Eliminating the payroll tax cap would waste money on wealthy seniors and break the principles of Social Security without fixing its finances.
Capitol Hill has begun waking up to the fact that Social Security now faces insolvency before the end of the next presidential administration, threatening seniors with an automatic 22% benefit cut. In response, some lawmakers are already reaching for the simplest solution they can think of: eliminating the payroll tax cap.
Currently, the payroll tax that funds Social Security applies to just the first $184,500 of a worker’s wages. In a recent New York Times op-ed, Sens. Elizabeth Warren, a Democrat from Massachusetts, and Bernie Moreno, a Republican from Ohio, argued that Congress should do away with the limit to stabilize the program’s finances.
“Why should a middle-class nurse pay a larger share of her paycheck than a wealthy corporate lawyer?” the bipartisan duo wrote. “This is doubly unfair in an economy in which top earners’ wages, over time, have pulled far ahead of those of the average worker.”
Warren and Moreno are right to be concerned about the fairness of our present payroll tax system, which makes U.S. income taxes less progressive and eats into wages. And new revenue, particularly from the wealthiest Americans, must be part of any reasonable solution to our fiscal challenges. But simply eliminating the cap and pouring all the new money into Social Security would be an irresponsible waste — one that would put wealthy seniors above working Americans and would make it more difficult to address other pressing national priorities.
