Should the U.S. raise payroll taxes to save Social Security?
Raising payroll taxes enough to stabilize Social Security could add thousands of dollars in annual costs, according to one analysis.
Raising payroll taxes to bolster Social Security could prove financially untenable for many workers, according to a Cato Institute economist. The program, now drawing from its retirement trust fund to cover shortfalls, is projected to run out in 2032. Raising the 12.4% payroll tax to 17%, as Cato suggests, would cost a median-earning worker about $2,600-$3,000 annually, a burden many Americans cannot bear.
Boccia, Cato's budget and entitlement policy director, argues Congress must explore other solutions. Raising the maximum income subject to Social Security tax is one alternative that enjoys bipartisan support. Senators Elizabeth Warren and Bernie Sanders propose eliminating the cap, which would require high earners to pay more into the system.
The Bipartisan Policy Center's 2025 poll found 65% of Democrats and 62% of Republicans support lifting the cap. However, experts warn unintended consequences, such as higher tax rates for high earners. Boccia suggests more comprehensive reforms, including benefit reductions and adjusting the retirement age to longevity, are necessary for Social Security's long-term viability.
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