Key facts
- Senators Elizabeth Warren (D-Mass.) and Bernie Moreno (R-Ohio) are advocating for Congress to eliminate the Social Security payroll tax cap.
- The current cap is set at $184,500 for 2026.
- The proposal suggests that removing the cap would raise approximately $3 trillion over 10 years.
- This measure is intended to extend the program's solvency and prevent a potential benefit cut of over 20% by late 2032.
- The senators argue the change would create a fairer system where high earners contribute a larger share of their income.
U.S. Senators Elizabeth Warren and Bernie Moreno have jointly proposed eliminating the cap on wages subject to Social Security payroll taxes as a means to shore up the program's finances. The bipartisan proposal, detailed in an essay published in The New York Times, aims to address looming funding shortfalls and ensure the program's long-term solvency.
Currently, Social Security payroll taxes are levied only on wages up to $184,500 for 2026. Warren and Moreno argue that removing this cap would generate an estimated $3 trillion over the next decade. They contend that this change would rectify an imbalance where high earners pay a smaller proportion of their total income into the system once they surpass the threshold, framing it as a matter of fairness.
The senators highlighted projections indicating that the Social Security trust fund could be depleted by late 2032 without congressional action, potentially leading to benefit reductions of more than 20%. They emphasized Social Security as a fundamental 'covenant' between workers and the government.
Separately, retirement experts are pointing to significant confusion among Americans regarding their Social Security benefits and overall retirement planning. A webinar hosted by the National Reverse Mortgage Lenders Association revealed that a substantial percentage of Americans are unaware of how much their retirement income will depend on Social Security, their expected monthly benefits, or their full retirement age. Speakers also noted the intersection of Social Security planning with housing decisions, particularly for older homeowners considering reverse mortgages to maintain their homes.