As Social Security faces trust fund depletion, some Washington lawmakers call for taxing high earners
High earners may only contribute Social Security payroll taxes for part of the year. As the program faces funding woes, some lawmakers say that should change.
TL;DR
- Social Security's Old-Age and Survivors Insurance (OASI) trust fund may be depleted by the fourth quarter of 2032, with 78% of benefits payable thereafter.
- Lawmakers are proposing to tax the rich to address the program's funding shortfall.
- Sens. Elizabeth Warren and Bernie Moreno are working on legislation to lift the payroll tax cap, which currently applies to earnings up to $184,500.
- Sens. Bernie Sanders and Rep. John Larson have proposed bills that would increase taxes on earnings over $250,000 or $400,000, respectively, while also increasing benefits.
- Reforms enacted in 1983 aimed for 75-year solvency but have been impacted by rising income inequality and the Great Recession.
- Concerns exist about the impact of tax increases on small businesses, though proponents argue most small business owners would be exempt.
- Some lawmakers, like Sen. Chuck Grassley, believe tax hikes on the wealthy alone or cutting waste are insufficient.
- Experts emphasize the need for bipartisan solutions, as Senate rules require 60 votes for Social Security reform to pass.
- A balance of increased revenue and benefit adjustments is seen as necessary for long-term solvency.