January 23, 2026
Summary of This Report:
For most of the 30+ years up through 2021, the Social Security Trust Fund grew, as total income (Social Security taxes plus interest on money the government borrowed from it) were greater than benefits payments.
Since 2022, the cash reserves in the Social Security Trust Fund have been shrinking because total revenues are less than benefits.
These trust fund’s reserves will run out by 2032 or 2033. Then, unless revenues are increased or benefits are cut (or both), the payroll tax money coming in will cover only about 80% of benefits.
The solution is to do all of these:
Change the age of eligibility from the current 62 (partial benefits), 67 (full benefits), and 70 (higher benefits than so-called “full” when a beneficiary waits until this age). Over time, gradually advance each of them a couple of years.
Currently, a salary or wages over $184,500 is not taxed for Social Security. Change the law to tax all the way up, but lower the percentage of the tax (6.2%) for amounts over the current/future ceiling. For example, continue to tax the first $184,500 (an amount adjusted annually for inflation) at 6.2%, but for higher incomes, make the tax percentage less in brackets, such as 3% for the next million in annual income and 1% of income over $5 million. (These percentages are just for the sake of example.)
Tax most passive income, perhaps at a lower rate than salaries/wages.
Allow the Social Security Trust Fund to invest in higher-earning securities than just Treasury Bonds, as some other countries do. See my upcoming report on this.
Taxing high pay at a lower rate and also taxing passive income has three key benefits. One, obviously, is higher revenue. Another is that it reduces the degree to which corporate executives and business owners can evade Ssocial Security tax by taking pay in equity instead of salary. (Elon Musk was the country’s most egregious example.) The third is that, like universal healthcare, it uses the tax system to reduce the massive, ongoing transfer of wealth from all Americans to the richest.
This report is a brief summary. My full report for subscribers, with a deeper discussion of policy options, will be published soon.
Please Comment:
Do you have your own ideas for Social Security to add? Or do you disagree with this commentary?
Please comment. All civil comments are welcome!