Recently, senators proposed new legislation that imposes a 6.2% Social Security tax on wages and self-employment income exceeding $250,000. This tax is in addition to the already existing 6.2% Social Security tax on wages or self-employment income up to the Social Security wage base. Senators, Bernie Sanders from Vermont, Harry Reid from Nevada, and Pete Defazio from Oregon proposed the legislation. If passed, the legislation would become effective in 2014. The additional Social Security tax on income exceeding $250,000 will not be capped. As a result, the tax obligation of people with high income would increase dramatically. According to Forbes, if the legislation passes, a taxpayer earning $400,000 dollars a year would end up paying out $9,300 more per year in employment taxes. Many believe the legislation, is forcing affluent taxpayers to mend the broken Social Security program.
See Tony Nitti, Congress Looks To The Wealthy To Bail Out Social Security, Forbes, Mar. 7, 2013.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this to my attention.
