Rep. Lynn Jenkins had two suggestions for beefing up Social Security when she was in Iola Wednesday: increase the retirement age to 68 in recognition of the fact that we are living longer; and index benefits so that those who accumulated money during their working lives would get smaller pensions.
However, Jenkins made no mention of favoring raising the amount of annual earned income subject to the Social Security tax.
Which is curious. At present, all wages and other earned income subject to the tax, are taxed up to $106,800 a year. Wages above that level are exempt.
If earned income up to, say, $250,000 were subject to the Social Security tax, the program would be fiscally sound. If all earned income was taxed, the Social Security trust fund would once again be overflowing.
And it is pretty difficult to support the proposition that only low- and middle-income Americans should pay the Social Security tax on all of their income. The math is easy. With every dollar a person earns over the current limit, he or she pays a smaller percent of their earned income to support Social Security.
That is exactly as unfair as it sounds. It is not only unfair, but makes the job of balancing the federal budget that much more difficult.
Since reducing the deficit has a high priority with the Republican Party, raising the cap on the amount of earnings to be tapped to keep Social Security sound would seem to be a natural for Rep. Jenkins and her colleagues.
SHE DOES DESERVE credit for favoring the two most obvious ways to reduce Social Security benefits to trim the program’s cost.
Raising the retirement age gradually would be wise and appropriate. Not only are people living longer, the nature of work has changed dramatically. Ditch diggers wore themselves out before they turned 65. Computer operators don’t. An appropriate retirement age may be 70 today, although it would make sense to add some caveats.
Along with a higher retirement age should also come some exceptions for those who work at physically taxing jobs and for those who, for whatever reason, can no longer work full time.
Indexing pensions can also be defended. My father, for example, who retired at 65 in 1963, calculated that he had received all of the money that he and his employers had put into the Social Security system on his account within a few years after retirement and, from then on, was receiving a pension someone else was being taxed to provide. He proposed that the system be revised so that retirees would receive only what had been invested for them, plus a reasonable return on that investment, if they could afford to support themselves from then on.
His reform would have taken the rich off the Social Security rolls.
Both of these reforms would reduce payouts from the system by reducing benefits. Both, however, would be much more expensive to administer — and politically difficult to enact — than simply lifting the lid on the amount of income subject to the payroll tax.
That should be the first step Congress takes to make the program sound far, far into the future.
— Emerson Lynn, jr.
