Challenging the “Tax the Rich” Pathway to Solvency - The Hill; AMAC
It’s a frequent refrain when addressing Social Security’s insolvency problem: “Make the rich pay their fair share.” You heard it in the State of the Union messaging earlier this year, you heard it in the recent presidential election debate, and you hear it repeatedly in everyday news accounts. Is it really a solution to the long-term problem? The Hill’s Chris McIsaac doesn’t think so.
In a post yesterday on thehill.com, McIsaac recaps President Biden’s preference for a change to the payroll tax rules that would reinstate the 12.4% levy on incomes exceeding $400,000, suggesting that such a move would “… avoid the benefit cut to millions of seniors and stabilize Social Security over the long term.” McIsaac’s analysis is that this change would only achieve a 10-year improvement in the insolvency trajectory, and would likely impede economic growth.
McIsacc’s article–which you can read in full here–concludes with a strong endorsement of the need to move “… beyond the soundbite proposals and start being honest with the American people about the scope of the problem and articulating the real tradeoffs and compromises required to maintain Social Security for generations to come.” For anyone paying attention to Social Security’s slow-moving train wreck, this statement serves as a good summary of what needs to happen.
The alarm bell has been ringing for decades, calling for corrective measures in a program that needs adjustment to cope with 21st-century economics. Much has been written about steps that could be considered to address the problem, but no substantive changes have been made since the early 1980s. As an example of the leading thoughts on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized. This can be achieved through slight modifications to cost-of-living adjustments and benefit calculations for high-income beneficiaries, coupled with gradual increases to the full (but not early) retirement age. AMAC supports an increase in the threshold where benefits are taxed and then indexed for inflation and calls for eliminating the reduction in benefits for those choosing to work before full retirement age. Summaries of the AMAC position–the AMAC Social Security Guarantee–can be viewed at AMAC.us.