The complaint I have on taxes is that SS tax cuts off at 97500 meaning that guy making 97500 is paying out 6.2% of his income yet if I make 195000 I am only paying out 3.1% as a percentage of my income. Seems that the guy making 97500 is getting screwed when you look at this as a % of income.
Social security is not a standard tax. What you put in is related to what you can take out later. SS taxes are put into the Social Security Trust Fund. The person making 97,500 and the person making 195,000 will only be able to draw down social security at the same rate. This ignores any income based phase out of social security. The Social Security Administration should be sending you a sheet every year containing the taxed social security income. The amount you can withdraw depends upon the sum of the social security taxes adjusted for the time within the social security trust fund and amortized over your projected retirement lifetime.
What this also means, is that a person making 195,000 will need to make other arrangements (ie. investing in retirement funds, 401ks etc) if they want to live near the income they have lived at when they were working.
