Rate of growth of wages subject to Social Security taxes
January 19th, 2023
Suppose the real rate of growth of wages subject to Social Security taxes is expected to average 1% per year during the next 40 years. Assume that the Social Security tax rate remains constant, and prove that the average return on Social Security taxes paid into the Social Security trust fund will also be 1%. Why can workers with high incomes expect negative returns on their Social Security taxes during this period?