You see, payroll tax applies to all earned income (i.e., wages or salary you're paid) between $0.01 and $132,900 (as of 2019). This "cap" rises annually with the National Average Wage Index (NAWI). If, for example, the NAWI rises 3.5% year over year, then the earnings tax cap will increase 3.5% in the upcoming year. More than 9 out of 10 working Americans will earn less than $132,900 in 2019, which means they'll have the payroll tax applied to every single dollar they earn.
Meanwhile, a single-digit percentage of the working population will earn more than $132,900 in 2019. Although they'll owe their portion of the payroll tax up to $132,900, all earned income above and beyond this amount is exempt. For some folks, this might represent a small amount of their earned income. But if you earn $266,000 or more, a majority of your income will be exempted from the payroll tax.
Billionaire President Donald Trump is a perfect example of everything the working public dislikes about the current scope of Social Security's payroll tax. Aside from earning $400,000 as salary for being president, financial disclosures filed by Trump suggest that he earns in the neighborhood of $600 million annually, primarily from his employment assets. That works out to $1.64 million a day, close to $68,500 an hour or 1,141.55 a minute in estimated earnings. At this pace, it would take President Trump just 117 minutes -- less than two hours -- to hit the payroll tax earnings cap. In other words, Trump was probably done paying into the system before 2 a.m. on New Year's Day.
If that were not enough, keep in mind that only earned income is subject to the payroll tax. This means investment income, rental income, and multiple other sources of income, most often taken advantage of by the well-to-do, are exempt.
According to an analysis from the Social Security Administration, between 1984 and 2016, the amount of earnings exempted from the payroll tax has quadrupled from about $300 billion to $1.2 trillion. At a tax rate of 12.4%, that $1.2 trillion represents close to $150 billion in lost revenue for the program.
http://www.yahoo.com/finance/news/donald-trump-done-paying-social-110600027.htmlThe easy fix for Social Security would be to tax ALL incomes and keep the cap. But the greedy, crooked, in the pocket of the wealthy are not likely to do that.
You see, payroll tax applies to all earned income ... (