Sound Tax Policy to Address the Social Security Crisis
The future of Social Security, a vital safety net for retirees and people with disabilities, is in jeopardy. By 2035, the program could face a funding crisis if no action is taken. To ensure the long-term viability of Social Security, sound tax policies need to be implemented promptly.
Solutions to Secure Social Security’s Future
One feasible solution is to raise taxes on upper-income earners. Currently, there is a cap on taxable income for Social Security, set at $168,600. This means that any income above this threshold is not subject to Social Security taxes. Eliminating this cap would ensure that higher earners contribute their fair share to the program.
Another effective measure is expanding the Social Security tax base to include investment income. As wealth accumulation through investments becomes increasingly common among high-income individuals, taxing investment income could generate substantial revenue for the program.
Public Opinion and Policy Approaches
Recent polls indicate that a majority of Americans prefer tax hikes over benefit cuts or retirement age adjustments to sustain Social Security. By lifting the income cap on taxable income, policymakers could strike a balance between increasing revenue and avoiding unpopular benefit cuts or tax hikes.
Urgency of Action
Time is of the essence in addressing the Social Security funding shortfall. Failure to act promptly could result in a 17% cut in benefits for recipients. Lawmakers must act now to implement gradual changes and preserve the social contract with those who depend on Social Security for financial security.
Andrew Leahey, a tax and technology attorney, emphasizes the importance of sound tax policies to secure Social Security’s future. By modernizing the program to reflect current income sources and addressing the funding gap, policymakers can ensure the long-term sustainability of Social Security.
