Tuesday, July 21, 2009

Doing Pretty Well

Unless you're a socialist, you are probably applauding this Wall Street Journal story:

The pay of employees who receive more than the Social Security wage base -- now $106,800 -- increased by 78%, or nearly $1 trillion, over the past decade, exceeding the 61% increase for other workers, according to the analysis. In the five years ending in 2007, earnings for American workers rose 24%, half the 48% gain for the top-paid. The result: The top-paid represent 33% of the total, up from 28% in 2002.
Of course, that means that the rich are continuing to run away and hide from the rest of us in terms of income. But it means a lot more than that too...

The growing portion of pay that exceeds the maximum amount subject to payroll taxes has contributed to the weakening of the Social Security trust fund. In May, the government said the Social Security fund would be exhausted in 2037, four years earlier than was predicted in 2008.
All just a part of capitalism right. These people have clearly been working harder, not receiving any special treatment.

For example, health insurer Humana Inc. contributes 4% of pay to employees' retirement accounts on salary up to the taxable-earnings wage base -- and 8% above it. Thanks to the richer contribution, Humana Chief Executive Michael B. McCallister received a total contribution of $22,370 under the plan in 2008. (He also received $314,790 in company contributions to his supplemental executive retirement and savings plan.)

Typically, employers can't discriminate in favor of high-paid employees who participate in taxpayer-subsidized retirement plans. But a "permitted disparity" exception enables them to provide additional benefits on the portion of pay that isn't subject to payroll taxes, ostensibly to replace the Social Security benefits executives won't receive on the portion of their pay that is exempt from payroll taxes.

Via Kevin Drum.

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