Community Champion ⭐⭐⭐

Newsweek Article - How Should Social Security Be Reformed ?

Forum|Forum|1 year ago
July 27, 2025
25 replies
13922 views

I just wanted to share an article that I read this morning :

https://www.newsweek.com/social-security-funding-reform-seniors-consider-options-2103944

~ Lisa 🌈🙋💰🤔

GailL1

Community Champion ⭐⭐⭐

I hear and read everybody saying that it would be fixed if we raised the cap - NOPE Not unless the benefits of those who are paying in so much more is also limited - very limited. So how is that fair as the article thinks people feel - ?

So what happens to those who work (2) jobs and make over the cap? Right now, they and their employer get their withholding back.

EDITED TO ADD: The Social Security Actuary when analyzing various proposals also look at behavioral responses - the founded ones.

What they say over and over again is “We assume employers and employees will

redistribute total employee compensation among taxes, wages, and other compensation. This behavioral response reduces the increase in both payroll tax revenue and scheduled benefits that would occur in the absence of this behavioral response.”

MY BIGGEST SUGGESTION and it could be done right away - is to have employees and employers begin to pay withholding taxes for both Social Security and Medicare on the employee health benefits that employers give as a benefit instead of salary to their individual employees. Itis still compensation and should be treated as such. Plus it would also increase our tax revenues. WHY iS THIS NOT EVER TALKED ABOUT AS A FIX or at least part of the fix?

If we want to tax investment income for Social Security and maybe even Medicare, then I think it should all investment income should be taxes for everybody - not limited by income level.

Would those paying more into the SS system with this tax on investments get any benefit based on this or is it only for funding for those who are getting a benefit.

Personally,I think we also need to revise some of the benefits - especially the early retirement. OH, there is nothing wrong with filing for retirement benefits early but a person should not be able to get auxiliary benefits when they are just filing for early retirement.

I also think that we did a disservice to the whole system by eliminating the WEP and the GPO instead of passing a new formula. But the deed has been done - BIPARTISANLY - so who are I. Will those same people stand up for the higher earners getting their just benefit when they are paying in more by increasing greatly or eliminating the Social Security cap?

IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna

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RickS467730

Contributor ⭐⭐

You’re raising important questions—and I agree that raising the cap alone isn’t a magic fix, especially if benefit formulas aren’t adjusted alongside it. But we also have to be careful about policies that treat higher earners like bottomless ATMs without a proportional return. That undermines the “earned benefit” premise of Social Security.

You also make a strong point about behavioral responses. If we keep hiking taxes on labor or investment, people will naturally shift compensation structures or delay work—hurting the very funding we’re trying to protect.

As for taxing employer-provided health benefits—technically that’s compensation, yes, but there are real consequences to making those benefits more expensive for both employers and workers. It could even push more people onto the public system or reduce employer coverage altogether.

I’ve said in the Social Security section a few times now that I’m personally more drawn to ideas like partial privatization—something along the lines of the Sweden model or President Bush’s proposed carve-out accounts. These give younger workers the chance to earn market-based returns while still protecting current retirees and those close to retirement. But every time it’s suggested, it gets dismissed outright as “unacceptable,” without even a serious debate.

Your point on WEP and GPO is also spot on. I’ve said before that repealing them without creating a fair and thoughtful replacement was a mistake. Bipartisan or not, it weakened the long-term credibility of the program. If we’re asking higher earners to pay significantly more, fairness demands they see a benefit tied to that extra contribution.

We can’t fix this if we won’t talk openly about tradeoffs and realistic, forward-thinking options—especially ones that don’t just raise taxes or keep pushing the retirement age up. Too many people shy away from opposing viewpoints, and that’s part of why we’re stuck.

GailL1

Community Champion ⭐⭐⭐

@Tonster521

As stipulated by the ACA, employers must show their contribution to their employees health insurance benefit and I, believe, any portion that an employee pays, on their annual W-2. This is not taxed now in any way. The amounts are listed more for compliance and in determining the % to salary since this is a stipulated % measure for the employee’s ability to either buy their share of the coverage OR be eligible for an ACA plan if the % is above a certain measure.

If an employer is self insured - they still have to assign a value to the plan because if not, they are shooting in the dark as to the cost and I am pretty sure that any smart employer would not do this - it opens up too much of a liability to them. They know how much the ESI is costing them per employee.

That is the part that should be considered as part of their overall compensation package just like other fringe benefits.

The only reason this has not been done is because of a very old statue that exempts this BENEFIT from the compensation measure. Employers love it because it saves them lots of tax dollars.

If it goes on that W2, it should be taxed as compensation both for the employer and the employee.

It is one of the MAJOR tax expenditures we have because we are not taxing this employee benefit as compensation - Which this benefit is - a part of the overall employee’s compensation.

TaxPolicy Center - What are the largest tax expenditures?

from the link ~

The third largest tax expenditure (an estimated $190.3 billion in fiscal year 2021 is the exclusion of employers’ contributions for employees’ medical insurance premiums and medical care. Under this provision of the tax code, contributions are excluded from an employee’s gross income, while an employer may deduct the cost as a business expense. Treasury estimates this provision will cost $252.4 billion in 2024. JCT’s estimate of this tax expenditure is smaller than Treasury’s estimate because JCT assumes that, absent the exclusion of employer contributions, individuals would claim a larger itemized deduction for the higher health insurance costs they would incur.

IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna

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sktn77a

Contributor ⭐⭐⭐

When Social security was first implemented, average lifespans were less than the retirement age(65). Today, average lifespan is almost 20 year longer than retirement age. No wonder it's going broke.

Raise the full retirement age to 70 and raise the early retirement age from 62 to 66.

LisaS961881Author

Community Champion ⭐⭐⭐

….. a gloomier article just three weeks later:

https://www.newsweek.com/americans-fear-end-social-security-poll-2113953

~ Lisa 🙋

GailL1

Community Champion ⭐⭐⭐

@LisaS961881

So Do You think that President Reagan with the help of a Democratically lead Congress could get the changes they passed in 1983 - passed today in this political climate?

I would say “NO” -

IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna

LisaS961881Author

Community Champion ⭐⭐⭐

Gail - I totally agree.

With both political parties being more concerned with tearing each other down rather than reaching across the Maginot Line and creating a solution together, I cannot foresee a comprehensive solution anytime soon.

Yup - gloomy….

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