From BusinessWeek, March 7, 2005 (registration required but what matters is right here):
...the drive for revenues will likely result in raising the “cap” on withheld wages and salaries above the current level of $90,000. Assuming that the Social Security tax rate remains the same — and leaving aside the fact that the 50% share of payroll taxes paid by employers are deductible — raising the cap will translate into a marginal tax rate increase of 12.4 percentage points on all income up to the new cap. Consider, for example, a person earning $500,000 a year. Removing the cap entirely would extract an additional $50,840 annually in Social Security tax. Even simply lifting the cap would result in a hefty hike. A cap of $110,000, for example, would boost taxes on everyone earning that sum by $2,480. Unless the benefits are increased proportionally, the scheme is nothing but a backdoor marginal tax rate hike that makes a mockery of the President’s tax rate reductions.
