I have a new paper in AEI’s Retirement Policy Outlook series, titled “Don’t raise Social Security taxes: But if it’s necessary, here’s how.”
The basic take is this: Social Security is the entitlement where it makes most sense to reduce benefits rather than raise taxes. Unlike Medicare or Medicaid, cuts to future Social Security benefits can (by middle and high earners, at least) easily be replaced through higher retirement saving.
However, political compromise may mean that revenues will have to be on the table as part of any package deal to fix Social Security. If so, it would be preferable to raises taxes the old fashioned way – by increasing the payroll tax rate – than by raising the payroll tax ceiling.