It is more poltically viable than taxing all SS benefits by removing the cap altogether. Small businesses, among others, will raise holy hell. FYI: AARP's solution: increasing the income cap to $150,000; increasing the payroll tax by 0.5 percent for both workers and employers, and changing the benefit formula to make the program more progressive. AARP has a huge membership base of 35 million, which makes it a big player in SS reform. I despise the group, which is forcing an enormous wealth transfer from the young to the old.
So what if the payroll tax has not been raised for some time? If you think that taxes MUST be raised every few years, regardless of economic or political consequences, you are not in the real world -— and before long we will be at 80% total tax rates!
Unlike you, I am against all tax increases to support this Ponzi scheme. Entitlements are consuming about half the federal budget and will rise to 71% by 2060 if nothing is done.
The REASON that I PREDICT that taxes on the SS benefit will be key to any political solution is obvious to most of us who study the issue very long:
I will compare my knowledge of the issue with yours anytime.
Any “tax on benefits” will be partially “self correcting” -— reducing the strain on the system caused by COLA increases and reducing the strain on the system caused by those newly retired who begin to draw benefits.
THE SYSTEM IS UNSUSTAINABLE THE WAY IT IS CURRENTLY STRUCTURED. IT IS A MATTER OF DEMOGRAPHICS. BY 2030, WE WILL HAVE JUST TWO WORKERS FOR EVERY RETIREE. AND BY 2030, ONE IN EVERY FIVE AMERICANS WILL BE 65 OR OLDER. YOU MUST EITHER INCREASE TAXES OR DECEREASE BENEFITS OR PROBABLY BOTH. FOR EXAMPLE, TAKING THE EARNINGS CAP OFF WILL JUST ADD A FEW YEARS TO THE SOLVENCY OF THE SYSTEM.
Politically, the under 65 crowd will NOT be excited about paying more into the SS system when the Trumps and Gates of the world are still getting 15% of their benefits completely tax free.
They should get excited about paying into a Ponzi scheme. Unfortuantely, the sheeple don't have a clue and will go along with what the elites tell them. The Dems love the entitlement programs because it makes more and more people dependent upon government.
You are mixing apples and oranges.
From what you just posted, you used “cap” and also “payroll” and then talk about taxation, but do not make clear that you are dealing with payroll taxes.
Lets try to be clear here.
I do think that the “cap” on the amount of earnings subject to SS taxation, for wage earners, will go up -— in fact I think that cap might be eliminated entirely!
As far as the taxation of benefits that are already being received, my math, above, though not all inclusive of all the details, clearly shows that it most middle class folks, on SS, are being taxed on 50% to 85% of their benefits NOW! The formula is simply awkward, and most people do not understand that they are being taxed on SS.
The bottom line is this:
Every argument that you have used against my predictions can be used against YOUR proposals as well.
YES the programs are not sustainable.
They will NOT be cured by your suggested increase in the payroll tax percentage, either!
And, you DO support an increase in payroll taxes, so do not claim that I do and that you don’t.
Furthermore, you have said repeatedly that benefits must be reduced or revenues increased ——
A TAX INCREASE ON BENEFITS DOES BOTH!