The Social Security cap is real. Lifting it alone won't fix the gap

Wages above $184,500 escape the tax in 2026. But the cap isn't the main reason Musk pays little. His known salary is $54,080, and his stock gains aren't wages, so lifting the cap alone wouldn't reach them.

In 2026 workers pay 6.2% on wages up to $184,500, and employers match it¹. That caps a worker's share at $11,439, by our arithmetic. The cap rises with wages yearly. For 2027 it is $192,300².

Musk takes no salary from Tesla, and SpaceX's IPO filing shows a $54,080 salary, about $3,353 in Social Security tax by our arithmetic^3,4. In 2021, when he exercised stock options, he did hit the cap³. Capital gains and other investment income escape Social Security tax³. PolitiFact rated the line Mostly True. It said the post "accurately reflects a real feature of Social Security taxes" but that Musk "could pay even less"³. Forbes put his fortune at about $1.1 trillion that day⁵.

About 6% of workers earned above the cap in 2023, by our arithmetic from SSA's counts⁶. The Trustees estimate that 82.9% of covered earnings were taxable in 2024, down from 88.6% in 1984⁷. The 1977 amendments aimed for 90%⁸. Sanders' bill would tax gains Musk cashes in through a separate investment tax⁹.

SSA's actuaries estimate that lifting the cap closes about 57% of the shortfall. The bill's 75-year score also counted new investment taxes, and it covers a 2023 version under 2022 projections, before the gap grew.

Sanders' bill taxes wages above $250,000 without counting them toward benefits^9,10. Scored alone under 2026 projections, that closes 57% of the 75-year shortfall, and the trust funds run dry around 2057 instead of 2034^11,12. Scrapping the cap entirely closes 58%¹¹.

The bill also adds a 12.4% tax on investment income for filers earning over $200,000, or $250,000 for couples, plus a business-income tax^9,10. In 2023 the chief actuary wrote that the full package "would extend the ability of the OASDI program to pay scheduled benefits in full and on time throughout the 75-year projection period." In that score the investment and business taxes raised more than the cap did¹⁰.

That score used 2022 assumptions, when the gap was 3.42% of taxable payroll. It is now 4.42%^10,13. SSA hasn't scored the 2025 bill, whose launch release cites the 2023 analysis^14,15. So no one has tested whether the new version lasts 75 years against today's bigger gap. It also sends only 62% of its expanded investment tax to Social Security⁹.

The bill's formula change adds roughly $200 to $220 a month at full retirement age for most workers, in line with the actuaries' estimates. In the 2023 score, the bill's investment and business taxes paid for it.

The bill raises the first step of the benefit formula⁹. SSA's actuaries estimated the 2023 version as an "approximate $200 increase" in the full-retirement-age benefit "for most workers"¹⁰. The 2025 version trims the formula change. For workers first eligible in 2027 it comes to about $219 a month, or roughly $2,630 a year, by our calculation from SSA's bend points^9,16. SSA puts the original design at about $250 a month for the same workers¹⁷.

Not everyone would get the full amount. Claiming at 62 cuts benefits by 30% for people born in 1960 or later, and the raise shrinks the same way¹⁸. Low earners with long careers can get more from the bill's higher minimum benefit¹⁰.

The raise isn't free. In the 2023 score, the benefit increases and a more generous cost-of-living formula added about 2% of taxable payroll to the shortfall, by our sum of the actuaries' figures¹⁰. CRFB, a budget watchdog, counted the expansions as using "nearly two-fifths" of the bill's new revenue¹⁹.