The program’s key funding source could be cut permanently
Presently, employees and self-employed taxpayers pay a dedicated Social Security tax of up to $137,700 of their income. President Trump has recently suggested a permanent payroll tax cut that would mean eliminating that tax for good. While this measure would result in higher paychecks for workers, it would also affect Social Security’s main source of funding. This, in turn, would affect the post-retirement income of many future and current retirees.
The program’s key funding source could be cut temporarily
On August 8, President Trump signed four executive orders amid the coronavirus pandemic and severe economic downturn. One of them referred to the deferral of payroll taxes for Social Security from September 1st to Dec 31st for workers with an annual income lower than $104,000. This means that workers would be able to receive higher salaries in the short-term, but since it is a temporary measure, not a permanent cut, the taxes would still need to be paid by workers at some point.
In addition, President Trump claimed that if he is reelected, he’ll try to find a permanent fix for these deferred payroll taxes but since these taxes fund the Social Security program, not paying them would seriously undermine the program’s efficacy. It would only benefit people still working but not those left without jobs because of the coronavirus crisis.
