Wealthiest Grab 1/3 of Total Pay in the Country

July 22, 2009

(ChattahBox)—According to a recent article in the Wall Street Journal, the disparity between the wealthiest wage earners and the rest of us is widening, with executives and other highly compensated employees receiving more than one-third of the total pay in the U.S. And this figure does not include benefits, such as various stock options and other perks that are reserved for the wealthy.

The consequences of most of the wealth in the country concentrated at the very top, besides the disappearance of a middles class in our society, is that the social security fund that serves as a lifeline for most Americans upon retirement, is eroding.

In 2007, the top earners took home about $2.1 trillion of the $6.4 trillion in total U.S wages. And the increase in the top-tier salaries continues to rise at an astronomical rate compared to average wage earners.

The inflation-adjusted after-tax income of the richest one percent of the population increased by an astonishing 256 percent, between 1979 and 2006, compared to a meager 21 percent for middle income families. And these figures present a disturbing picture regarding the future of the Social Security trust fund.

The increasing amount of wages that are not subject to payroll taxes is contributing to the eroding of the social security fund over time, and shows no signs of slowing down. The government recently predicted that the Social Security fund would be exhausted by 2037, unless drastic changes are made.

As executive pay has increased, the percentage of pay subject to payroll taxes has decreased to 83 percent, down from 90 percent in 1982. Lawmakers have tried and failed over the years to raise the taxable wage ceiling, to increase the amount of collected payroll taxes.

Eliminating the wage ceiling altogether, would take care of the Social Security trust fund’s deficit for the next 75 years, according to the Social Security Administration.

These figures should serve to help Democrats make their case to impose a surtax on the wealthiest one percent of Americans, to finance health care reform.


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