President Donald Trump has floated the idea of a permanent payroll tax cut as a method of providing economic relief to Americans as part of the response to the COVID-19 pandemic, but Social Security’s Chief Actuary Stephen Goss estimates that such a move could deplete Social Security’s reserves in less than three years.
In a letter written to Sen. Chris Van Hollen, Bernie Sanders, Ron Wyden and Chuck Schumer August 24, 2020 Goss informs the senators that a payroll tax cut, which would eliminate Social Security taxes for employees, would completely deplete Social Security’s reserves by the middle of 2023 if an alternate funding mechanism is not established.
“If this hypothetical legislation were enacted, with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that DI Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter. We estimate that OASI Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter,” Goss wrote in his letter to the senators.
Goss’ letter is in response to the senators’ request to Goss of how a permanent payroll tax cut would impact Social Security, and as expected, Trump’s idea of a permanent payroll tax cut put the benefits of Social Security beneficiaries at extreme risk.
Trump said he would support a permanent payroll tax cut if he is re-elected in November. It is unclear what support there would be either in the Senate or House for such an idea, but if it would negatively impact Social Security benefits this way it would be hard to believe there would be much support for the idea.
