Income gap

Medicare withholds 1.45% of salary up to $200,000 for couples at which time it increases by .9% to 2.35% and this is matched by the employer. It covers all income with no upper limit. Social security is 6.2% from employer and employee up to $168,000. In order to close the income gap social security contributions could be increase to cover all income much like Medicare. Another step would be to have no social security deductions on the first $50,000 and then double the deductions to 12.8%. While most families with incomes below $50,000 pay no income tax they all pay social security tax. These are changes that can be made without any additional government agencies since social security and Medicare are already in place. Another way to reduce the gap is by making changes in the earned income tax credit (EITC) which started in 1975. Prior to that time if you were receiving public assistance (welfare) and went to work you would lose some or all of your public income. The government wanted to encourage people to work but in typical government fashion they just didn't eliminate the penalty for working they kept the penalty but added the EITC. Here is a typical benefit. A mother with two children works and earns $20,000 receives $5,500 in EITC but if she earns $40,000 the EITC drops to $2,100. This could be increased both in the earnings and in the benefit, once again without any new programs. A third way to help close the gap is the Child Tax Credit which is currently set at $2,000 per child could be increased to $5,000 and that would mean that a family of four would pay no income tax on earnings up to $140,000. Once again this requires no additional programs. Forth is to remove income tax on the first $50,000 of social security benefits. If these four suggestions were initiated the income gap would be cut in half over night. Until recently most people were not comfortable with income redistribution but the gap has gotten so wide that many are now willing to look at changes. Currently the top 20% of wage earners receive 50% of the income.