There has been a lot of rhetoric lately to the effect that our Social Security system is going broke, and that benefits need to be sharply cut for future beneficiaries.
If someone were to ask me what to do, I would say raise the top level of the portion of income subject to payroll taxes. Remember, the present level of $106,800 was set in 1983, and if the level had been set to grow with inflation, it would now be over $250,000. My recommendation would be to look at raising the top level beyond which social security taxes are not paid to the level set in the Reagan years, but adjusted for inflation to today's dollars, together with an ongoing commitment to raise the cap to keep pace with inflation.
Among those who wish to preserve Social Security rather than gut it, some say remove the cap entirely, others that the rate could be raised. To me the current rate of about 13%* (or the rate of about 15% that obtained until this year) seems plenty high enough, and I believe raising the cap as I propose would keep Social Security solvent for a long time, although Robert Reich is proposing a $500,00 upper limit. I leave it to those more expert in actuarial prediction to make the calculations.
As to eliminating the cap entirely, I oppose it for the following reason: I believe we will need to raise income tax rates considerably to bring our national finances under control. Robert Reich has proposed income tax bracket rates that would top out at 70% for incomes over $15 million (along with lower rates for incomes below $250,000). If those paying 70% in income taxes were also paying social security taxes, their rate would around 83%, which does seem excessive. Yes, I know that in the Eisenhower years the top marginal rate was around 90%, but still.... And yes, I know there's little chance of Reich's proposals being enacted, but this is a blog on what I would say if asked!
* I'm including both employer and employee contribution, which is also the self-employment tax rate for the self-employed.