February 20, 2009

Fact or Myth? The Answer

Yesterday I posed a question I have heard often over the years, usually preceded by the phrase "If Social Security is so good".........


"Why don't federal officials like U.S. Congressmen and Senators pay Social Security taxes on their salaries? And what about the President and the Vice-President? They don't pay into Social Security either!"


The Answer: This is a myth.

The President and Vice-President of the United States as well as most executive-level political appointees, and all U.S. Congressman and Senators pay Social Security taxes on their salaries up to the annual maximum ($106,800 in 2009) just like private sector employees. In addition career federal employees hired after January 1, 1984, also pay into the Social Security trust fund.

According to the Social Security Administration, about 94% of employees and self-employed individuals in the United States are covered by Social Security. The most notable exception are some state and local government employees who only pay Medicare taxes because they are covered by a government retirement plan. In Texas, the majority of these individuals work for school districts who have chosen not to cover their employees.

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