Social Security Update: Major Proposed Change Gets Boost Ahead of Midterms
A proposal to raise or eliminate the Social Security payroll tax income cap is gaining ground as candidates prepare for the 2026 midterm elections.
The Social Security Administration faces a funding shortfall that would trigger an automatic benefit reduction as early as 2032 unless Congress acts. In light of this, prominent Democrats, a growing number of senior groups, and an unusual Republican ally in the Senate are offering support.
The latest endorsement came this week from Iowa Senate candidate Josh Turek, a Democratic state representative who called for lifting the income cap on Social Security taxes as part of a broader effort to strengthen the retirement program’s finances.
At an event speaking with senior living center Scottish Rite Park residents on Wednesday, Turek said he would support lifting the cap, and former Social Security Administration Commissioner Martin O’Malley expressed his support as well.
“Josh Turek will vote to improve it, improve benefits, and strengthen it for the long term,” O’Malley said.
Turek’s publicly announced stance comes months after an unlikely bipartisan partnership emerged between Senator Elizabeth Warren, a Massachusetts Democrat, and Senator Bernie Moreno, an Ohio Republican, who are working together on legislation to remove the cap.
Why It Matters
The debate over the Social Security wage cap is becoming increasingly urgent as trustees project the program’s main retirement trust fund could be depleted in 2032 unless Congress acts.
According to the latest trustees’ report, incoming payroll tax revenue would then be sufficient to pay only about 78 percent of scheduled benefits.
The proposal to lift the cap could also become a major campaign issue heading into November. While Democrats have long supported raising taxes on high earners to protect Social Security, Moreno’s backing has sparked one of the most significant bipartisan discussions around Social Security reform in years.
What To Know
Under current law, workers and employers each pay a 6.2 percent Social Security payroll tax on wages up to $184,500 in 2026. Earnings above that threshold are not subject to Social Security payroll taxes.
The idea of getting rid of the cap generally rests on the idea that it creates an imbalance: most workers pay Social Security taxes on all their earnings, while higher-income Americans stop paying once they reach the taxable maximum.
“There’s a simple reason lifting the Social Security tax cap is gaining traction. The alternatives are increasingly painful,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek.
Warren and Moreno’s proposal would remove that cap and subject more high-income earnings to Social Security payroll taxes. The senators said that doing so would strengthen the program’s finances without reducing benefits for retirees.
“This is a no-brainer: the wealthiest Americans, who have benefited the most from America’s opportunities, should contribute the same percentage of their income as a factory worker in Chillicothe, Ohio, or a teacher in Worcester, Mass,” Moreno and Warren said in a joint piece for The New York Times in June.
Which Democrats Support Lifting the Social Security Cap?
The idea has long been popular among progressive Democrats.
Warren has become one of the most visible advocates for the idea, arguing that higher earners should contribute the same percentage of their income as middle-class workers. She is now working directly with Moreno on legislation to eliminate the cap.
“Why should a middle-class nurse pay a larger share of her paycheck — than a wealthy corporate lawyer? This is doubly unfair in an economy in which top earners’ wages, overtime, have pulled far ahead of those of the average worker,” the senators said in their op-ed.
Turek endorsed lifting the cap during an event this week focused on Social Security’s future.
“For beneficiaries, raising or eliminating the cap wouldn’t necessarily increase their checks today,” Ryan said. “Its biggest effect would be bringing more money into Social Security and reducing the size of the long term funding gap.”
The proposal has also won support from advocacy organizations including the National Committee to Preserve Social Security and Medicare, whose president, Max Richtman, has also publicly endorsed adjusting the wage cap to generate additional revenue for the program.
“The partisan difference still matters. Democrats generally favor putting more of the burden on higher earners while protecting or expanding benefits,” Ryan said. “Republicans who are warming to the idea are more likely to see higher payroll-tax revenue as one piece of a broader deal that could also include benefit-side changes.”
Why Some Republicans Are Now Backing the Idea
The most notable Republican supporter of lifting the cap so far is Moreno.
In their New York Times essay, Moreno and Warren said that lifting the payroll-tax cap is a “common-sense solution” to Social Security’s financing challenges.
Their collaboration is unusual because Social Security taxes have traditionally been a partisan issue, with many Republicans favoring benefit reforms or retirement-age adjustments rather than tax increases.
“The significant development is that one of the old political red lines is starting to soften,” Ryan said. “That makes an eventual bipartisan compromise more plausible than it was.”
What Are Critics Saying?
Not everyone supports the proposal.
Lawmakers against the idea argue that eliminating the wage cap would amount to one of the largest tax increases in decades and could alter Social Security’s traditional link between payroll-tax contributions and future benefits.
“It definitely helps push the solvency crisis out, but it doesn’t alleviate the problem over the longer term. The conversation will have to go deeper than just tax increases,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
“Ultimately, it will likely require some combination of changes to the full retirement age, tax increases, benefit changes, or means testing.”
The Tax Foundation said that removing the cap would generate substantial revenue but would not fully solve Social Security’s long-term financing challenge on its own.
“Removing the payroll tax cap would not restore long-run solvency, but it would significantly harm the economy and depart from the program’s original earned-benefit design,” the organization wrote in June.
Some conservative leaders have also warned that higher payroll taxes could discourage investment, hiring and wage growth.
“I don’t think it’s likely to pass under the current administration, as lifting or removing the cap would amount to a tax increase on higher earners,” Thompson said. “Both Democrats and Republicans agree that something needs to be done, but they disagree on how to go about it.”
What Happens Next
The Warren-Moreno legislation has not yet advanced through Congress, but support for lifting the payroll-tax cap appears to be growing.
The issue will likely be prominent during the midterm campaign season, particularly in competitive Senate races where candidates are attempting to appeal to older voters concerned about Social Security’s future.
“There are more centrist Republicans and Democrats who have supported approaches that combine additional revenue with changes to the program, but politically, no one is particularly eager to run on a platform of raising taxes or cutting Social Security benefits,” Thompson said.
Contact Newsweek editors on this story: Jason Lemon and Sam Wilson.