Social Security Reform: The Politics of the Payroll Tax

Source: Benjamin A. Templin, Thomas Jefferson School of Law Research Paper No. 2377506, December 1, 2013

From the abstract:
This Article examines the principal reform proposals that would increase tax revenue for the Social Security trust fund — weighing the pros and cons of each. The Article also considers the prospects for political agreement on a reform proposal given the past efforts and the looming crisis.

Part I of the Article recounts the latest data as of 2013 on insolvency projections and discusses the methods by which the Office of the Chief Actuary measures the effect of proposed reforms. Part II provides an overview of the payroll tax and benefit calculations. The factors used in calculating both tax and benefits are key components used in many reform proposals.

The Article focuses on two types of tax reform proposals: (1) proposals that increase the tax rate, which are the subject of Part III; and (2) proposals that increase the maximum taxable income rate, which are discussed in Part IV. Part V examines the political realities of reform proposals and suggests ways in which political bargaining can be structured to maximize the chances of a proposal being adopted.