“We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions….With those taxes in there, no damn politician can ever scrap my Social Security program.” President Franklin D. Roosevelt
Media reports have been circulating in Washington for the last few weeks that the Trump Administration is considering a proposal to eliminate the payroll tax. Since this tax is used exclusively to fund Social Security and Medicare, its elimination would be tantamount either to ending these two vitally important programs or converting them into welfare programs where retirees’ benefits would be subject to the whims of Congress and the vagaries of the legislative process.
The National Committee to Preserve Social Security and Medicare opposes this terrible idea, and urges the Trump Administration to disavow what we hope is an ill-conceived trial balloon.
Social Security is broadly supported by Americans because they see it as an earned right. Retirement benefits are determined by the contributions made during a person’s working career. The relationship between earnings and benefits is a fundamental feature of the program, one that would be completely undermined if Social Security is no longer funded by a payroll tax.
Some have questioned the wisdom of funding Social Security in this manner. When President Franklin D. Roosevelt was asked about this by a young economist, he responded by saying, “We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions….With those taxes in there, no damn politician can ever scrap my Social Security program.”
We urge the Administration to disavow elimination of the payroll tax so that America’s seniors can rest assured that their Social Security benefits will continue to be paid, on time, just as they have been paid since the beginning of the program over 80 years ago. Social Security is too important to replace its dedicated and self-financed revenue source with another funding mechanism that would make the program incredibly vulnerable to benefit cuts or privatization.
How important is Social Security? The numbers tell the story. Approximately 61 million seniors and their family members receive Social Security benefits. In 2016, their benefits totaled about $905 billion, and payment of these benefits was funded nearly entirely from payroll taxes paid by the 171 million workers (and their employers) who contributed to Social Security and Medicare that same year.
We strongly urge President Trump to disavow any plan to change Social Security and Medicare’s funding by eliminating the payroll tax.