Through the Doughnut Hole: Reimagining the Social Security Contribution and Benefit Base Limit

Posted: 7 Jun 2010

See all articles by Patricia Dilley

Patricia Dilley

University of Florida Levin College of Law; National Academy of Social Insurance (NASI)

Abstract

The Obama campaign proposal to address Social Security's future financing shortfalls by increasing the Social Security tax base limit only for those making more than $250,000 per year raises the broader question of the function of the base limit from a Social Security program perspective. The public supports increasing the wage base above all other possible avenues for solving long term financing issues, but the problems with the Obama "doughnut hole" proposal are substantial from several perspectives. In this article, the author suggests that the function of the base limit be reconsidered, and the benefit accrual function of the earnings base be considered separately from the revenue function of the tax base. The little recognized fact that Social Security benefits are based on earnings, not on taxes, should be the central organizing principle in a reconsideration of the base limit and of options for future revenue sources for Social Security.

Keywords: Social Security, Retirement, FICA, Wage Base, Obama Proposal

JEL Classification: H55

Suggested Citation

Dilley, Patricia, Through the Doughnut Hole: Reimagining the Social Security Contribution and Benefit Base Limit. Administrative Law Review, Vol. 62, No. 2, p. 367, 2010, University of Florida Levin College of Law Research Paper No. 2010-14, Available at SSRN: https://ssrn.com/abstract=1621754

Patricia Dilley (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States
352-392-2270 (Phone)
352-392-7647 (Fax)

National Academy of Social Insurance (NASI)

1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904
United States

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