Would Taxing All Earned Income Resolve Social Security's Growing Cash Shortfall?

Sunday, 14 April 2024, 07:44

The proposed solution to Social Security's long-term funding shortfall may not be as effective as believed. Despite increasing taxes on high earners, the program still faces a $22 trillion shortfall. Taxing all earned income could extend the program's solvency by 35 years but doesn't resolve the core issue. Collaborative efforts, such as adjusting spending and revenue, including taxing the rich and raising the retirement age, may be necessary to secure the program's future.

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Social Security's Funding Shortfall: A Closer Look

The existing payout schedule of Social Security, including cost-of-living adjustments (COLAs), faces a $22.4 trillion long-term cash shortfall.

Demographic Trends Affecting Social Security

The retirement of baby boomers
Increase in life expectancy
Decline in net-legal migration
Drop in U.S. birth rates
Rising income inequality

The program's issues stem from demographic changes rather than myths like 'congressional theft'.

Solution Analysis: Taxing Earned Income

Analyzing the proposal to tax all earned income for high earners shows a 35-year extension of the program's solvency. However, this measure alone doesn't fully resolve Social Security's funding shortfall, requiring a comprehensive approach that includes adjustments in spending and revenue.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.

Social Security's Funding Shortfall: A Closer Look

Demographic Trends Affecting Social Security

Solution Analysis: Taxing Earned Income

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