Social Security Wage Base Skyrockets

[austin3515]

https://hrlaws.services.xerox.com/2016/10/18/social-security-benefits-and-taxable-wage-base-to-increase-for-2017/

Anyone know why so much? After 117,000, 118,500, 118,500 in 2014, 2015 and 2016 respectively, it jumped to $127,200 in 2017.

[ETA Consulting LLC]

Well, mathematically, you have a 15.3% overall FICA up to the TWB. When you look at how many individuals with Compensation above $118,500; then you'll see a huge increase in tax revenue from this increase.

I'm not one to choose tax policy over monetary policy or vice versa, but the math alone would project a huge increase in revenue through employment taxes.

Good Luck!

[Buffys Redrum]

Mathematically? Or the idea that they're running out of money?

[austin3515]

I assume there must be some legal basis for jacking the wage base though? Is it just on a whim, or is it on a funding status?

[Tom Poje]

because last year's cost of living was 0%, therefore despite a formula which would normally have caused an increase last year, the special rule "NO COLA, NO increase in the TWB"

so if you don't drink cola, there is no increase in your 'wage base'

the most recent version of my spread sheet PLAN LIMITATIONs I posted elsewhere even has a chart indicating what the wage base would have been except for this special rule.

[ETA Consulting LLC]

because last year's cost of living was 0%, therefore despite a formula which would normally have caused an increase last year, the special rule "NO COLA, NO increase in the TWB"

so if you don't drink cola, there is no increase in your 'wage base'

the most recent version of my spread sheet PLAN LIMITATIONs I posted elsewhere even has a chart indicating what the wage base would have been except for this special rule.

So, there is a method to the (perceived) madness

Thanks Poje!

[david rigby]

See Tom's spreadsheet at Post #4 in this discussion thread:

http://benefitslink.com/boards/index.php/topic/59532-new-limits/

Also, read Post #9.

[Tom Poje]

by the way Austin, my initial reaction was the same as yours, how did it jump so much,

and then looking at last year's data I realized what happened.

I guess it is sort of like the year in which the CPI actually dropped, but the limitation didn't drop because of a special rule