Should the U.S. raise payroll taxes to save Social Security?
Summary
Raising payroll taxes to fix the Social Security funding gap could cost workers and employers a lot of money, making it hard for many people to afford. Instead of just raising taxes, experts suggest considering a combination of options like lifting the income cap on Social Security taxes and making changes to benefits.Key Facts
- Social Security pays out more benefits than it collects from payroll taxes due to more retirees.
- The Social Security trust fund is expected to run out by 2032, which could lead to a 22% cut in benefits.
- Payroll taxes are currently 12.4%, split between workers and employers; self-employed pay all of it.
- Raising payroll taxes to 17% could add $2,600 to $3,000 per year for a median worker earning about $62,000.
- Many workers cannot afford the increased tax because most do not have emergency savings.
- An alternative is to raise or remove the income cap of $184,500 for Social Security taxes, making high earners pay more.
- Senators Warren and Moreno support lifting the cap to make the system fairer.
- Experts believe a mix of raising revenue and adjusting benefits is needed to keep Social Security stable long-term.
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