Employer Compensation Tax for Social Security and Medicare
The Social Security retirement and Medicare Hospital Insurance trust funds are expected to be depleted in seven years.
Without action, retirees face a 24 percent benefit cut in 2032, and Medicare hospital payments would be cut by 12 percent.
- Restoring solvency requires slowing benefit growth, lowering health care costs, or increasing revenue.
- The Social Security and Medicare trust funds are financed by a 15.3 percent payroll tax on wages.
A new alternative is proposed: replacing the employer side of the payroll tax with a flat Employer Compensation Tax on all employer compensation costs.
Restoring solvency to these trust funds will require slowing benefit growth, lowering health care costs, increasing revenue, or some combination.
Author's summary: Employer Compensation Tax proposed to restore solvency.