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Are Social Security Entitlements Financially Sustainable?

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Emily Brandon’s article, “5 Ways to Fix Social Security”, proposed changes to the current Social Security system including: increasing the Social Security tax, lifting the payroll tax caps, raising the retirement age, a means-test, and modifying the cost-of-living adjustment calculations. Senators Elizabeth Warren and Tom Harkin agreed with the removal of the payroll tax caps (Welna, 2013) and senior editor at Kiplinger’s Personal Finance, Mary Beth Franklin, concurred with Brandon’s suggestions and additionally suggested an increase to the payroll tax. While Professors Shiller and Diamond also support raising Social Security tax, both Professors disagree with making changes to computing the cost-of-living adjustments.
After viewing the suggestions, the modifications to Social Security displaying the most merit were increasing Social Security taxes along with raising the payroll tax cap. Brandon’s article states 69% of American’s approve of raising Social Security taxes to 7.2% which “would eliminate just over half” of the financing gap and both Professors Shiller and Diamond agree increasing Social Security taxes for both employers and employees is a good solution to the funding crisis (Shiller, 2013; Wang, 2013). However, simply raising Social Security tax alone is not enough and places the burden on lower and middle income earners; the payroll cap has to be removed as well. Melissa Favreault, a Social Security expert of the Urban Institute, supports removing the payroll cap to make Social Security withholdings more progressive; raising only the withholding rates would create a regressive tax instead (Welna, 2013). Also according to Welna’s article, President Obama stated, “Since 1979, our economy has more than doubled i...

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...How to Fix Social Security. Kiplinger. Retrieved January 21, 2014, from http://www.kiplinger.com/article/retirement/T051-C022-S001-how-to-fix-social-security.html (Franklin, 2011)
Shiller, R. (2013, June 8). Want to Fix Social Security? Use the Right Wrench.The New York Times; Economic View. Retrieved January 21, 2014, from http://www.nytimes.com/2013/06/09/business/to-fix-social-security-use-the-right-wrench.html?_r=1& (Shiller, 2013)
Wang, P. (2013, October 28). Can we save Social Security?. CNNMoney. Retrieved January 19, 2014, from http://money.cnn.com/2013/11/01/retirement/saving-social-security.moneymag/ (Wang, 2013)
Welna, D. (2013, December 5). To Fix Social Security, Some Democrats Want To Lift Wage Cap. NPR. Retrieved January 21, 2014, from http://www.npr.org/2013/12/05/249068448/to-fix-social-security-some-democrats-want-to-lift-wage-cap (Welna, 2013)
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