Social Security Works, a left-wing group, was quick on the draw. Within an hour of Senator Marco Rubio’s announcement in April that he was running for president, it issued a news release attacking him: “If Senator Marco Rubio had his way, Social Security’s very modest benefits, averaging just $1,330 a month for retired workers, would be cut.”
That’s not true. A spokesman for the group says it had in mind Rubio’s proposal to increase the retirement age and his openness to reducing cost-of-living adjustments, which many economists believe overcompensate for inflation. But neither of those steps would cause average monthly benefits to be lower than they are today.
Social Security is an emotional topic, made more so by misinformation. My previous post for Bloomberg about it drew an immense number of comments and email, much of it angry at me for questioning Senator Elizabeth Warren’s proposal to increase benefits without first finding a way to pay for the benefits we’ve already promised. The most common theme of the criticism — excluding the unprintable emails — is that we could easily pay for Social Security by raising taxes on the rich.
Taxes for Social Security are levied on wages up to $118,500. (Benefits are also capped.) Senator Bernie Sanders wants to change the Social Security tax to apply it to income above $250,000, and my correspondents were enthusiastic about this idea. They shouldn’t be.
Advocates present this tax increase as though it were a minor tweak to the system. It’s much bigger than that. We’ve spent 20 years arguing about whether the top tax rate should be 35 percent or 39.6 percent. Getting rid of the Social Security cap would raise that top rate above 50 percent — and that’s before counting state taxes.