Read the report: http://www.ctj.org/pdf/obamasocsec20080707.pdf
Presidential candidate Senator Barack Obama has proposed increasing the Social Security payroll tax on wealthy Americans to enhance the program's solvency for years to come. While several commentators and politicians have suggested that this would burden the middle-class, a new report from CTJ finds that only around 1 percent of taxpayers would actually be affected by this proposal.
Social Security is funded by a payroll tax of 12.4 percent on the first $102,000 of each worker's earnings. Some experts and lawmakers have suggested raising the cap or eliminating it altogether. Senator Obama's idea differs in that he would only increase the Social Security tax for those whose earnings are above $250,000.
Some commentators have suggested that Senator Obama may actually change the way Social Security is financed more fundamentally by applying a tax increase to total household income rather than individual earnings. This would mean that the $250,000 threshold would apply to all household income rather than individual earnings.
We estimate that in 2008, only 2.1 percent of taxpayers will have adjusted gross income (which includes forms of income that are potentially taxable) above $250,000. This means that even under this more expansive interpretation of Senator Obama's Social Security plan, about 98 percent of taxpayers would not be affected.