Could taxing earnings above $250,000 be the ultimate secret to preventing a massive 24 percent cut to your future benefits?

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Taxing earnings above $250,000 could help significantly reduce Social Security’s funding gap, but it is not a guaranteed single fix by itself. Under current law, Social Security payroll taxes apply only up to a wage cap, which is $184,500 in 2026. Earnings above that are exempt from the 12.4% Social Security tax. Sanders’ proposal would apply the tax again to wages, salaries and self-employment income above $250,000, creating a “donut hole” between the current cap and $250,000. Supporters argue this would capture more income from top earners and restore revenue lost as a larger share of national wages has moved above the cap over time. There is strong evidence that lifting or removing the cap would materially improve solvency. Estimates cited in the background say eliminating the cap entirely could close roughly 73% of Social Security’s long-run funding shortfall. Other analyses show that cap-related reforms can close anywhere from about 22% to 67% of the gap, depending on design. That makes it one of the most powerful revenue options on the table. But it is not an “ultimate secret.” Sanders’ bill also expands benefits by $200 a month and improves COLAs, which increases costs as well as revenue. Whether the plan fully prevents an automatic benefit cut of roughly 22% to 24% depends on the exact tax design, economic effects, and whether Congress adopts additional changes. What is clear is that without action, the retirement trust fund is projected to be depleted in late 2032, …

Sanders Proposes $2,400 Social Security Raise as 2032 Trust Fund Deadline Looms

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Sanders Proposes $2,400 Social Security Raise as 2032 Trust Fund Deadline Looms

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