Social Security is mainly funded by a flat tax on all wages up to $110,100 per year (going up to $113,700 in 2013). The more people earn, the more tax they pay (up to that level).
There are no deductions and no exemptions. Every additional dollar earned by poor and middle-income people translates directly into higher Social Security tax receipts.
Thus a doubling of the minimum wage from $7.25 to $14.50 an hour would result in a doubling of the Social Security taxes paid by minimum wage earners.
We have at least twenty years to rebuild the Social Security trust fund. If we raise minimum wages now, we can start rebuilding the fund now. Congress should put the minimum wage up a dollar a year every year for the next ten years, starting in 2013.
As with all retirement saving, the earlier you start the easier it is to meet your goals. Social Security taxes paid into the trust funds in 2013 will immediately start earning compound interest. By 2023 the Social Security crisis will be solved.By 2033 we'll probably be able to raise benefits a little, too.
1 | 2