Boston College economist Alicia Munnell, writing for MarketWatch, discusses the so-called “start-up costs” involved with Social Security, which are often referred to as the system’s “legacy debt.” This represents the extra benefits paid to early participants in the program over and above what they paid in taxes. This amount – which is somewhere north of $20 trillion – is the main reason Social Security is underfunded going into the future.
Munnell argues that these costs should be shifted from Social Security to the general Treasury. In other words, they should be financed by income taxes, which are predominantly paid by high earners, rather than payroll taxes. She argues that doing so would “produce a more equitable tax system.”
I can understand making this kind of change and I might even support something like it. But I’m not sure why shifting Social Security costs from a tax that is more or less proportional to income to one that is paid predominantly by a very few high earners is more “equitable.”