4 Social Security Changes That Democrats and Republicans Agree On
The parties may be divided however a recent survey indicates both political parties agree on the following fixes for Social Security.
1. Reduce benefits for the top 25% of earners
This overwhelming support from both parties to reduce Social Security benefits for the top income earners. Over 75% surveyed support reducing benefits for the top 25% of earners. Fewer than four in 10 support reducing benefits for the top 40%, while less than one in five favor reducing benefits if you for the top 50% of earners.
The presumption is made that higher-income individuals who made a lot of money throughout their lifetimes will not need to rely on Social Security when they retire. Rather than take that money away from top earners, they agree that reducing what the top 25% of earners take home each month. By reducing the take-home benefits of if the top 25%, it would reduce the budgetary shortfall and estimated 7%.
2. Raise the retirement age gradually to age 68
Another suggestion overwhelmingly supported is raising the full retirement age to age 68. 79% of those surveyed, including 78% of Democrats (who usually oppose raising the retirement age) favored the idea. The reason for raising the full retirement age (FRA) is obvious, people are living longer than ever these days, putting a strain on the social security trust fund. According to the survey, increasing the retirement age to at least 68 would reduce the budgetary shortfall 15%.
3. Increase the payroll tax cap to $215,000
88% surveys support raising the payroll tax cap to at least $215,000. Raising the payroll tax cap is partially based on the recent changes to the Social Security payroll tax that were announced combined earnings between $1 and $127,200 are to be taxed at 12.4% in 2017, with you and your employer usually spitting this tax responsibility down the middle (6.2% each). Any earnings above and beyond $127,200 are considered free and clear of Social Security taxation. Since most Americans have combined earnings that are below $127,200, raising the payroll tax cap would affect only a small percentage of the population (about 10%) and require wealthier Americans to pay more into the system. Raising the payroll tax cap to $215,000 would eliminate about 27% of the current shortfall.
4. Increase the payroll tax rate to 6.6%
Lastly, 76% of those surveyed favored the idea of increasing the payroll tax from 6.2% to 6.6%. For the self-employed, the responsibility would increase from 12.4% to 13.2%. A similar idea that suggested increasing the payroll tax to 6.9% got less than 50% support. The reason that a payroll tax hike is needed is simple: the program needs more money to maintain benefits for those, 61% of seniors reliant on the program to supply at least half of their monthly income. Raising the payroll tax would help eliminate an estimated 17% of the shortfall. The combined four changes would eliminate about 66% of the estimated budgetary shortfall.
One addition observation
The entire budget shortfall could be eliminated if the payroll tax cap were eliminated in its entirety. In other words, if all combined earnings were taxable, the shortfall would be reduced by 66% from this action alone.