Social Security Advocates Sound The Alarm About The Latest Trump Tax Plan

President Donald Trump speaks during a signing ceremony for executive orders regarding trade in the Oval Office at the White House, Friday, March 31, 2017, in Washington. Trump spoke to the media but left before sign... President Donald Trump speaks during a signing ceremony for executive orders regarding trade in the Oval Office at the White House, Friday, March 31, 2017, in Washington. Trump spoke to the media but left before signing the orders. (AP Photo/Andrew Harnik) MORE LESS
Start your day with TPM.
Sign up for the Morning Memo newsletter

Following reports that President Donald Trump is dumping the tax plan he campaigned on and exploring a host of other options, advocates for Social Security are sounding the alarm, pointing to a proposal to eliminate the program’s primary source of funding: payroll taxes.

Though it is not yet known how far along the White House proposal has progressed, those who want to protect Social Security say they are taking the news “extremely seriously.”

“Even if this is just a trial balloon, we want to puncture it as quickly as we can,” said Nancy Altman, the president of the advocacy group Social Security Works.

According to the Associated Press, lobbyists aligned with the Trump administration are pushing for the elimination of the 12.4 percent payroll tax, which is the overwhelming source of revenue for the Social Security trust funds, which provide benefits to the elderly and the disabled. The report published Monday details how they plan to sell the idea to lawmakers and the public:

This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts even though it would involve changing the funding mechanism for Social Security, according to the lobbyist, who asked for anonymity to discuss the proposal without disrupting early negotiations.

Altman, who told TPM that she only found out about this plan from press reports, called it a Trojan Horse.

“They will sell it as a tax cut for the middle class, but really this is undermining middle class economic security, and the ability to retire,” she said. “They’ll say they’re ‘saving’ Social Security, but basically they want to scale back or get rid of the program.”

No other dedicated funding source has yet been floated to replace the payroll tax as a funding mechanism for Social Security, and the odds of Republicans supporting a new tax are slim.

Mark Mazur at the non-partisan Tax Policy Center, who served as assistant secretary for tax policy in the Obama administration’s Treasury Department, said eliminating this particular funding source would upend a “basic social contract.”

“The Social Security system is largely based on the premise that individuals make contributions—by paying taxes—during their working life, and then in retirement they receive benefits,” he said. “If you remove that funding source, you change that contract. And unless you have a well-defined revenue source come in to replace it, you’re essentially weakening Social Security.”

Without a replacement revenue stream, Social Security would have to compete for funding with every other federal program, a prospect that advocates worry would lead to the eventual gutting of the system.

“People need to rely on this 20, 30, 40 years in the future. It can’t be subject to appropriations,” Altman said. “They’re essentially saying, ‘Just trust the future Congress.’”

President Trump campaigned on an explicit promise not to cut Social Security, a promise Altman and other advocates say he would betray with this plan.

“His rhetoric on the campaign was blunt and straightforward. He said he was not going to touch it,” Richard Fiesta, the Executive Director of the Alliance for Retired Americans, told TPM. “But now it seems like he’s going after the very core of the funding of the system. That’s crazy and dangerous.”

Fiesta said his organization’s three million members played a major role in helping to tank the Republican bill to repeal the Affordable Care Act, making tens of thousands of calls to congressional offices, writing letters, and showing up to hundreds of rallies, town halls, and protests. If the plan to eliminate the payroll tax goes forward, Fiesta said: “We’ll be in their offices and in the streets like there’s no tomorrow.”

Latest DC
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Associate Editor:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: