Citing the critical need for a “tax code built for growth,” House Ways and Means Committee Chairman Kevin Brady (R-TX) made media appearances over the past few days explaining that August is the time for “making the direct case (for tax reform) and listening to the American people.” Although not specifically tied to remarks in the recently-issued 2017 Social Security and Medicare Trustees Report, the Committee’s stance on tax reform cite’s the return of job opportunities to American workers, the lowering of tax rates across the board, and the stimulation of business investment as key ingredients in the path to achieving permanent, pro-growth tax reform.
So, what’s the connection to Social Security? The 2017 Trustees Report points out that the trust funds’ projected shortfall “is the result of a growing gap between Social Security’s benefit costs and its dedicated tax revenues” or, in other terms, the inflow of cash via taxes is insufficient to cover earned and scheduled benefits over the long term. In fact, the Trustees Report explains that stagnation in earnings–and therefore tax revenues–coupled with the ratio of workers to beneficiaries (2.8 in 2016, down from a range of 3.2-3.4 in the 1974-2008 period) combine to create a 75-year, 2.66% gap between scheduled benefits and the level of payroll needed to sustain them. These projections are purely statistical, but they point to the clear and strong relationship between payroll, the economy, and Social Security benefits.
For additional background on the House Ways and means Committee’s pro-growth tax reform initiative, check out this post.
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