So Mr. Romney wants to introduce "means testing" to Social Security (Next seniors may see benefits tied to means (Boston Globe, October 10, 2012: A1, A8). He seems unaware that Social Security benefits are
already subject to means testing.
The payout from Social Security is, unlike the contribution, quite progressive. Right now the Social Security formula for computing one's pension depends on Average Lifetime Earnings. Each year's earnings are converted into constant dollars and then a monthly average is calculated. Based on this, Social Security pays you:
** 90% of the first $767.00 of monthly income (lifetime average),
** 32% of income between $767.00 and $4624.00, and
** 15% of income above $4624.00 to the cap of $9175.00 ($110,100.00 per year).
So what additional means testing would be imposed? Would the top two percentages be reduced? Or would Mr. Romney suggest taxing Social Security as regular income? The latter would seem the most sensible to
me as only those with substantial additional income would see a reduction in after-tax income.
The real solution to the solvency of the Social Security Trust Fund would be to raise the cap on Social Security earnings (currently $110,100 per year) so that higher paid individuals contribute more.
Sent to Boston Globe