Myth: The Rich Pay Their Fair Share of Social Security

Every working American pays 6.2% of their wages into Social Security — but only up to a certain amount. That ceiling is called the wage base, and in 2025 it sits at $176,100. Once your income crosses that line, you stop paying Social Security tax on every additional dollar you earn.

Here is what that looks like in real life. If you earn $50,000 a year as a school teacher, you pay 6.2% of every single dollar — about $3,100 a year. If a corporate executive earns $2 million a year, they also pay 6.2% — but only on the first $176,100. That works out to about $10,918. The other $1,823,900 they earned? No Social Security tax at all. Their effective rate is just 0.55% of their total income.

This was not always how the system worked. When Congress set the wage base in 1983, it was designed to cover about 90% of all wages earned in America. But since then, income inequality has grown dramatically. The richest Americans have pulled far ahead, so a much larger share of the country's total wages now sits above the cap — meaning Social Security is funded by a smaller and smaller slice of the income pie.

The Social Security Trust Fund is projected to be depleted by 2035. At that point, without any changes, the program could only pay about 83% of scheduled benefits. Lifting or eliminating the wage cap is one of the most direct fixes available. According to the Congressional Budget Office, applying the payroll tax to wages above $250,000 without crediting those earnings toward higher benefits would generate $1.6 trillion over ten years and close roughly 70% of the solvency gap.

Supporters of the cap argue it was designed to match contributions with future benefits — you pay in more, you get out more. Critics point out that the link between contributions and benefits is already loose at high incomes, and that letting millionaires pay a lower effective rate than factory workers undermines the fairness of a program that millions of Alabama families depend on.