Republicans Break With Party Orthodoxy, Float Payroll Tax Hike on High Earners to Save Social Security

Since Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Moreno, R-Ohio, published a joint New York Times op-ed in June calling to lift the Social Security payroll tax cap, the idea has picked up more Republican support, but still no actual legislation.

Rep. Tom Cole, R-Okla., who chairs House Appropriations, told The Washington Post he's open to raising "the amount of income through tax." Rep. Lloyd Smucker, R-Pa., a senior Ways and Means Republican, signaled the same. That's a real break from decades of GOP opposition to tax hikes of any kind.

The 2026 Social Security Trustees Report says the Old-Age and Survivors Insurance Trust Fund runs dry in the fourth quarter of 2032. After that, incoming payroll taxes cover only 78% of scheduled benefits. Combine the retirement fund with the disability fund and the number stretches to the third quarter of 2034, at 83% payable, according to the trustees. Congress could act before either deadline hits, but as of now it hasn't.

The overall hole is nearly $30 trillion over 75 years, up from about $25 trillion the year before, the trustees said in June.

What the cap actually does

Workers and employers each pay 6.2% Social Security payroll tax, but only on wages up to $184,500 in 2026. Someone making $100,000 pays the tax on every dollar. Someone making $500,000 stops paying after the first $184,500, according to Finance Buzz. The Social Security Administration estimates roughly 6% of covered workers cross that threshold in a given year, meaning 94% never hit the cap at all.

The Roosevelt Institute, a liberal think tank, calculates that fully eliminating the cap would close 67% of the 75-year solvency gap, if benefits aren't raised for the newly taxed earnings. Pair the tax hike with higher benefits for those same earners and it only closes 48% of the gap. A softer option, permanently capping taxable earnings at 90% of the wage distribution, covers just 22% to 28% depending on whether benefits rise too.

Warren and Moreno had called for legislation but hadn't introduced an actual bill as of late August, according to the Associated Press. Whether new high-earner tax dollars come with matching benefit credits, preserving the program's contribution-to-benefit link, or whether they're diverted purely to shore up the trust fund, changes how much of the shortfall gets solved and how much this looks like a wealth transfer versus an insurance program.

The Republican counterargument

The traditional conservative objection to lifting the cap isn't just "no new taxes." It's that Social Security was designed as an earned-benefit program where contributions roughly track future payouts, not an open-ended redistribution scheme. If high earners pay in dramatically more without proportional benefit increases, critics argue the program starts to resemble a straight income tax dressed up as insurance, undermining the political case that built public support for it in the first place. Kevin Thompson, CEO of 9i Capital Group, told Newsweek that whatever happens, "the working public will likely have to shoulder more of the burden at a time when many are already dealing with higher prices."

A rival idea from Cassidy

Sen. Bill Cassidy, R-La., working with Sen. Tim Kaine, D-Va., has proposed a different fix entirely: a $1.5 trillion federally borrowed investment fund, separate from the trust fund, invested in stocks and other assets over 75 years. Cassidy told SavingAdvice on September 8 that no payroll tax dollars would go into it and that it could "conservatively" cover 65% of the program's unfunded liability over roughly 65 years, making "whatever you have to do for the other 35%" easier.

The Committee for a Responsible Federal Budget pushed back, warning that borrowing to invest in markets exposes taxpayers to real financial risk and doesn't by itself restore solvency.

Democrats want more than a tax swap

Rep. John B. Larson, D-Conn., ranking member of the House Social Security Subcommittee, welcomed the GOP shift but wants it paired with his Social Security 2100 Act, which would eliminate the FICA cap, add a net investment income tax above $400,000, and increase benefits. Larson says the average retiree faces a $500-a-month cut by 2032 without action, and argues Republicans who talk about "protecting" Social Security need to show actual legislative text.

None of these plans alone closes the gap. Roosevelt Institute's own math shows even the most aggressive cap elimination leaves a third of the shortfall untouched. The 2032 deadline is real and getting closer, but Congress still hasn't put a single one of these bipartisan-flavored ideas into an actual bill for a vote.