WSJ: Pay of Top Earners Erodes Social Security

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Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data -- without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.

Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total U.S. pay in 2007, the latest figures available.

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The pay of employees who receive more than the Social Security wage base -- now $106,800 -- increased by 78%, or nearly $1 trillion, over the past decade, exceeding the 61% increase for other workers, according to the analysis. In the five years ending in 2007, earnings for American workers rose 24%, half the 48% gain for the top-paid. The result: The top-paid represent 33% of the total, up from 28% in 2002.

The growing portion of pay that exceeds the maximum amount subject to payroll taxes has contributed to the weakening of the Social Security trust fund. In May, the government said the Social Security fund would be exhausted in 2037, four years earlier than was predicted in 2008.

The data suggest that the payroll tax ceiling hasn't kept up with the growth in executive pay. As executive pay has increased, the percentage of wages subject to payroll taxes has shrunk, to 83% from 90% in 1982. Compensation that isn't subject to the portion of payroll tax that funds old-age benefits now represents foregone revenue of $115 billion a year.

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Lifting the earnings ceiling could result in higher Social Security benefits payments to higher-income individuals, since benefits are based on a worker's highest 35 years of earnings. But the additional tax revenue would have decades to earn a return, thus offsetting the cost of the additional payments.

Social Security Administration actuaries estimate removing the earnings ceiling could eliminate the trust fund's deficit altogether for the next 75 years, or nearly eliminate it if credit toward benefits was provided for the additional taxable earnings.

Employers oppose changes that would increase their share of payroll tax. In addition, eliminating the ceiling would prevent employers from using a controversial but common technique, based on payroll taxes, to award additional benefits to executives who participate in rank-and-file pension and 401(k) plans.

For example, health insurer Humana Inc. contributes 4% of pay to employees' retirement accounts on salary up to the taxable-earnings wage base -- and 8% above it. Thanks to the richer contribution, Humana Chief Executive Michael B. McCallister received a total contribution of $22,370 under the plan in 2008.

http://online.wsj.com/article/SB124813343694466841.html

[Peikko 1,575]

Stop the high earner hatred! They earned their money, they should keep it. Only low wage earners need to have their wages garnished. The poor must get poorer. The middle classes poorer and the rich laugh all the way to the vault.

[w¡n9Nµ7 §£@¥€r 123]

Stop the high earner hatred! They earned their money, they should keep it. Only low wage earners need to have their wages garnished. The poor must get poorer. The middle classes poorer and the rich laugh all the way to the vault.

[Peikko 1,575]

[HAL 9000 96]

Obama cries for the filthy rich.