People hold umbrellas as they walk outside the U.S. Capitol on July 9, 2026.
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As Social Security faces funding shortfalls, some lawmakers are renewing their calls for higher taxes on high earners to shore up the program.
Until recently, the strategy’s proponents were all Democrats, but now include several Republicans.
In June, Sen. Bernie Moreno, Republican of Ohio, teamed up with Sen. Elizabeth Warren, Democrat of Massachusetts, to write an op-ed in the New York Times calling the removal of the cap on Social Security payroll taxes a “common sense solution.”
Republican Reps. Tom Cole of Oklahoma and Lloyd Smucker of Pennsylvania also said in separate interviews recently that they would consider raising payroll taxes to help fund the program.
Experts say benefit cuts could be avoided by changing the way Social Security taxes are collected from workers’ paychecks.
In 2026, workers will contribute Social Security payroll taxes on up to $184,500 of income.
High-income earners may participate in the program for only part of the year. According to the Roosevelt Institute, a liberal think tank, these taxes currently cover about 83% of workers’ total income.
How taxing high income earners can help close the gap
Social Security may not be able to pay out retirement benefits on time as early as the fourth quarter of 2032, about six years from now, according to an annual report released in June by the program’s governing board. At that point, the trustees project, 78% of benefits will be paid out from the trust fund, which provides income to eligible retired workers, their spouses and children, and survivors of deceased workers.
A combination of the program’s Retirement Trust Fund and Disability Trust Fund could provide full benefits through the third quarter of 2034, when 83% of benefits will be paid.
The program’s governing board said in a June report that Social Security faces a shortfall of nearly $30 trillion over 75 years, up from about $25 trillion the year before. The difference represents the program’s “unfunded obligation,” or projected revenue less expenses, the report said.
How much of that shortfall is covered by raising the tax cap will depend on how the policy is structured.
According to the Roosevelt Institute, completely eliminating the Social Security payroll tax limit would cover 67% of the program’s 75-year solvency gap. However, the think tank’s research shows that if benefits were also increased, the changes would cover 48% of the solvency gap.
The alternative, permanently setting the tax cap at 90% of earnings, would address a 75-year solvency gap of 28% if benefits were not increased and 22% if monthly checks were increased, according to the Roosevelt Institute.
Eliminating the Social Security payroll tax cap on incomes over $400,000 was the most preferred option among 2,243 Americans age 21 and older surveyed in 2024, according to the National Academy of Social Insurance, AARP, National Institute for Retirement Security, the U.S. Chamber of Commerce and Greenwald Research. The survey was conducted from October 15, 2024 to November 20, 2024, and had a margin of error of plus or minus 2.1 percentage points.
Another option that was nearly as popular was raising the payroll tax rate for both employees and employers from 6.2% to 7.2%, according to the survey.
Social Security advocacy groups, such as the Social Security Administration and the Social Security and Medicare Maintenance Committee, have also repealed taxes on high-income earners in an effort to strengthen the program.
Tyler Bond, a senior fellow at the National Academy of Social Insurance, a nonprofit organization focused on economic security programs, said it is “almost inevitable” that Congress will include changes to the Social Security tax cap when reforming the system. Mr. Bond co-authored a new Roosevelt Institute study on how to finance the Social Security deficit.
About 6% of workers earn more than the cap each year, Bond said. He says only 20% of workers earn above the threshold at any point in their career.
“We’re talking about a fairly small segment of the workforce,” Bond said.
Social Security funding problems can typically be resolved by increasing taxes, cutting benefits, or a combination of both. Another proposed proposal would be to raise the retirement age and consider cutting benefits.
“It’s very hard to ignore the fact that removing the cap would fill most of the funding gap without having to make any other changes,” Bond said.
“There is no room to tax the wealthy for any other purpose.”
An electronic display shows Washington’s national debt as of August 19, 2026.
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Some policy experts do not believe that raising the payroll tax cap is a silver bullet for the Social Security funding crisis.
Eliminating the payroll tax cap would amount to a 12.4 percent tax increase on income currently exempt from taxation, the largest tax increase since 1982, according to the Tax Foundation, an independent tax policy nonprofit.
“We haven’t seen anything like that in the modern economy,” said William McBride, chief economist at the Tax Foundation.
McBride said these high-income taxpayers may respond by cutting back on their hours or reporting less taxable wages.
This change will also affect the economy. For example, a study by the Taxation Foundation found that capping payroll taxes at $346,000 starting in 2027 and increasing them to cover 90% of wages by indexing them to wage growth would eliminate nearly 900,000 jobs and reduce GDP by 0.7%.
“It would be even more extreme if we were to eliminate the cap completely and apply a payroll tax to all wages,” McBride said.
Proponents of raising or eliminating the payroll tax cap argue that an increase of about 12 percentage points for 5% of people would mean 95% would be able to flee Scotland, said Andrew Biggs, a senior fellow at the American Enterprise Institute, a conservative Washington-based think tank.
But he said the proposed increases target those at the top who already pay high marginal tax rates.
“This is a huge tax increase for a very small number of people, and it will have huge economic consequences that they didn’t even think about,” Biggs said.
Social Security’s funding dilemma stems from the fact that Medicare faces funding shortages of its own. Medicare’s Board of Governors predicted in June that the Medicare Hospital Insurance Trust Fund could be depleted in the second quarter of 2033. At that point, only about 89% of scheduled Medicare Part A costs may be covered.
Meanwhile, the national debt recently exceeded $40 trillion.
Mr Biggs said a large increase in payroll taxes would “make it impossible” for the government to raise other taxes. Medicare, Medicaid and the rest of the debt will fall on middle-class and low-income people, he said.
Eliminating the cap on payroll taxes to pay for Social Security would result in a significant tax increase for taxpayers in California and elsewhere, with the top marginal tax rate, which includes income, payroll and state taxes, reaching 63%, said Jessica Riedl, an economic research fellow at the Urban-Brookings Tax Policy Center.
“There’s no room to tax the wealthy for anything else,” Riedl said.
Additionally, without higher taxes paid on Social Security and higher monthly checks, the link between contributions and benefits would be severed, he said.
