Writer Advocates Tax Increases to Solve Long-Term Social Security Problem
Alicia H. Munnel of Barron’s opines here that taxes should be raised to solve the Social Security solvency problem and pay full benefits over the next 75 year time horizon. Social Security’s long-run deficit is projected to equal 2.84% of covered payroll earnings. This means that if payroll taxes were raised immediately by 2.84 percentage points (1.42 percentage points each for the employee and the employer), the program would be able to pay the current package of benefits for everyone who reaches retirement age through 2092, with a one-year reserve at the end. But other voices suggest other reforms, such as trimming benefits for higher income earners and/or raising the retirement to reflect the reality of increased life expectancy. Munnel explains why she favors tax increases in this article. As she states, “the debate is about whether we want to keep the tax rate constant and cut future benefits or whether we want to raise additional revenues to finance promised levels.” Read the full piece here.
The Association of Mature American Citizens (AMAC) has a different approach, making modest changes in cost of living adjustments and the retirement age, without the need for any tax increases on workers. AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by Rep. Johnson (R-TX) and Rep. Larson (D-CT) and merging them with the Association’s own well researched ideas. One of its several components is Social Security PLUS, a new yet voluntary early retirement plan that would allow all earners to have more income available at retirement. This component is intended to appeal especially to younger workers. AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their legislative staffs over the past several years. Read AMAC’s plan here.