For more and more Americans, the dream of a secure retirement has become increasingly threatened. The Great Recession has taken its toll on a retirement system which has been in place in the United States since WWII. Retirement was conceived as a "three-legged stool," with the three legs being Social Security, pensions and personal savings centered around homeownership. But with private sector employers walking away from providing pensions, and with a collapsed housing market and inequality increasing in the years even before the Great Recession, these other two legs have been undermined.
In a newpolicy paper, Steven Hill writes that the "retirement stool" no longer is stable and secure, and Social Security now is the only leg left for hundreds of millions of Americans. New solutions are needed to provide retirement security to retiring Americans, both now and in the future. In particular, an expansion of Social Security -- one of the most successful and popular programs in American history -- that converts it into a more robust retirement system called Social Security Plus would build upon the most stable component of the current system.
The report identifies three primary revenue sources that would allow a doubling of the Social Security payout. First, lift Social Security’s payroll cap so that income over $106,800 per year is still taxed to contribute to Social Security. Second, eliminate the employer tax deduction for providing retirement, as employer-based pensions would be made redundant by the proposed Social Security Plus, and these substantial deductions would no longer be needed. Third, reduce or eliminate other unfair deductions in the tax code which currently allow the top 20 percent of income earners to reap generous deductions that low and moderate income Americans cannot enjoy.
Click here to read the full paper.