Sen. Bernie Moreno (R–Ohio) recently announced that he was working with Sen. Elizabeth Warren (D–Mass.) to eliminate the cap on Social Security taxes. Moreno would be a very odd Republican if he thinks this is a good idea, or else he simply doesn't understand the math.
Under current law, employees and employers each contribute 6.2 percent in Social Security payroll taxes on the first $184,500 in income. By eliminating the cap, that 6.2 percent tax would become a new top marginal tax rate. For example, a taxpayer in California would pay a 37 percent federal income tax rate, a 13.3 percent state income tax rate, a 1.45 percent Medicare tax, a 0.9 percent additional Medicare tax, and a 6.2 percent Social Security tax, for a top marginal rate of 58.85 percent. For self-employed people, who pay both sides of payroll taxes and Medicare taxes, the top marginal rate would rise to 66.5 percent—among the highest marginal rates in the world.
