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Social Security 'tax max' figure not declining as stated

The statement

Historically, the Social Security tax has been assessed on about 90 percent of U.S. income. Now it captures 83 percent because there's been such a growth of income among the highest earners.

U.S. Rep. David Cicilline, D-R.I., in an interview

The ruling

According to a Social Security "Policy Brief" from 2011 and other sources, Social Security sometimes refers to this limit as the "tax max." It's been the subject of a lot of tinkering since the 1930s, when it was set at $3,000. The tax rate then was just 1 percent.

The tax max started going up in 1951. Annual increases began in 1972. The tax rate itself started to rise in 1950. It has been 6.2 percent since 1990.

Returning to Cicilline's statement, we found that he got a key number wrong.

He said that, historically, 90 percent of income was subject to the Social Security tax. In fact, 83 percent is the average proportion of wages subjected to the tax from the founding of Social Security through 2009. For several years during the 1950s, 1960s, and 1970s it was below 80 percent, dropping to 71 percent in 1965.

The percentage peaked at 90 percent in only two years — 1982 and 1983. It's been on the decline since then. It was about 86 percent in 2010.

Cicilline's office subsequently sent us two reports that confirmed the 90 percent represents a historical peak, not an average.

One was a 2010 document from the nonpartisan Congressional Research Service, which predicted that the rate would hit 83 percent around 2014. The other was a compilation of statistical tables from the Social Security Administration showing that the 2011 rate was expected to be 83 percent, as Cicilline said.

The reports showed something else.

Since 1983, about 6 percent of the population each year has earned enough money to reach the cap and stop paying Social Security taxes that year. The fact that the percentage has changed very little (yet the amount of wages subjected to the Social Security tax has steadily declined) shows that the wealthiest Americans have been seeing less and less of their income subjected to the tax, which was Cicilline's other point.

As the 2011 policy brief concluded, "The percentage of earnings covered by the tax max has fallen since the early 1980s because earnings among above-max earners have grown faster than earnings among the rest of the working population."

We rate the claim Mostly False.

Edited for print. Read the full version at

Social Security 'tax max' figure not declining as stated 05/25/13 [Last modified: Friday, May 24, 2013 5:20pm]
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