What’s Contributing to Social Security Insolvency?
Social Security is facing a funding crisis, and it’s largely due to demographics. The population is aging, and the birth rate is declining, leaving fewer workers to support retirees. A CBS News report says there’s another situation brewing that’s making matters worse — widening income inequality.
The article notes that over the past few decades, “incomes of higher-paid Americans have soared, far outpacing those of low- and middle-class workers.” This affects Social Security because the program taxes only annual earnings up to $184,500. This means the program loses out on “the faster income growth among top earners.”
Citing the recent Social Security trustees’ report, the article points out that “the share of total wages subject to Social Security taxes has fallen from almost 87 percent in 1984 to roughly 83 percent today, largely because high earners’ pay has grown much faster than everyone else’s, lifting more of their income above the tax cap.”
This is why so many senior advocates, including all of us here at The Seniors Trust, believe it’s time to scrap the cap. The current payroll tax cap exempts annual earnings above $184,500 from Social Security taxes.
Scrap the Cap!
Our mission is to secure passage of the Social Security Expansion Act. This landmark bill buttresses the long-term solvency of Social Security by expanding benefits for seniors — not cutting them. And one of the ways it does this is by requiring the wealthiest Americans to pay their fair share.
The Social Security Expansion Act would lift the income tax cap and subject all income above $250,000 to an additional Social Security Payroll tax. Under this bill, more than 93 percent of households would not see their taxes go up by one penny.
In addition to strengthening the Social Security program, the Social Security Expansion Act also calls for increased monthly benefits for seniors and the enactment of an annual cost-of-living adjustment (COLA) that is fairer to seniors and their unique spending habits.
