Places Where Workers Pay the Most Into Social Security

Here’s why you’re paying a higher Social Security tax rate than someone earning over $1 million.

Here’s why you’re paying a higher Social Security tax rate than someone earning over $1 million
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Three quarters of people whose income exceeded the tax cap in 2011 earned less than $200,000, according to an Urban Institute analysis of Social Security Administration data, while 0.5 percent earned over $1 million. "Most people who earn above the tax cap earn right above it," says Favreault. "There's a lot of people who earn over the tax max just once or twice in their life, and another cluster of people who earn above it for 10 or 15 years."

Increasing Social Security's payroll tax cap is a popular idea, with 68 percent of Americans supporting the complete elimination of the cap, according to a recent National Academy of Social Insurance and Mathew Greenwald and Associates online survey of 2,000 Americans age 21 and older. A 2010 Gallup and USA Today poll found that this change also enjoys strong bipartisan support with 79 percent of Democrats, 60 percent of Republicans and 64 percent of Independents saying it's a good idea to require workers to pay Social Security taxes on all of their wages.

[Read: 10 Places to Retire on Social Security Alone.]

There is less disparity in Medicare tax rates because Medicare taxes are collected differently from those of Social Security. Workers and employers each pay 1.45 percent of worker earnings into the Medicare system, with no annual limit. And for the first time in 2013, there is an additional Medicare tax for high-income taxpayers of 0.9 percent of earnings over $200,000 for individuals and $250,000 for couples.