HOW MUCH MONEY TO FIX SOCIAL SECURITY ?
May 15, 2019 - Douglas Myser
How much money to fix Social Security ? Many different proposals have been put on the Political Table over the years to fix the coming Social Security shortfall, but the reality is that neither party wants to be the party that cuts benefits for fear of a political backlash. Even Republicans have a hard time getting enough votes together for a Privatization Plan, as many Republicans balk at the last minute, swayed by angry constituents, hell bent on voting them out if they do. Given the political realities, it seems that the only solution will be to put more money into the system, and or cut benefits for future beneficiaries. So the only question is, How much money to fix Social Security ?
As the latest report on the condition of Social Security came out, after the Trustees report came out, the prognosis was not good. Although the report was generally a bit better than last year's, Social Security is still projected to run out of money in 2035. If this happens, a 20% across the board cut would be required for all current and future Social Security beneficiaries. Nobody wants that to happen. However, getting Congress to agree on a solution to the problem is easier said than done. There are several different ways to tackle the problem, and not surprisingly, some are more popular with Democrats while others are more popular with Republicans.
Having said that, one of the most quantifiable ways to solve Social Security would be an increase to the Social Security IRS payroll tax rate. Currently, American workers and their employers each pay 6.2% of compensation, up to an annual maximum ($132,900 in 2019). Self-employed workers pay both sides of the tax--employer and employee--for a total rate of 12.4% of income, up to the same maximum that applies to employees. So. how much would be needed ? The Trustees estimate that in order to keep the program solvent for at least the next 75 years, an immediate 2.7% increase in the Social Security payroll tax would be needed. For those who already have payroll tax debts, we are a Tax Resolution Services firm that specializes in 941 Payroll Tax Debt Negotiation with the IRS. We can look at any personal taxes you owe also and determine if you qualify for the IRS Fresh Start Program.