Lloyd K. Smucker says raising the cap on income subject to Social Security payroll taxes could be part of the fix as the Social Security Trust Fund heads toward a projected 22% benefit cut in 2032 without action. He said lawmakers would probably have to do something on the payroll half of the money being paid into the system.
Smucker told reporters, “You’ll probably have to do something on the payroll half of the money being paid into the system,” and said lawmakers should consider a combination of changes. He also said lawmakers should consider raising the retirement age, which is currently 67 for anyone born in 1960 or later, and expanding means-testing so more benefits go to low-income retirees and fewer to the wealthy.
Bernie Moreno and Elizabeth Warren
The idea is not new, but it is still unusual inside Republicans. Bernie Moreno and Elizabeth Warren wrote in June that the wealthiest Americans should contribute the same percentage of their income as a factory worker in Chillicothe, Ohio, or a teacher in Worcester, Massachusetts, and Moreno said, “Since the vast majority of Americans make less than that, most people are paying Social Security taxes on 100% of their earnings while the highest earners are paying on only part of theirs.”
Earlier this summer, Moreno drew flak from fellow Republicans after he and Warren proposed lifting the cap so the tax would apply to all earned income. The payroll tax is 6.2% paid by employees and 6.2% paid by employers, but in 2026 it applies only to the first $184,500 of earned income and rises with inflation each year.
Tax Foundation
Proposals now under discussion would raise the cap only for income above $250,000 in one bill, above $400,000 in another, or apply the tax to all income above the current cap. Smucker said, “We can’t allow that to happen, and the only way you address that is to start being serious and realistic about the math problem and the demographics.”
The Tax Foundation said raising the cap could reduce economic growth, sever the link between taxes paid into the program and benefits received from it, and do little to make the system solvent in the long term. That leaves lawmakers with a narrower set of choices: a broader tax change, benefit changes, or both, if they want to avoid the 22% cut projected for 2032.
The immediate question is which version of a payroll tax cap increase can get enough support to become part of a Social Security fix. Smucker’s comments show that some Republicans are moving closer to a tax increase on higher earners, but the size of the cap and the rest of the package still have to be negotiated.
