Tax raise for wealthy could save Social Security

Newsweek  -   As Social Security's financial outlook grows increasingly concerning, a bipartisan group of lawmakers is reviving a proposal to require higher-income Americans to pay Social Security taxes on more of their earnings.

To many, it presents as one of the least painful ways to shore up the retirement program, but it also could amount to one of the largest tax increases in decades.

Democratic Senator Elizabeth Warren and Republican Senator Bernie Moreno wrote in a recent New York Times op-ed that removing the payroll tax cap would be a “no-brainer” as the Social Security Administration faces funding insolvency as early as 2032.

According to the latest Social Security trustees' projections, the program's Old-Age and Survivors Insurance trust fund is expected to become depleted in the fourth quarter of 2032. If Congress does nothing, incoming payroll tax revenue would only be sufficient to pay about 78 percent of scheduled benefits, resulting in an automatic 22 percent cut for retirees and survivors.

Under current law, workers and employers each pay a 6.2 percent Social Security payroll tax on earnings up to $184,500 in 2026. However, wages earned above that amount are exempt from Social Security taxes.

Warren and Moreno are two lawmakers so far to call for eliminating the cap entirely, arguing that wealthy Americans should pay Social Security taxes on all earnings rather than stopping once they exceed the annual threshold.

“Why should a middle-class nurse pay a larger share of her paycheck — than a wealthy corporate lawyer? This is doubly unfair in an economy in which top earners’ wages, over time, have pulled far ahead of those of the average worker,” the senators wrote in their Times op-ed.