn’t going to happen.
In my opinion we are leaving future generations with a huge burden. We are going to have to do one of four things, cut spending, raise revenue (i.e. Taxes, tariffs etc.), a combination of the two, or keep borrowing and hope the whole thing doesn’t collapse.