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A Revenue-Based Approach to Saving Social Security Open Access
Social Security is a politically popular, broad-based social program that pays benefits to workers and/or their dependents upon disability, retirement, or death. Currently, Social Security expenditures exceed revenues. Without intervention, Social Security will have to reduce benefits to 77 percent of the scheduled amount in 2033 and by more in later years. This paper proposes a two-pronged revenue-based approach that would rebalance the Social Security trust fund for at least the next 75 years while improving program equity. The first proposed change is to remove the cap on taxable earnings. The second is to introduce a 7.7-percent "retirement security surtax" on investment income that aligns with the Affordable Care Act's Net Investment Income Tax. While analysts have previously considered the effect of removing the Social Security tax cap, the expansion of the tax base to investment income is a new solution that has not previously appeared in the literature. The combination of these two approaches should produce a stronger, more equitable system that improves retirement security for all covered workers.
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10_4079_pp_v22i0_15107.pdf | 2019-08-05 | Open Access |
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