Press Release Health and Social Programs US

Analysis Illustrates How Small Changes Could Substantially Brighten Social Security’s Future


10/12/2021 12:00am

Contact: Karen Conner, 202-281-4159Mail_Outline

Washington DC —  The 2021 Social Security Trustees’ Report announced in August that the trust fund is fully funded through 2033. A new CEPR analysis released today shows what is needed to fund the program after 2033. Specifically, the analysis by CEPR Program Associate Sarah Rawlins shows that payroll taxes would need to be increased by 3.54 percentage points to fully fund the program after 2033. The good news is the Trustees’ forecast also predicts more than enough wage growth over the next 75 years to mitigate the impact of such a tax increase.

But that 3.54 percentage point tax increase only keeps funding at the same benefit level. As Rawlins explains, the Social Security trust fund shortfall could be eliminated by increasing the payroll tax or the government could simply add more money to the fund. Another option for maintaining or expanding benefits beyond 2033 is by removing the cap on salaries that can be taxed. Thanks to growing economic inequality in the US, the rich are getting richer at such a rate that over the next decade more than 18 percent of salary income is projected to be over the cap.

 

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