Pensions that are paid in full
The retirement fund runs out of reserves in the last quarter of 2032, and current law then permits only 78 percent of scheduled benefits. Taxing earnings above the cap closes most of that gap.
▸ Show reasoning & sources ▾ Hide reasoning & sources
Value
The stream is money arriving in the households of people drawing a state pension, priced at the middle of the scale as all money is. What makes this the largest argument on this site is not the value class but where the money lands: about four in ten American pensioners take more than half their income from this one source, and one in seven takes almost all of it. The people paying it appear as the argument opposite, at the weight of the top few percent of earners, and the difference between the two weights is the whole of what this evaluation says. Nothing is counted here for the security of knowing the payment will arrive, which is a separate argument. Nothing is counted for the additional benefit credit some versions of the proposal would give the people paying, which would reduce the transfer and is not in the version scored here. The value is the middle of the scale, and the entire weight of this argument sits in the distance between two income bands.
Impact
The taxable maximum is 184,500 dollars in 2026, and about six percent of workers earn more than it in a given year. Charging the tax above it raises roughly 320 billion dollars a year before anybody changes their behaviour and about 150 billion after the largest published estimate of that response; 290 billion is used here, in a range from 150 to 320, with the behavioural response booked as its own argument rather than deducted twice. That is 250 billion euro. All of it goes into the retirement fund, whose reserves are otherwise exhausted in the last quarter of 2032, after which current law permits only 78 percent of scheduled benefits — a cut of about 22 percent for every recipient at once. The money therefore lands with pensioners, who carry a weight of 1.4, in a range from 1.1 to 2.0: a mix of the poorest fifth, for whom this is nearly all their income, and households around the middle for whom it is a part. The Impact is the largest figure anywhere on this site and it is simply the size of the transfer multiplied by the distance between two income bands.
▸ Show calculation ▾ Hide calculation
| Additional revenue from charging the tax above the cap Setting, range 150 to 320 billion dollars: 320 before any behavioural response, about 150 after the largest published estimate of it; the response is booked as its own argument rather than deducted twice [3] | 290 billion dollars a year | 290 billion dollars a year | |
| ÷ | In euro exchange rate used throughout this evaluation | 1.16 dollars to the euro | 250 billion euro a year |
| × | Weight of a euro for the households receiving a state pension Setting, range 1.1 to 2.0: four in ten pensioners take more than half their income from this source and one in seven almost all of it, alongside households around the middle for whom it is a part | 1.4 | 350 billion euro a year |
| ÷ | Normalised Impact scale of this evaluation | 50 billion euro a point | 7 |
Plausibility
The revenue is arithmetic — a statutory rate applied to earnings that are already reported — and the benefit cut it prevents is what current law does automatically when a trust fund is empty, so neither end of this requires anybody to decide anything. The counterfactual is that law, unamended, which the trustees' 2026 report dates precisely. Two things hold this well below what an arithmetic certainty would otherwise carry. The first is timing: the money is collected from 2027 and the cut it prevents begins in 2032, so for the first six years of this evaluation the revenue accumulates rather than preserves anything, which is inside the twenty-year horizon but not evenly spread across it. The second is larger and is not a technical objection: Congress has never once allowed a scheduled Social Security cut to take effect, and if it would have acted by some other means, the benefit preserved here is only the difference between this fix and that one, which nobody can size. That is named and unresolved. Reverse causation does not arise. The Plausibility is a little above the middle: the arithmetic is certain and the thing it is compared against is a law nobody expects to be allowed to operate.
Counterfactual: current law unamended, under which the retirement fund's reserves are exhausted in the fourth quarter of 2032 and 78 percent of scheduled benefits are payable [1]. Design: mechanistic — the revenue is a statutory rate on reported earnings, but what the money preserves depends on Congress not acting by other means, which is a behavioural link and carries the quantity. Confounder: Congress has never allowed a scheduled cut to take effect, so the true counterfactual may be a different fix and the benefit preserved only the difference between them; named and unresolved. Direction: no reverse causation. Ceiling: projection 6.0 binds and mechanistic gives the same.