Ask the Advisor: June 2016

Ask the Advisor: June 2016

Did Members of Congress Give Themselves a Raise this Year?

Q:  I keep getting email about the pay that Members of Congress receive.  Did Members of Congress give themselves a pay raise this year?  I’ve read that they don’t pay Social Security taxes.  Is this true? 

A: The emails that you refer to are as old as the Internet, and much of what you may have read is not entirely true.  Here are some facts from the Congressional Research Service:

Unlike the general public, Members of Congress are probably the only workers you can think of who are required by law to set their own salaries.  Since this policy has been wildly unpopular with voters since it started on March 4, 1789, in 1989 Congress passed legislation to give themselves an automatic pay raise —whether they deserve it or not — thus eliminating the need for the embarrassing annual public vote.  Instead, Congress must take action to deny its pay raise.

Members of Congress currently receive $174,000 per year.  But oddly enough for a Congress with a reputation of not agreeing on much, Members have managed to agree to forego their pay raise seven years in a row.  Spurred by public approval ratings that are hovering at record lows, Members last received a pay raise in 2009.

That said — a new pay raise cycle is upon us.  According to the Congressional Research Service, Members will be due for a maximum potential pay raise of 1.6% or $2,800 on January 2017 — unless they move to strip the pay increase out of legislation later this year.  Meanwhile, people depending on Social Security benefits are very likely to get a potential maximum cost - of - living adjustment increase of ZERO again next year, according to recent consumer price index data.

Perhaps the most common misconception of Members of Congress is that they don’t pay Social Security taxes.  Not true, they do, just not on their entire income.  But by Social Security law — the same law that applies to all workers — they only pay Social Security taxes on the first $118,500 of income.  They pay no Social Security taxes on the $55,500 balance of their income  — even more for House and Senate leaders who receive higher incomes.  If the Social Security taxable maximum wage were abolished, Social Security would receive an estimated $3,697,630 more in revenues annually based on current Congressional salaries.