After signing his first major piece of legislation into law, President Biden is setting his sights on the next phase of his agenda: infrastructure and taxes. The two go hand in hand; Biden laid out a tax plan in order to fund massive public investments in housing, roads, trains, and more. And though the infrastructure bill is focusing on corporate tax hikes, individual tax increases will probably be unveiled later this month and will include funding for social programs. But there’s a glaring omission in the White House’s announcement and what has so far been detailed in media reports: raising revenue for Social Security.
There’s no need to look far for supporters of raising the Social Security tax. Biden himself campaigned on a plan that would raise $740 billion over a 10-year period. So as the president and his Democratic colleagues in Congress look to pass the first major tax hike in nearly three decades, they ought to include a plan not only to keep the Social Security fund solvent but also to reduce poverty among older Americans. Failing to do so would be a missed opportunity, one that Democrats might later come to regret given Republicans’ repeated efforts to cut Social Security benefits.
Biden’s own campaign proposal is a good first step. According to the Urban Institute, his plan, if enacted, would close a quarter of Social Security’s long-term budget shortfall and cut the poverty rate among Social Security beneficiaries by over half.
On its own, the president’s campaign plan is far from perfect — it would, for example, keep the Social Security fund solvent for only an additional five years. But it would also move the country in the right direction, especially on broadening Social Security’s tax base. Right now, payroll taxes that go toward funding Social Security are capped at the first $142,800 of a taxpayer’s income, leaving a large pot of income out of the equation. And though the cap should simply be raised, Biden doesn’t want to raise taxes on anyone making less than $400,000. That’s why his campaign plan didn’t exactly propose lifting the cap; if implemented, it would merely reintroduce the Social Security payroll tax on income above $400,000 — leaving any income between $142,800 and $400,000 untaxed.
A critical part of Biden’s campaign plan was not only raising funds for Social Security but also expanding the benefits to reduce poverty among elderly Americans. It would, for example, ensure that benefits for workers who were in the labor force for 30 years or more would be at least 125 percent of the federal poverty line. The oldest beneficiaries would also receive a bump to offset dwindling retirement savings, and widows and widowers would receive a 20 percent increase so that their Social Security benefits don’t get cut in half when their partner dies.
These kinds of important reforms would be impossible to implement without raising the social security tax. As of now, the Old-Age and Survivors Insurance Trust Fund is on track to run out of money to pay out full benefits by 2034 — a year earlier than previously expected, as a result of the pandemic. Yet, according to Axios, Democrats close to Biden aren’t expecting him to put up much of a fight when it comes to imposing new Social Security taxes. That would be a mistake. Expanding Social Security benefits, and raising the money to do so, would transform how the United States treats its elderly, and that’s something that could help cement Biden’s legacy as a transformational president.
At some point, Congress will have to tackle Social Security’s looming financial shortfall, and Biden has to ask himself whether he wants that to happen under Democratic or Republican rule. In the end, the president should trust his instinct to go big on expanding the social safety net — and Social Security is one major program that should not get left behind.
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