Employers Would Also Pay for This Social Security Fix

LETTER RE: 'SOCIAL SECURITY DON’T MISS'

As a small business person, it's scary how I have to find a matching amount of cash to add on to the amount I withhold for Social Security. I would guess most people don't know that their employer contributes this additional, doubling, amount. Your show did not mention this aspect.

Your observation that people want high-income earners to keep paying in to Social Security above the current contribution cap ($176,100 in 2025), frames the policy as a tax increase only for individuals. But it would also be a massive tax increase for employers, who would have to match the new taxes.

Sure, these employers already choose to pay hefty salaries, but there is no additional (payroll) tax on them when they do so.

Perhaps employers would cut back any pay increases by 7.65% (Social Security + Medicare). For example, if they currently pay someone the threshold amount, $176,000, and they want to move that person's pay up by $10,000 to $186,000, perhaps the raise would be just $9,235 so they would have the roughly $765 they need to contribute as FICA. (Note that the raise would be around $8,470 (before income tax!) since the paycheck will also be smaller by 7.65%).

However, for employees already earning those higher salaries, employers would be facing a big new tax. Imagine a ball player with a salary of $1,000,000. $176,000 is already subject to FICA. Taxing the other $824,000 means the player pays $63,036 more for Social Security and Medicare. Not only that, the ballclub must come up with this same $63,036. Getting it from the player will be tough because the player is already getting socked! The team faces a mix of belt-tightening along with raising prices on tickets, parking, and hot dogs. Ouch.

Employers don’t have a pre-existing pot of money to pay the FICA tax increase the way that high-income people do. That is, one's paycheck is a large lump sum that will just be a little smaller (!) due to higher FICA. But where does the business find the new amount it has to cover? This needs to be part of the discussion for such a "fix" for Social Security.

Brigham Johnson
Delray Beach, Florida
April 11, 2025