Two People Scam Social Security, Cause $32 Billion Mistake in Income Data

Last week, I blogged David Cay Johnston’s article, Scary New Wage Data, 129 Tax Notes 481 (Oct. 25, 2010), which reported new social security data that the average wage of Americans making $50 million or more increased from $91.2 million in 2008 to $518.8 million in 2009. Bloomberg now reports that the data are in error (`Invalid’ Multiple Tax Forms by Supposed Billionaires Skew Wage Figures, by Ryan J. Donmoyer):

The Social Security Administration has discovered a $32.3 billion mistake in its 2009 wage index and today asked its inspector general to investigate how the error occurred.

Two people were found to have filed multiple W-2 forms that made them into multibillionaires, an agency official said. Those reports skewed statistical wage tables, released Oct. 15, and made it appear that top earners in the United States had seen their pay quintuple in 2009 to an average $519 million each. The agency today released corrected tables that showed the average incomes of the top earners, in fact, declined 7.7% to $84 million each. …

[T]he Social Security office announced [today that] it found “invalid” wages from two of the 74 top wage earners detailed in its data. The data were part of the National Average Wage Index and contained the pay for 74 Americans who earned more than $50 million in 2009. The Social Security review found two tax filers, between them, reported more than $32 billion in wages and officials decided today to invalidate those filings.

David Cay Johnston, Scary Wage Data II — Social Security Changes Its Numbers
Joe Kristan, That’s an Outrage! A Scandal! A… Never Mind.

About the Author

Paul Caron

Paul Caron was named Duane and Kelly Roberts Dean of Pepperdine University School of Law on June 1, 2017. Dean Caron joined the Pepperdine faculty in 2013 after serving as the Dorothy and Leonard Straus Distinguished Visiting Professor of Law in the spring semesters of 2010 through 2013. He served as Associate Dean for Research and Faculty Development at Pepperdine in 2015-2017. Before coming to Pepperdine, he was Associate Dean of Faculty and Charles Hartsock Professor of Law at the University of Cincinnati College of Law.

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