CEPR

CEPR has updated the calculator below (also available here) which shows the last day when salaries, if spread evenly throughout the year, are subject to Social Security taxes.[1] It also displays how much taxes are levied based on current law, and how much would be levied if the payroll tax cap were scrapped. (See CEPR's post for 2019 here.)

Salaries which might be interesting to enter into the calculator are:

$35,000: This is around the median annual earnings of an individual in the United States. (The vast majority of earnings at the level is wage income.)

$10,000,000: This is income at which Representative Alexandria Ocasio-Cortez’s proposed 70 percent marginal tax would take effect.

$1,500,000 and $21,800,000: This is the estimated wage income of billionaire Howard Schultz, former CEO of the coffee chain Starbucks. Although no longer CEO of Starbucks, he was on track to receive a similar salary in his retirement. His last known salary totaled $21,800,000 (with a $1,500,000 base salary). Schultz is in the news as he recently decided to explore running for president in 2020. Schultz has, in the past, distinguished himself with his focus on deficits and debt. Part of this focus has included cuts to Social Security and Medicare.

 


[1] It’s important to note that Social Security taxes only apply to wage income and not to other types of income, like investment income. As incomes rise, wage income often becomes eclipsed by investment income — which under current law, is not subject to Social Security taxes.