Raising Payroll Taxes Could Prevent Social Security Cuts. But That May Not Happen for This Reason
Social Security is in trouble. In the coming years, the program expects to owe more money in benefits than it collects in revenue. And while it has trust funds it can tap to make up that difference, once those cash reserves are depleted, benefit cuts will be on the table -- and those cuts could be substantial.
Meanwhile, those trust funds could run out of money by 2035. That means benefit cuts aren't a far-off problem, but rather, one seniors might grapple with in just a little more than a decade.
One solution that's been tossed around to prevent Social Security cuts is raising the wage cap for payroll tax purposes. Payroll taxes are Social Security's main source of revenue, and right now, only $147,000 of wages are taxed per year (that figure is likely to climb in 2023). If lawmakers were to raise the wage cap or get rid of it entirely, it would allow Social Security's payroll tax revenue to increase, thereby preventing benefit cuts and helping to ensure that the program is around for many future generations.
Source Fool.com
