Biden’s Plan to Save Social Security: Taxing the Wealthy to Ensure its Future

Biden on Social Security: During the discussion with former President Donald Trump on Thursday night, President Joe Biden presented his proposal to increase payroll taxes on the wealthiest to strengthen Social Security.

Throughout the game on Thursday night, social security was brought up multiple times. There is a financing gap for the program, and if Congress doesn’t adopt a fix before then, it’s expected that the retirement trust fund will run out in 2033.

According to the most recent Trustees report, after that date, incoming payroll taxes will be adequate to pay for an estimated 79% of promised benefits.

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“Make the very wealthy begin to pay their fair share,” was Biden’s response when moderator Jake Tapper asked him to name one concrete action to keep Social Security solvent, as per Barron’s. Compared to the wealthy, lower-class and middle-class workers pay a larger percentage of their wages in Social Security taxes.

The current Social Security payroll tax rate is 6.2% for the employer and 6.2% for the employee, applied to wages up to $168,600 in 2024 for a total of 12.4%. Above that amount, wages are exempt from the taxes that fund Social Security.

Biden campaigned on a platform in 2020 of restoring the payroll tax on salaries over $400,000. That would result in an untaxed wage “doughnut hole” between the cap and $400,000. After omitting certain details from his most recent budget proposal—which included raising payroll taxes on wealthier earners to pay for Medicare—the president seems to bring back that idea on Thursday.

Although Biden said on Thursday that the action would be enough to close Social Security’s financial gap, actuaries’ calculations indicate otherwise. They calculated that starting in 2024, the 12.4% payroll tax on earnings over $400,000 would only cover 63% of the difference.

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“Defeat this man,” as Biden put it, would be another way to fortify Social Security. He said, “Trump wants to cut Medicare and Social Security,” to which Trump responded with a nod.

Trump, for his part, claimed that by letting individuals into the nation and accepting benefits they did not deserve, Biden was ruining Social Security. Undocumented immigrants are indeed ineligible for Social Security benefits. By paying payroll taxes but not getting benefits, they strengthen the program.

According to a 2013 Social Security actuarial assessment, earnings by undocumented immigrants contributed around $12 billion to the program’s cash flow in 2010.