Edwards and Social Security  

John Edwards was on multiple talk shows this morning, and I can't remember which show had him talking about Social Security, but he staked out a space between Clinton and Obama on increasing the limit on taxable FICA wages. I believe Obama wanted to raise the limit, so that a worker would keep paying taxes beyond the current $97K limit, and Clinton didn't want the increase. Edwards's compromise was completely nonsensical: people earning between $97K and $200K (per worker, not per family) are middle class, so he doesn't want to raise the limit and increase their taxes. Instead, he wants the FICA taxes to start back up again at $200K.

This could have some weird implications: does it mean, for example, that people's benefits would continue to go up after $97K even when they haven't paid any further taxes? Will your benefits continue to go up after you've earned more than $200K?

Also, it's actually not all that common for people to earn more than $200K in wages; for the most part, people in this income bracket are getting other kinds of compensation that aren't subject to FICA anyway -- and of course Edwards's setup would encourage even more alternative compensation schemes. So while there may be a political message in taxing people who earn this much, it's probably not going to raise that much money.

Finally, there's the fact that Edwards's scheme is still regressive, because it taxes the low wage worker at a higher percentage of her income than the $150K "middle class" worker has to pay. If the idea is to designate an income range where workers don't have to pay, why not put it at the bottom?