the last time the social security cap was raised was in 1983.
the last time the social security cap was raised was in 1983.
when was the last time the social security cap was raised?
1983
in 2018, the social security wage base was $128,400 and the social security tax rate was 6.20% paid by the employee and 6.20% paid by the employer. a person with $10,000 of gross income had $620.00 withheld as social security tax from his check and the employer sent an additional $620.00. a person with $130,000 of gross income in 2017 incurred social security tax of $7,886.40 (resulting in an effective rate of approximately 6.07% - the rate was lower because the income was more than the 2017 "wage base", see below), with $7,886.40 paid by the employer. a person who earned a million dollars in wages paid the same $7,886.40 in social security tax (resulting in an effective rate of approximately 0.79%), with equivalent employer matching. in the cases of the $130k and $1m earners, each paid the same amount into the social security system, and both will take the same out of the social security system.
social security wage base
in january 1935, roosevelt proposed the social security act, which he presented as a more practical alternative to the townsend plan. after a series of congressional hearings, the social security act became law in august 1935. during the congressional debate over social security, the program was expanded to provide payments to widows and dependents of social security recipients. job categories that were not covered by the act included workers in agricultural labor, domestic service, government employees, and many teachers, nurses, hospital employees, librarians, and social workers. the program was funded through a newly established a payroll tax which later became known as the federal insurance contributions act tax. social security taxes would be collected from employers by the states, with employers and employees contributing equally to the tax. because the social security tax was regressive, and social security benefits were based on how much each individual had paid into the system, the program would not contribute to income redistribution in the way that some reformers, including perkins, had hoped. in addition to creating the social security program, the social security act also established a state-administered unemployment insurance system and the aid to dependent children program, which provided aid to families headed by single mothers. compared with the social security systems in western european countries, the social security act of 1935 was rather conservative. but for the first time the federal government took responsibility for the economic security of the aged, the temporarily unemployed, dependent children and the handicapped. reflecting the continuing importance of the social security act, biographer kenneth s. davis later called the social security act "the most important single piece of social legislation in all american history."
presidency of franklin d. roosevelt, first and second terms