Raising payroll taxes alone may burden workers, experts say

According to Cato Institute analysts, the Social Security system will exhaust its trust fund by 2032 unless revenue is boosted, and a straightforward solution would be to raise the payroll tax rate to 17%. For a median worker making about $62,000, this would mean an extra $2,600-$3,000 in taxes each year, shared equally with the employer. Romina Boccia stresses that most Americans cannot absorb such a cost, noting many have less than $400 in emergency reserves.

Lawmakers are exploring alternatives, notably removing the $184,500 earnings cap so high-income earners contribute more without changing the rate for lower wages. Senators Elizabeth Warren and Bernie Moreno have advocated for this cap removal, which a Bipartisan Policy Center poll shows enjoys majority support across party lines. However, experts caution that lifting the cap could push top marginal rates above 60% in some states, potentially prompting early retirements among high earners.