Van Hollen, Schumer, Wyden, & Sanders Request Analysis from Social Security Administration on the Impact of Eliminating the Payroll Tax

Today, U.S. Senator Chris Van Hollen (D-Md.), Senate Democratic Leader Chuck Schumer (D-N.Y.), and Senators Ron Wyden (D-Ore.) and Bernie Sanders (I-Vt.) sent a letter to the Social Security Administration’s Chief Actuary Stephen Goss requesting an analysis on the impact of eliminating the payroll tax that funds Social Security’s Old Age and Survivors Insurance (OASI) Trust Fund and Disability Insurance (DI) Trust Fund.

The Senators begin their letter asking Chief Actuary Goss to provide an analysis of the impact that zeroing out Social Security’s payroll and self-employment taxes – paid by employers and employees – will have on the OASI and DI trust funds. They ask, “Specifically, what would be the implications of such legislation for revenue coming into the OASI and DI trust funds, at what point would the OASI and DI trust fund asset reserves become depleted, and how would this affect the ability to pay scheduled OASI and DI benefits on a timely basis?”  

“While we would not be supportive of this hypothetical legislation, we would like to be aware of its potential implications,” the Senators note.

The full text of the letter is available here and below.

Dear Mr. Goss,

We are writing to ask for your analysis of hypothetical legislation that changes the tax rate paid by employers, employees, and self-employed individuals to zero percent for the Federal Insurance Contributions Act (FICA) payroll taxes and Self-Employment Contributions Act (SECA) taxes that fund Social Security’s Old Age and Survivors Insurance (OASI) Trust Fund and Disability Insurance (DI) Trust Fund. This hypothetical legislation would make no other changes to current law, and it would apply for all earnings paid on January 1, 2021 and thereafter. 

Specifically, what would be the implications of such legislation for revenue coming into the OASI and DI trust funds, at what point would the OASI and DI trust fund asset reserves become depleted, and how would this affect the ability to pay scheduled OASI and DI benefits on a timely basis?

While we would not be supportive of this hypothetical legislation, we would like to be aware of its potential implications. Thank you for your analysis into these questions, and we look forward to your reply.