WASHINGTON — The Social Security trustees released an annual report this month projecting the Old-Age and Survivors Insurance (OASI) trust fund may be depleted in the fourth quarter of 2032. This new projection indicates depletion several months sooner than previously estimated. Upon the depletion of the OASI trust fund, 78% of benefits will be payable, according to trustee projections.

Currently, earnings up to $184,500 are subject to Social Security payroll taxes. The payroll tax cap is adjusted annually to keep pace with national wage growth. In 1983, Social Security reform aimed to provide 75-year solvency for the program. At that time, the Social Security payroll tax cap was sufficient to cover 90% of eligible earnings, said Stephen Nuñez, director of stratification economics at the Roosevelt Institute.

By 2000, FICA taxes captured approximately 82.5% of taxable income and have remained at that level, Nuñez said. The Center for Economic and Policy Research reported that individuals with $1 million in annual wage and salary earnings stopped paying Social Security payroll taxes for 2026 on March 9.

Sen. Elizabeth Warren and Sen. Bernie Moreno co-wrote an op-ed stating they are working together on legislation to lift the payroll tax cap. Sen. Bernie Sanders proposed the Social Security Expansion Act, co-sponsored by Sen. Warren and nine other Senate Democrats. This act would raise taxes on wages, salaries, and self-employment earnings over $250,000 and proposes increasing the net investment income tax and making active trade or business income subject to those levies. The Social Security Expansion Act also provides certain benefit increases.

Rep. John Larson proposed the Social Security 2100 Act, which would make income over $400,000 subject to Social Security payroll taxes and provides benefit increases. The Social Security 2100 Act was put forward in 2023 with 189 Democratic co-sponsors but has not been reintroduced in the current session of Congress.

Nancy Altman, president of Social Security Works, stated that Social Security was enacted to provide basic economic security when wages are lost due to old age, disability, or death. Altman noted that today's benefits are "low by virtually any measure." She stated that cutting benefits would harm retirees who are already struggling financially, as well as the economy. Altman added that the initial question in reform should be, "What level of benefits should Social Security provide?"

Elizabeth Milito, vice president and executive director of the National Federation of Independent Business Small Business Legal Center, stated that if tax increases are imposed on pass-through small businesses, it could negatively affect their ability to invest in growth and create jobs.