Should high earners support scrapping Social Security’s cap on taxable earnings?
Earnings above a cap aren’t subject to the payroll taxes that fund Social Security. As a result, billionaires pay the same tax as someone earning $176,100 in 2025 (the cap is indexed to the average wage, so it changes every year).
“Scrapping the cap” is a popular and effective way to address Social Security’s funding gap. Nearly three-fourths of Social Security’s projected long-term shortfall would be eliminated if the cap were scrapped without increasing benefits.
But wouldn’t such a move be opposed by high earners? The answer isn’t as obvious as you might think, because most workers with earnings above the cap stand to lose more from benefit cuts than from higher taxes. If nothing is done to shore up Social Security’s finances, EPI estimates that 70% of workers aged 32–66 who earned more than the taxable maximum in 2024 would lose more in benefit cuts than they would pay in higher taxes if the cap were scrapped.
The remaining 30% of these high earners, would, however, be better off losing 22.4% of their benefits beginning in 2034 than paying Social Security taxes on earnings above the cap. Unfortunately, this group includes politically influential multi-millionaires and billionaires.
Break-even line below which high earners are better off with "scrap the cap" than benefit cuts
| Age | Annual earnings in 2024 |
|---|---|
| 32 | $230,000 |
| 33 | $232,000 |
| 34 | $234,000 |
| 35 | $236,000 |
| 36 | $239,000 |
| 37 | $241,000 |
| 38 | $244,000 |
| 39 | $247,000 |
| 40 | $250,000 |
| 41 | $254,000 |
| 42 | $257,000 |
| 43 | $261,000 |
| 44 | $266,000 |
| 45 | $271,000 |
| 46 | $276,000 |
| 47 | $282,000 |
| 48 | $288,000 |
| 49 | $295,000 |
| 50 | $303,000 |
| 51 | $312,000 |
| 52 | $322,000 |
| 53 | $334,000 |
| 54 | $347,000 |
| 55 | $363,000 |
| 56 | $381,000 |
| 57 | $403,000 |
| 58 | $413,000 |
| 59 | $426,000 |
| 60 | $443,000 |
| 61 | $465,000 |
| 62 | $498,000 |
| 63 | $545,000 |
| 64 | $626,000 |
| 65 | $789,000 |
| 66 | $1,274,000 |
Source: Author's analysis using Social Security Administration's Contribution and Benefit Base and the projections and assumptions in the 2025 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.
Figure A shows the break-even line below which workers are better off paying taxes on earnings above the cap than experiencing benefit cuts sufficient to eliminate the projected shortfall. For example, if the cap were eliminated, a worker who was 35 years old and earned below $236,000 in 2024 would pay taxes on earnings above the cap through age 66, but the value of these additional taxes would be lower than the value of forgone benefits if these were reduced by 22.4% (the amount necessary to restore the system to long-term balance).
Ultimately, most high earners stand to lose more from potential Social Security benefit cuts than from paying taxes on earnings above the cap. Scrapping the cap remains the most fair and practical path to safeguarding Social Security for future generations.
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