Bob Ball proposed in 2007 (www.robertmball.org quoted in NASI “Fixing Social Security†Reno and Lavery, 2009, p 14) a “balancing rate increase.†This is the way his idea was described in the NASI publication:
Acknowledging the uncertainty of 75 year projections, former Social Security
Commissioner Robert M. Ball proposed a balancing rate increase that would
be adjusted as future estimates change. The balancing rate would be based
on the trustees’ most current intermediate assumptions, but it would be
clearly understood and clearly communicated to the public that this
rate would need to be adjusted up or down over time. This balancing
rate would be a fail-safe provision to take effect automatically if Congress did
not adjust revenues and costs to changes in the estimates.
When workers are asked, they say they would rather have their payroll tax increased by 1% than have their benefits decreased in any way.
Building on this, I would suggest that the current long term actuarial shortfall projected by the Trustees be addressed by a 1% increase in the payroll tax for each the worker and his employer in 2017 with the clear understanding that another increase might be needed by about 2034.
That 2034 increase would probably only need to be about one half of one percent. At that time it would be necessary to “clearly communicate to the public†that another half-percent increase might be needed in 2053.
It is important for the reader to clearly understand that these future increases are a long time away and may not be needed at all if the economy returns to performing as it has in the past. Moreover, by the time they are likely to be needed, workers will be making 25% and 50%, respectively, more than they are making today. So, for every thousand dollars you make today, you would be making 1250 dollars in 2033, and your tax would increase less than $20 (twenty dollars). In 2053 you would be making about 1500 dollars for every thousand dollars you make today and your tax increase would be about 30 dollars (compared to today’s. But again, remember, these increases would not occur for a long time.
