The maximum taxable wage is increased yearly based on wage growth. Today about 87% of wages are subject to the payroll tax. Increasing the amount of wages subject to the payroll tax is an approach often suggested to help improve Social Security's long-term solvency. Historically, the rate has been somewhat higher - 89 to 90% of wages.
The percent of covered wages has declined steadily because wages in excess of the taxable maximum amount have increased more rapidly than wages in general have. If covered wages had remained the same percentage that they reached in 1983, the trust funds would have nearly $160 billion more in reserves today. If that percent were maintained into the future, the increased reserves, plus the higher future contributions, would increase the life of the trust funds by about 10 more years.
Raising the wage base is popular in part because less than 10% of workers have earnings above the maximum. While higher earners and their employers would pay more in payroll taxes, the change would increase workers' future benefits. The increase, however, would not be as large as their additional contributions. AARP would be open to a moderate increase in the payroll tax to help bring it closer to historical levels.
