Permanent Payroll Tax Holiday Would Destroy Social Security, Top Actuary Says

President Trump’s plan to end the Social Security payroll tax would deplete the trust fund by 2023 if some other funding method is not adopted, the chief actuary at Social Security predicts.

Trump on Aug. 8 suspended payroll taxes through the end of the year and said he would end the tax permanently if he is reelected.

“If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax. So I’m going to make them all permanent,” Trump told a subsequent press briefing.

In a letter to Stephen C. Goss, chief actuary at the Social Security Administration, Democratic Sens. Chris Van Hollen, Bernie Sanders, Ron Wyden and Charles Schumer asked for an analysis of the effect ending the payroll tax, which is split by employees and employers and amounts to 15.3% of an individual’s salary, would have.

“If this hypothetical legislation were enacted, with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on Jan. 1, 2021, and thereafter, we estimate that [Disability Insurance] Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter,” Goss responded, the Hill reported.

"We estimate that [Old Age and Survivor Insurance] Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter,” he added.

Nancy Altman, president of Social Security Works, a progressive group dedicated to protecting and improving Social Security, said Goss’s analysis proves Trump’s plan would “destroy Social Security.”

“This plan is wildly out of step with the American people, who overwhelmingly oppose cutting Social Security. Indeed, recent polling shows that preventing Social Security cuts is a top issue for the majority of voters,” Social Security Works said in a press release.

“If a presidential candidate wants to ensure turnout among older votes in the general election, simply advocate for the elimination of Social Security,” often characterized as the third-rail of U.S. politics, Professor Robert Johnson of the Heider College of Business at Creighton University told International Business Times in an email.

The Social Security and Medicare trust funds were not in great shape before Trump suggested eliminating the payroll tax, funded through just 2034 and 2026, respectively at current payroll tax levels.

Trump’s suspension did not have support from either side of the aisle in Congress, and unless lawmakers act, the money will have to be recouped after Jan. 1.

During the 2016 campaign, Trump pledged not to make any Social Security or Medicare cuts. The 2017 tax reform legislation, however, the $2,500 Medicare doughnut hole limit for medication, sharply increased out-of-pocket drug costs for many elderly Americans on expensive prescriptions.