Even if the Democrats accept chained CPI, they’re going to want some goodies in return. One big one: Let the highest earners pay more Social Security payroll taxes.
Right now, employers and workers only pay those payroll taxes on the first $113,700 of income.
Lift the cap so 90 percent of all Americans’ earnings are taxed — it’s only about 83 percent now — and a Social Security deal could raise about $550 billion in revenues over the next 10 years, according to estimates by Third Way, which has endorsed the approach. It would also wipe out Social Security’s deficit through 2020.
The Center for American Progress suggests getting rid of the earnings limit only for employers, but not for employees, so workers wouldn’t see a direct tax increase.
Either way, of course, this idea wouldn’t be a concession to Republicans at all — in fact, it would be a wildly tough sell. Any way it’s designed, it would look like a tax increase.