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Column: The richest Americans finished paying their Social Security taxes last week. Most of us will pay all year

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Column: The richest Americans finished paying their Social Security taxes last week. Most of us will pay all year

Here are some rough calculations of when some of America’s richest individuals fulfilled their Social Security tax obligations for 2025: For Apple Chief Executive Tim Cook, it was at about 2 p.m. on New Year’s Day. For McDonald’s CEO Christopher Kempczinski, sometime on the morning of Jan. 3. For Elon Musk, it was sometime around 12:31 a.m. New Year’s Day.

For most of the rest of us, it won’t happen until next New Year’s Eve.

The real figures on the payroll tax liabilities of the America’s plutocrat class are necessarily murky, for reasons we’ll get to in a moment. But they tell a dismal story nonetheless, as set forth annually by labor economist Teresa Ghilarducci of the New School.

A lot of income escapes the Social Security system; and the escaping income is that from the wealthiest Americans.

— Economist Teresa Ghilarducci

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The story is one of rising economic inequality in United States — and more specifically how our tax system is designed to benefit the wealthy rather than ordinary workers. Anyone needing empirical evidence of these conditions need not look beyond the way we fund Social Security, our indispensable federal retirement and disability program.

Although the program is designed to provide universal coverage, the burden of paying for it falls disproportionately on the working class. Under the program’s current structure, benefits are progressive — they come to a larger percentage of lifetime earnings for lower-income retirees — but the tax is regressive, amounting to less as a percentage of income as income rises.

At least 230 of the richest Americans already have paid their Social Security tax for the year, Ghilarducci reports. That’s because wage earnings of $176,100 or more this year — the cap on wages taxed by Social Security — are exempt, and their income is so high that they reached the ceiling within days or even minutes of the New Year’s ball dropping at Times Square.

“A civil engineer earning $176,100 per year looks the same as Elon Musk in the eyes of the Social Security system,” Ghilarducci writes. By contrast, “over 164 million workers (about 94% of us) pay Social Security taxes all year long. The point is a lot of income escapes the Social Security system; and the escaping income is that from the wealthiest Americans.”

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One of the most effective Social Security reforms proposed by Democrats is to raise or (preferably) eliminate the payroll tax cap. But that change doesn’t go quite far enough. What’s necessary, as Ghilarducci correctly observes, is to bring more income categories — interest, business receipts, capital gains — into the definition of earnings.

“Taxing the expanded base could more than pay for promised Social Security benefits for 35 years and there would even be some money to eliminate poverty among all Social Security recipients,” she observes.

Here’s a brief primer on the payroll tax, which typically appears on pay stubs under the label “FICA” (for “Federal Insurance Contributions Act”). For Social Security, it comes to 12.4% of gross wage income, shared equally by worker and employer, up to an annually adjusted cap. In 2025, the cap is $176,100, up from $168,600 last year. That means that you’ll pay a maximum of $10,918 directly in Social Security tax this year, with your employer paying the same sum on your behalf. (Self-employed workers have to pay both levies.)

Workers and employers each pay an additional 1.45%, with no cap, to help fund Medicare. The richest taxpayers may also be subject to a 3.8% tax on some of their investment income.

Two aspects of the payroll tax are boons for the wealthy. One is that it applies only to wages, tips, bonuses, commissions, and some fringe benefits — generally, almost anything that appears on the annual W-2 forms workers receive from their employers. “Unearned income” such as interest, dividends and capital gains distributions isn’t counted.

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That’s important because unearned income tends to represent a greater share of total income for the wealthy compared with the rank-and-file.

In tax year 2022 (the most recent for which the IRS provides statistics), W-2 income accounted on average for about 75% of the total income reported by households with adjusted gross income of $50,000-$75,000. For households with income of $1 million or more, only about 25% was subject to the payroll tax. For those with income of $10 million or more (averaging about $30.4 million each), only about 12% on average was subject to the payroll tax — and then only up to the FICA cap.

To put it another way, any workers earning wages of $176,100 or less this year will pay 6.2% of their pay in Social Security tax. For someone earning $10 million, assuming all of it comes in wages, the tax rate is 0.11%.

That brings us to the complexities involved in gauging the income of America’s richest individuals, notably top corporate executives. Mostly to reduce corporate and income taxes, companies tend to keep the cash components of their executives’ pay as meager as possible, as opposed to stock and stock options. The latter aren’t subject to the payroll tax.

Apple, for example, listed Cook’s total compensation for 2023 (the most recent year reported) as $63.2 million. But only $3 million of that was in salary, plus another $10.7 million reported as a cash incentive tied to the company’s performance. An additional $2.5 million was paid for items such as security services and personal travel on private aircraft, which Apple requires Cook to use “for security and efficiency reasons.” Cook may have to pay tax on some of those items.

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It’s difficult, and in some cases impossible, to figure out how much in cash a top corporate executive actually pockets in any year. The Securities and Exchange Commission implemented a regulation in 2022 mandating that public companies disclose “compensation actually paid” to top executives, ostensibly so shareholders could accurately assess how the money paid to the C-suite corresponded to a company’s performance.

In practice, however, the resulting metrics obscure almost as much as they reveal. Apple, for example, disclosed in its 2024 proxy statement that in 2023 it “actually paid” $106.6 million to Cook — but it also stated that the figure “does not represent cash or equity value realized or paid” to Cook, or to the company’s four other top executives.

Rather, the “actually paid” disclosure is merely a way to adjust the value of stock options and other equity awards given to the executives, as the value of the underlying shares rises or falls. So if you’re trying to determine how much more the bank accounts of executives swelled during the year, this is no help.

Musk’s income from Tesla, his publicly traded electric vehicle company, is especially hard to gauge. (Ghilarducci says she based her estimate of Musk’s potential tax liability on “public data on Musk’s income,” including nonwage income.)

According to Tesla’s disclosure, Musk received no salary, bonus, stock or options from 2021 through 2023. That may have something to do with the issues connected with his groundbreaking $56-billion 2018 pay package, which was challenged in a shareholder lawsuit. The pay package was overturned in January 2024 by Delaware Chancellor Kathaleen McCormick, who found it excessive and not the product of an arm’s length negotiation between Musk and the Tesla board. (Tesla didn’t respond to my request for comment.)

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That points to how the wealthy exploit their assets without incurring income tax, whether on ordinary or “unearned” income: They borrow against them. Tesla has disclosed that as of last March, Musk had pledged more than 238.4 million of his Tesla shares — about one-third of the total 715 million shares of which he was listed as beneficial owner — as “collateral to secure certain personal indebtedness.” The pledged stock is worth about $95 billion at the current stock price. The proceeds of loans aren’t generally treated as taxable income unless the loan is forgiven.

Tesla disclosed in its proxy statement in April that the compensation it “actually paid” Musk came to $1.4 billion in 2023. But it stated — as Apple did in relation to Cook’s pay — that the figure did “not reflect the actual amount of compensation earned by or paid to Mr. Musk” that year. It was merely an artifact of adjustments to the putative value of his stock grants as it fluctuated in relation to the value of the underlying shares.

So whether Musk paid his entire payroll tax obligation by 15 minutes into 2025 (as Ghilarducci estimated based on Musk’s total Tesla-connected wealth), or owed nothing and has paid nothing can’t be determined.

All we can say is this: The run-up of wealth among a tiny camp of mega-billionaires comes at great social cost. Conservatives and Republicans in Congress continue to claim that the cost of Social Security, Medicare and Medicaid benefits is an insupportable burden on America, so benefits need to be cut, though President-elect Donald Trump has vowed to preserve entitlements like Social Security and Medicare.

But if the wealthy paid their fair share of the cost of those programs, they might well be solvent, even flush enough for benefits to be expanded and extended, into the limitless future.

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U.S. Space Force awards $1.6 billion in contracts to South Bay satellite builders

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U.S. Space Force awards .6 billion in contracts to South Bay satellite builders

The U.S. Space Force announced Friday it has awarded satellite contracts with a combined value of about $1.6 billion to Rocket Lab in Long Beach and to the Redondo Beach Space Park campus of Northrop Grumman.

The contracts by the Space Development Agency will fund the construction by each company of 18 satellites for a network in development that will provide warning of advanced threats such as hypersonic missiles.

Northrop Grumman has been awarded contracts for prior phases of the Proliferated Warfighter Space Architecture, a planned network of missile defense and communications satellites in low Earth orbit.

The contract announced Friday is valued at $764 million, and the company is now set to deliver a total of 150 satellites for the network.

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The $805-million contract awarded to Rocket Lab is its largest to date. It had previously been awarded a $515 million contract to deliver 18 communications satellites for the network.

Founded in 2006 in New Zealand, the company builds satellites and provides small-satellite launch services for commercial and government customers with its Electron rocket. It moved to Long Beach in 2020 from Huntington Beach and is developing a larger rocket.

“This is more than just a contract. It’s a resounding affirmation of our evolution from simply a trusted launch provider to a leading vertically integrated space prime contractor,” said Rocket Labs founder and chief executive Peter Beck in online remarks.

The company said it could eventually earn up to $1 billion due to the contract by supplying components to other builders of the satellite network.

Also awarded contracts announced Friday were a Lockheed Martin group in Sunnyvalle, Calif., and L3Harris Technologies of Fort Wayne, Ind. Those contracts for 36 satellites were valued at nearly $2 billion.

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Gurpartap “GP” Sandhoo, acting director of the Space Development Agency, said the contracts awarded “will achieve near-continuous global coverage for missile warning and tracking” in addition to other capabilities.

Northrop Grumman said the missiles are being built to respond to the rise of hypersonic missiles, which maneuver in flight and require infrared tracking and speedy data transmission to protect U.S. troops.

Beck said that the contracts reflects Rocket Labs growth into an “industry disruptor” and growing space prime contractor.

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

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California-based company recalls thousands of cases of salad dressing over ‘foreign objects’

A California food manufacturer is recalling thousands of cases of salad dressing distributed to major retailers over potential contamination from “foreign objects.”

The company, Irvine-based Ventura Foods, recalled 3,556 cases of the dressing that could be contaminated by “black plastic planting material” in the granulated onion used, according to an alert issued by the U.S. Food and Drug Administration.

Ventura Foods voluntarily initiated the recall of the product, which was sold at Costco, Publix and several other retailers across 27 states, according to the FDA.

None of the 42 locations where the product was sold were in California.

Ventura Foods said it issued the recall after one of its ingredient suppliers recalled a batch of onion granules that the company had used n some of its dressings.

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“Upon receiving notice of the supplier’s recall, we acted with urgency to remove all potentially impacted product from the marketplace. This includes urging our customers, their distributors and retailers to review their inventory, segregate and stop the further sale and distribution of any products subject to the recall,” said company spokesperson Eniko Bolivar-Murphy in an emailed statement. “The safety of our products is and will always be our top priority.”

The FDA issued its initial recall alert in early November. Costco also alerted customers at that time, noting that customers could return the products to stores for a full refund. The affected products had sell-by dates between Oct. 17 and Nov. 9.

The company recalled the following types of salad dressing:

  • Creamy Poblano Avocado Ranch Dressing and Dip
  • Ventura Caesar Dressing
  • Pepper Mill Regal Caesar Dressing
  • Pepper Mill Creamy Caesar Dressing
  • Caesar Dressing served at Costco Service Deli
  • Caesar Dressing served at Costco Food Court
  • Hidden Valley, Buttermilk Ranch
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They graduated from Stanford. Due to AI, they can’t find a job

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They graduated from Stanford. Due to AI, they can’t find a job

A Stanford software engineering degree used to be a golden ticket. Artificial intelligence has devalued it to bronze, recent graduates say.

The elite students are shocked by the lack of job offers as they finish studies at what is often ranked as the top university in America.

When they were freshmen, ChatGPT hadn’t yet been released upon the world. Today, AI can code better than most humans.

Top tech companies just don’t need as many fresh graduates.

“Stanford computer science graduates are struggling to find entry-level jobs” with the most prominent tech brands, said Jan Liphardt, associate professor of bioengineering at Stanford University. “I think that’s crazy.”

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While the rapidly advancing coding capabilities of generative AI have made experienced engineers more productive, they have also hobbled the job prospects of early-career software engineers.

Stanford students describe a suddenly skewed job market, where just a small slice of graduates — those considered “cracked engineers” who already have thick resumes building products and doing research — are getting the few good jobs, leaving everyone else to fight for scraps.

“There’s definitely a very dreary mood on campus,” said a recent computer science graduate who asked not to be named so they could speak freely. “People [who are] job hunting are very stressed out, and it’s very hard for them to actually secure jobs.”

The shake-up is being felt across California colleges, including UC Berkeley, USC and others. The job search has been even tougher for those with less prestigious degrees.

Eylul Akgul graduated last year with a degree in computer science from Loyola Marymount University. She wasn’t getting offers, so she went home to Turkey and got some experience at a startup. In May, she returned to the U.S., and still, she was “ghosted” by hundreds of employers.

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“The industry for programmers is getting very oversaturated,” Akgul said.

The engineers’ most significant competitor is getting stronger by the day. When ChatGPT launched in 2022, it could only code for 30 seconds at a time. Today’s AI agents can code for hours, and do basic programming faster with fewer mistakes.

Data suggests that even though AI startups like OpenAI and Anthropic are hiring many people, it is not offsetting the decline in hiring elsewhere. Employment for specific groups, such as early-career software developers between the ages of 22 and 25 has declined by nearly 20% from its peak in late 2022, according to a Stanford study.

It wasn’t just software engineers, but also customer service and accounting jobs that were highly exposed to competition from AI. The Stanford study estimated that entry-level hiring for AI-exposed jobs declined 13% relative to less-exposed jobs such as nursing.

In the Los Angeles region, another study estimated that close to 200,000 jobs are exposed. Around 40% of tasks done by call center workers, editors and personal finance experts could be automated and done by AI, according to an AI Exposure Index curated by resume builder MyPerfectResume.

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Many tech startups and titans have not been shy about broadcasting that they are cutting back on hiring plans as AI allows them to do more programming with fewer people.

Anthropic Chief Executive Dario Amodei said that 70% to 90% of the code for some products at his company is written by his company’s AI, called Claude. In May, he predicted that AI’s capabilities will increase until close to 50% of all entry-level white-collar jobs might be wiped out in five years.

A common sentiment from hiring managers is that where they previously needed ten engineers, they now only need “two skilled engineers and one of these LLM-based agents,” which can be just as productive, said Nenad Medvidović, a computer science professor at the University of Southern California.

“We don’t need the junior developers anymore,” said Amr Awadallah, CEO of Vectara, a Palo Alto-based AI startup. “The AI now can code better than the average junior developer that comes out of the best schools out there.”

To be sure, AI is still a long way from causing the extinction of software engineers. As AI handles structured, repetitive tasks, human engineers’ jobs are shifting toward oversight.

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Today’s AIs are powerful but “jagged,” meaning they can excel at certain math problems yet still fail basic logic tests and aren’t consistent. One study found that AI tools made experienced developers 19% slower at work, as they spent more time reviewing code and fixing errors.

Students should focus on learning how to manage and check the work of AI as well as getting experience working with it, said John David N. Dionisio, a computer science professor at LMU.

Stanford students say they are arriving at the job market and finding a split in the road; capable AI engineers can find jobs, but basic, old-school computer science jobs are disappearing.

As they hit this surprise speed bump, some students are lowering their standards and joining companies they wouldn’t have considered before. Some are creating their own startups. A large group of frustrated grads are deciding to continue their studies to beef up their resumes and add more skills needed to compete with AI.

“If you look at the enrollment numbers in the past two years, they’ve skyrocketed for people wanting to do a fifth-year master’s,” the Stanford graduate said. “It’s a whole other year, a whole other cycle to do recruiting. I would say, half of my friends are still on campus doing their fifth-year master’s.”

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After four months of searching, LMU graduate Akgul finally landed a technical lead job at a software consultancy in Los Angeles. At her new job, she uses AI coding tools, but she feels like she has to do the work of three developers.

Universities and students will have to rethink their curricula and majors to ensure that their four years of study prepare them for a world with AI.

“That’s been a dramatic reversal from three years ago, when all of my undergraduate mentees found great jobs at the companies around us,” Stanford’s Liphardt said. “That has changed.”

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