Higher Payroll Taxes for Top Earners Proposed as Senators Push New Social Security Rescue Plan
A new bipartisan proposal aimed at strengthening Social Security could require some of the nation’s highest-paid workers to contribute more in payroll taxes while helping protect future retirement benefits for millions of Americans. The proposal comes as lawmakers continue searching for ways to address the long-term financial challenges facing one of the country’s largest federal benefit programs.
Sen. Elizabeth Warren of Massachusetts and Sen. Bernie Moreno of Ohio are urging Congress to act before Social Security faces a major funding shortfall. In a recent opinion piece, the two senators argued that lawmakers should eliminate the current Social Security payroll tax cap, saying the change would make the system fairer and provide significant new funding for the program.
According to the latest projections from the Social Security Board of Trustees, the Old-Age and Survivors Insurance Trust Fund is expected to exhaust its reserves during the fourth quarter of 2032. If no changes are made before that happens, Social Security would only have enough ongoing revenue to pay about 78% of scheduled benefits. That reduction would lower the average monthly payment by roughly $500 for many beneficiaries.
The senators believe removing the payroll tax cap could help close much of the funding gap. Under current law, Social Security payroll taxes apply only to wages up to a set annual limit. For 2026, that limit is $184,500. Both employees and employers each contribute 6.2% of wages up to that amount, meaning the maximum Social Security payroll tax paid for one worker is based only on earnings below the cap, even if that worker earns substantially more.
Warren and Moreno argue that this structure means most American workers pay Social Security taxes on all of their earnings, while higher-income individuals stop paying the tax once their wages exceed the annual threshold. They say this creates an imbalance because workers with lower and middle incomes continue contributing throughout the entire year, while those with much higher salaries contribute only on a portion of their income.
If Congress removes the payroll tax cap, individuals earning above the current taxable wage limit would continue paying Social Security payroll taxes on wages beyond that threshold. Estimates cited by the lawmakers indicate that such a change would directly affect only about 5% to 8% of the U.S. workforce, leaving the overwhelming majority of workers unaffected.
The senators also point to financial estimates showing that eliminating the payroll tax cap could generate approximately $3 trillion in additional funding for Social Security over the next decade. They argue that this added revenue would significantly strengthen the program’s finances and help preserve benefits for current and future retirees, as well as people receiving disability benefits.
Social Security currently provides monthly benefits to more than 70 million Americans, including retired workers and individuals with disabilities. The program is primarily financed through dedicated payroll taxes and taxes collected on certain Social Security benefits. When annual benefit payments exceed incoming revenue, the program relies on its trust fund reserves to cover the difference.
That situation has become increasingly important because Social Security has been paying out more in benefits than it has collected in cash income for the past 16 years. As a result, the program has been using its trust fund reserves to continue making full benefit payments. Federal law does not allow Social Security to pay more in benefits than it receives in available revenue once those reserves are depleted. Without legislative action before the trust fund runs out, automatic benefit reductions would take effect.
The proposal from Warren and Moreno adds another option to the ongoing national discussion about how to secure Social Security’s future. Their plan focuses on increasing contributions from the highest earners rather than reducing benefits, with the goal of strengthening the program’s long-term financial stability while maintaining promised payments for millions of Americans who depend on Social Security.
Sources
- Social Security Administration
- Social Security Board of Trustees
- U.S. Senate
