It can feel like there isn’t much that Democrats and Republicans agree upon these days. The political gridlock makes it tough for either side to make important changes, like finding a way to address Social Security’s looming insolvency. That’s worrisome if you depend heavily on your benefits. Right now, all we know is that Social Security will look different in a decade. What that means is anyone’s guess.
Among individual citizens, though, finding agreement hasn’t been as difficult. A recent National Association of Social Insurance (NASI) survey found that members of both political camps — and Independents, too — would be happy with the following two Social Security-sustaining changes.
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1. Increasing or eliminating the Social Security payroll tax cap
Currently, you only pay Social Security payroll taxes — 12.4% split evenly between employee and employer — on the first $176,100 you earn this year. This cap receives an annual adjustment for inflation. It’s high enough that the majority of Americans pay these taxes on all of their income. But that’s not true for the wealthy.
Many of America’s millionaires and billionaires only pay Social Security taxes on a fraction of their income. That doesn’t sit well with a lot of people, especially since Social Security is in dire need of funding. Without changes, the program will face benefit cuts in less than a decade.
The NASI survey looked at two Social Security proposals concerning the payroll tax cap: raising it to $400,000 or eliminating it entirely. Both would cause the wealthy to pay considerably more into the program, though research suggests that neither solution would be enough to completely eliminate the program’s funding shortfall.
The survey found that Democrats, Republicans, and Independents viewed these proposals favorably. Democrats were slightly more likely than Republicans to favor these moves. But the difference was only a few percentage points.
Some in government have floated versions of this idea in the past, but none have gained any traction. It’s a strategy that’s likely to continue to come up as the government seeks a bipartisan solution to Social Security’s funding crisis.
2. Raising the Social Security payroll tax rate slightly
The government will likely have to raise the Social Security payroll tax rate to increase the program’s funding. The latest Social Security Trustees Report suggests an increase of more than 4 percentage points could be necessary if the government delays taking action. But a smaller increase could work if paired with other solutions, like increasing the payroll tax cap.
The NASI survey looked at a modest tax increase — just 2 percentage points. Since employees and employers split the tax, this would only raise the average worker’s taxes by 1 percentage point. For someone earning $50,000 per year, that would be an extra $42 per month.
Though no tax increase would be ideal, the idea of a small increase appears agreeable to most Americans. Here, too, Democrats showed a stronger tendency to favor this proposal, but more than half the Republicans surveyed also suggested they would favor this change.
Only time will tell
There’s no indication the government plans to make any long-term Social Security reforms in the near future. That decision will likely happen months, if not years, from now. In the meantime, if you feel strongly about how the government should approach this issue, reach out to your Congressional representatives to make your feelings known.
