A recent report by the Congressional Research Service (at http://aging.senate.gov/crs/ss9.pdf) found the following:
Raising or eliminating the cap on wages that are subject to taxes could reduce the long-range
deficit in the Social Security Trust Funds. For example, if the maximum taxable earnings amount
had been raised in 2005 from $90,000 to $150,000—roughly the level needed to cover 90% of all
earnings—it would have eliminated roughly 40% of the long-range shortfall in Social Security.
In addition, the study found that income inequality exacerbates the funding shortfall:
Since 1982, the Social Security taxable earnings base has risen at the same rate as average wages
in the economy. However, because of increasing earnings inequality, the percentage of covered
earnings that are taxable has decreased from 90% in 1982 to 85% in 2005. The percentage of
covered earnings that is taxable is projected to decline to about 83% for 2014 and later.