Here’s One Simple and Sure-Fire Way to Ensure Social Security Solvency
A new article by Kiplinger found that one thing almost all Americans can rally around is retirement and the importance of supporting Social Security. It cited one recent survey that found 87 percent of Americans say Congress needs to act now to protect long-term funding for Social Security.
By now, everyone knows that the Social Security trust fund is facing a funding deficit. The article states this is largely because of “declining fertility rates resulting in fewer younger workers paying into the system and unanticipated levels of earnings inequality.”
Scrap the Cap
Social Security is funded by payroll taxes. Currently, income above $168,600 is not taxed for Social Security. With more people earning higher incomes these days, a large portion of workers’ wages now fall outside of this earnings cap. This has initiated calls to “scrap the cap.”
According to the Kiplinger article, when Congress last made changes to Social Security in 1983, it anticipated that 90 percent of earnings would be taxed under its formula. Today, only 82 percent of wages are taxed leading to the trust fund deficit. To reach the planned 90 percent rate, the cap would have to be raised to about $280,000.
Enact the Social Security Expansion Act
That would happen if Congress were to enact The Social Security Expansion Act. This landmark piece of legislation calls for lifting the cap on Social Security taxes to ensure that the wealthiest Americans pay a fairer amount in relation to their income.
The Social Security Expansion Act would subject all income above $250,000 to additional Social Security Payroll tax. The bill’s sponsors say doing so would extend the solvency of Social Security by 75 years. A study by the Center for Economic and Policy Research supports the theory that by lifting the wage cap we could strengthen the long-term solvency of Social Security.
In addition to strengthening the Social Security program, the Social Security Expansion Act also calls for increasing monthly benefits for seniors by $200 and enacting a fairer annual cost-of-living adjustment (COLA) that better reflects seniors’ unique spending habits.
You can show lawmakers you join The Seniors Trust in supporting this measure by signing our petition.
