Don’t raise Social Security taxes: But if it’s necessary, here’s how - Economics - AEI
I disagree with Andrew Biggs one of the economists at the American Enterprise Institute when it comes to raising payroll taxes. I wouldn't raise them across the board because its already an regressive tax that hits middle and lower income workers very hard. That discourages working and hiring because employers know they'll get stuck with having to pay this tax. Social Security does need to be reformed and needs new revenue but it has to be done in a way that doesn't come off as a middle class tax. Increase or a tax increase on low income workers, if anything the payroll tax should be lowered on those workers. Raise them on high earners and then lift the cap on the payroll tax from 100K$ where its currently to. 500K-1M$ while raising the payroll tax on those workers as well and then taxing their Social Security benefits. Not at 100% but consistent with what the payroll tax would be for those workers if thats what they were making. At work and by doing these things we would make Social Security solvent not only for baby boomers and people. Older then that but for Generation X my generation and Generation Y as well younger people.
But making Social Security solvent shouldn't be the only thing we should be looking at when it comes to retirement. We should be increasing benefits for low income workers so those workers who are retiring or about to retire. Would collect at least 20K$ a year from Social Security so they have an opportunity to live out of poverty. But expand retirement income for all workers so we would have less workers in this country only collecting Social Security for their retirement. Create what's called Social Security Plus that would go along with other retirement plans and wouldn't be new program to run it. But all workers would have the option to run their own individual retirement account, not their employer or government. But individuals themselves would be able to run their own IRA by increasing their own payroll tax. That would be tax free as long as they don't spend any of these savings before they retire, that would be. Matched by their employer that would be tax deductible and individuals would be able to save and invest this money to plan their own retirements.
Reforming Social Security is actually fairly easy as far as what needs to be done. Its Medicare thats a real challenge because Medicare is tied to our unaffordable healthcare system which needs further reform to. Reform Medicare and vice versa thats a real challenge but Social Security can be strengthen just by adjusting the payroll tax and lifting the cap. And we could go further with the retirement age if we have exceptions to it but Medicare is the real challenge. And reforming these programs shouldn't be linked together.