“For each additional year of work, you get a higher benefit and so that creates a better work incentive, which means people are staying in the workforce longer, collecting benefits for a few years, getting more time to save. So that helps strengthen the system,” Ritz said.

The proposal also calls for allowing caregivers to receive up to five years of work credit for the purpose of benefit calculation.

Others have proposed flattening the benefit structure to give everybody a benefit equal to the poverty level. One of the biggest criticisms of that idea is that it would undermine political support for the program by getting rid of the relationship between what you put in and what you get out. It would no longer seem like an earned benefit, Ritz said.

“And by keeping the benefit tied to work, we say it’s still an earned benefit but it’s based on your work rather than your income, and so we think it makes it more progressive, more affordable and it doesn’t break that critical political link,” he said. “We are trying to make it so that you don’t get a higher benefit just for being wealthier.”

Ritz’s report also calls for a slew of reforms such as adjusting the retirement age to improve simplicity and equity, changing the cost of living adjustments, reducing spousal benefits and reforming survivors’ benefits. 

Another key point of the proposal is that it eliminates the payroll tax entirely. “We don’t just propose changing the benefit structure,” Ritz said. “We proposed changing the revenue system to be less regressive and less punitive of work.”

He calls the payroll tax “a flat tax for lower- and middle-income workers, but once you are higher income, the tax goes away. The only reason we have that regressive structure is to create the perceived link between your contributions and your benefits.

“So once we make that change and we say, OK, we are going to say benefits are earned rather than paid for, then there is no real reason to have that system.”

Ritz said there are other ways of raising revenues to pay for Social Security that don’t discourage work and don’t put as many burdens on workers. In its tax reform proposal, the Progressive Policy Institute calls for a repeal of the 2017 Republican tax reform law, which would reduce taxes on earnings from labor while increasing them on unearned sources of income for the wealthy.

It also proposes specific policies to curb the biggest tax expenditures and encourage policymakers to reduce or eliminate many of the wasteful and discretionary provisions in the tax code. 

Additionally, both Social Security and Medicare payroll taxes will be phased out over five years under the proposal. Congress, the report suggests, could retain the use of trust fund accounting by earmarking a new revenue source to replace the lost payroll tax revenue.

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