The Wealthy Will Save Troubled Social Security

By Douglas A. McIntyre Updated Jul 29, 1:04PM EDT · Published Jul 29, 6:03AM EDT

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Many financial experts and analysts believe that the national debt and high deficits will mean that the federal government will have to make tremendous cuts in spending before the end of the decade. Former White House Chief of Staff Erskine Bowles and Sen. Alan Simpson are co-chairs of the National Commission on Fiscal Responsibility and Reform and they have hinted that Social Security will have to be cut sharply in future years.

None of this is terribly surprising based on the portion of federal spending devoted to the defense budget, Medicare, and Social Security. The burden on the US retirement fund will rise as the population rises.

It is hard to imagine how the trend can be reversed but many Americans believe that the wealthy will save Social Security and will not compromise the fund’s ability to pay citizens.

The two contributions that the rich can make is that they can pay Social Security taxes on all of their income and can forgo payments from the fund when they retire. A full two-thirds of people polled by Gallup recently believe that those who are well-to-do need to make payments into the fund based on every last dollar they earn, even if that is into the tens of millions of dollars. Sixty-three percent would like to see the wealthy have limited benefits upon retirement.

According to Gallup, the poll which it did with USA Today shows that the highest percentage of Americans in a Gallup survey to date saying the Social Security system is “in a state of crisis” or has “major problems.” Both young and old Americans would like to see the wealthy carry a larger burden

The trouble with all tax increases is that they may be regressive. Clever accountants can help keep the money earned by the wealthy from being “wages”, but at some point those with the highest earnings will do the mathematics and determine that if they will get a lower payout from the Social Security fund and will have to pay higher taxes that there is a tipping financial tipping point that may limit what they want to earn.

The other and perhaps more vexing issue is what all Americans were “promised” when they paid for their Social Security benefits. A cut in the benefits of people with high income will be challenged in federal court. The wealthy can afford the legal fees.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.