The issue facing American today is when and how to reform Social Security. Although the American public and political groups are unwilling to accept the burdens of social security reform, extensive reform is needed soon to continue paying the current benefits to American citizens.
A change in the Social Security tax is a possible factor of reform to bring the Social Security program back on track. Currently the Social Security tax is a flat-rate tax paid on all employment earnings up to a specified limit. Due to inflation the limit is increased every year currently it is just over $60,000. This tax is much harder on a lower income individual because the higher income individual is only taxed on their income that is below a certain amount set every year. It has been proposed that if the limit on the payroll tax were lifted, two-thirds of the projected Social Security deficit would be eliminated. Once the limit on the payroll tax is lifted a rise in the tax rate of the employers and the employees by 1.1% is predicted to be enough to solve Social Security's problems. This is assuming that two evasive actions take place. First the government will have to keep its hands of this extra tax revenue gained by the tax increases. Second the proposed solution will only have a chance to work if it is started immediately while the baby boomers are still able to add a little more cash to the trust fund for there own retirement. This solution isn't likely to be implemented by today's political system. The advisory council on Social Security would not pursue the lift of the limit because the support of the wealthy voters for Social Security reform would be lost. Americans are also weary of Social Security tax increases. The middle and lower class voters would also not support a Social Security tax increase. A recent poll by Money magazine found that 70% of the public is unwilling to pay more tax than the current 6.