Securing Social Security Solvency is Easier Than We Think
It’s no secret that Social Security is facing a funding crisis. Its trust fund is expected to reach a deficit in about 10 years, at which time the program will have no choice but to cut benefits. No one wants that to happen! Fortunately, according to MarketWatch, there’s an easy fix that could eliminate two-thirds of Social Security’s pending shortfall and make it a more equitable program overall.
Scrap the Cap
Right now, Social Security taxes are capped at $168,600. That means whether you make $168,600 or $16 million, you pay the same amount in payroll taxes. Not only is that not fair, it also puts an undue burden on lower-income earners who pay a higher percentage of their income in taxes. That’s because currently wages up to $168,600 are all subject to the 12.4 percent payroll tax, split between the worker and the employer.
The article cites the Social Security Administration’s Office of the Chief Actuary as saying that if the cap on taxes were lifted, the funds raised could wipe out about two-thirds of the financial crisis facing Social Security,
Solvency Could Be In Sight
The actuary’s office found that if the wage cap was eliminated and workers paid Social Security payroll taxes on every dollar of their earnings, regardless of how much they make, it would “close about 70 percent of the shortfall and extend the trust fund’s life to about 2060.”
That scenario is unlikely, but if payroll taxes were applied to earnings above $250,000 the Office of the Actuary found that “about 68 precent of Social Security’s long-term deficit would be eliminated and the life of the combined trust fund that backs the program would extend through the late 2050s.”
Social Security Expansion Act
That’s the premise of the Social Security Expansion Act, backed by The Seniors Trust. Introduced by Senator Bernie Sanders and other leading lawmakers, it calls for lifting the taxable maximum so that all income above $250,000 would be subject to the Social Security payroll tax. This plan would extend the Social Security trust fund’s solvency through 2096.
In addition to extending the longevity of the Social Security program, this landmark piece of legislation would expand benefits by $2400 per year, establish a fairer COLA, and reduce senior poverty. Please help show your support by signing our petition to Congress.
