Capital Gains and Games

Thanks for your response. We should be clear: Urlacher pays the same payroll taxes that I do, since we are both at the maximum taxable earnings. His payroll tax rate is less than mine, since he has more payroll above the cap than I do.

We had some concern about lifting the cap on the OASDI payroll tax. That would increase the marginal tax rate on payroll by 12.4 percentage points (employer and employee combined) on the highest earning levels. That's a big increase in marginal tax rates on earnings that can be quite sensitive to tax rates.

But the choice came down more to one of ideological preference. As the right-of-center member of the trio, I was looking to keep the size of the overall program from getting too large. As the left-of-center member of the trio, Jeff was unwilling to allow Social Security to look too much (more) like a welfare program in which benefits are unrelated to taxes paid. So lifting the cap entirely (without adding benefits on the covered earnings) or confiscating benefits entirely were not things that appealed to him.