March 02, 2005
Raise the Cap: Forget the "influential upper middle class"
Mark Schmidtt at the Decembrist is one of the strongest progressive voices against lifting the cap on wages subject to social security tax. His argument? That we don't want to alienate a "lot of influential middle- and upper-middle class people" who make more than $90,000 per year.
This is the problem for Democrats. They spend so much time being solicitious of this relatively small, well-off group that they are losing support from working class families. Those working class voters are the ones we should care about, and they overwhelmingly support lifting the cap.
And if raising the cap was combined with cutting the payroll tax rate for all workers, even many of those upper-income voters wouldn't feel any immediate pain. For example, if the tax rate was cut by 2%, there would be no tax increase for any worker making more than $120,000 per year. (And since most of these workers are in two-earner families, we are really talking about families making anywhere from $160,000 to $200,000 per year). I'd much rather position our politics as helping working families and risking alienating a few families in the range of $200,000 per year; if those folks don't see the justice of paying the same payroll tax rate as working stiffs, they probably will be lured by the Republicans on some other issue.
Update: Mark in comments calls me on the slightly unfair shot in saying he worried too much about the "influential upper middle class" but even his main point that raising the cap would make social security "a manifestly bad deal" and create a constituency for privatization. Yet many popular programs, such as public schools, are a manifestly bad deal for many more people -- the elderly, single people, and the same wealthy folks who could easily send their kids to private school -- and still maintain their popularity. For me, it's clear that easing the tax burden on lower-income working families would strengthen political support for social security far more than eliminating the cap would lead to any loss of support.
Posted by Nathan at March 2, 2005 08:27 AM