Such remarks from an influential Republican like Cole serve to deepen the GOP’s willingness to at least entertain tax increases to extend the lifespan of a politically popular program like Social Security. In June, Social Security’s trustees issued an annual report that said the program would be able to pay full benefits to retirees and disabled Americans until the fourth quarter of 2032, one quarter earlier than it had projected last year. At that point, the fund would be obligated to slash benefits by 22% to strengthen its financial footing.
Other Republicans are echoing Cole. “You’ll probably have to do something on the payroll half of the money being paid into the system,” Rep. Lloyd Smucker of Pennsylvania, who sits on the tax-writing House Ways and Means panel, recently told Roll Call.
Lifting the payroll tax cap gets a fresh look
In June, Democratic Sen. Elizabeth Warren of Massachusetts and Republican Sen. Bernie Moreno of Ohio proposed wiping away the cap on Social Security payroll taxes, which are currently set at 12.4% and evenly divided between a worker and their employer. The payroll tax cap currently affects only the first $184,500 of wages and self-reported income, and that sum is annually indexed for inflation.
The pair called it a “no-brainer” solution to a vexing policy problem in a New York Times op-ed published June 23. “With rising prices and artificial intelligence causing economic uncertainty for the future, Social Security must remain a stable foundation to help retirees afford life’s basic necessities,” Warren and Moreno wrote.
The duo haven’t released legislation on their proposal, which would fill in certain blanks such as whether investment income would be subject to payroll taxes. Previous presidents — Bill Clinton, Barack Obama and Joe Biden — shied away from embracing that solution, according to a blog post from Jessica Riedl, a tax fellow at the Brookings Institution.
Addressing Social Security’s pending financial shortfall will likely require a mix of tax increases and benefit adjustments. Nearly 70 million Americans rely on the program for monthly retirement benefits. Next year, beneficiaries could get up to a 3.6% cost-of-living adjustment to their Social Security checks.
‘Getting smeared’
There’s still anti-tax voices with significant sway in today’s Trumpified Republican Party. The White House has long maintained that President Donald Trump will preserve Social Security and Medicare, another popular program providing health coverage for many elderly Americans.
Grover Norquist, founder of Americans for Tax Reform, has warned that Republicans will “get smeared” in future elections if they support a tax increase to shore up Social Security. Norquist has long pushed Republicans towards anti-tax orthodoxy.
“You’ve got to deal with Social Security,” Cole told the Post. “And believe me, you’ll have a lot bigger problem if it goes bankrupt than you’ll have keeping it whole, because people will feel cheated.”
Joseph Zeballos-Roig is a policy and politics journalist based in Washington D.C with a focus on economics. He is experienced in connecting the significance of events in the capital to the lives of everyday Americans whether its taxes, tariffs, interest rates or federal programs.
