Social Security is barreling toward insolvency. Now even some Republicans are willing to break one of the party’s biggest taboos to save it: by raising payroll taxes on the wealthy.
Bernie Moreno, a Republican U.S. senator representing Ohio, and Sen. Elizabeth Warren, the longtime Democrat from Massachusetts, are working together on legislation to lift Social Security’s payroll tax cap. Currently, the 12.4% tax applies only to the first $184,500 of a worker’s annual wages, with employees and employers each paying 6.2%. Their proposal would subject more of high earners’ wages to the tax. Rep. Tom Cole, the Republican chairman of the House Appropriations Committee, has also said he is willing to consider higher taxes as part of a Social Security rescue.
But financial advisors say taxing high earners is not the same thing as taxing the wealthy. And simply removing the payroll tax ceiling won’t make Social Security’s long-term financing problem disappear.
“Call it what it is, a tax on high earners, not on the wealthy,” said Matthew Chancey, founder of Tax Alpha Companies. “Those are two different groups of people.”
That distinction matters to advisors and their clients.
Social Security taxes wages, not wealth. In 2026, employees and employers each pay 6.2% on wages up to $184,500. Investment gains, business-sale proceeds and most other investment income aren’t subject to the tax.
Chancey said that could affect, say, a surgeon earning $700,000 or an executive, who would both pay substantially more if the cap disappears. Yet, “the founder selling her company for $20 million pays nothing more than she did before.”
The urgency is real. Social Security’s Old-Age & Survivors Insurance trust fund is projected to be depleted in late 2032. Without congressional action, incoming payroll taxes would cover only about 78% of scheduled benefits, resulting in an across-the-board benefit cut of roughly 22%.
That could translate into hundreds of dollars disappearing from retirees’ monthly checks, making the outcome increasingly important to advisors building retirement-income plans.
Warren and Moreno argue lifting the cap would make the system fairer because most workers pay Social Security tax on every dollar of their wages while high earners stop paying after reaching the taxable maximum.
But critics say the proposal is not a permanent fix.
Tax Foundation economist Alex Durante estimates eliminating the cap would constitute the largest federal tax increase in decades while still failing to restore long-term Social Security solvency. The group also argues that a higher marginal tax on labor could discourage work and reduce economic growth.
Andrew Biggs, a senior fellow at the American Enterprise Institute, has raised another complication: Gross payroll-tax collections overstate how much uncapping actually improves Social Security’s finances.
Higher employer payroll taxes are ultimately reflected in lower worker compensation, Biggs argues, reducing other federal tax collections. And if newly taxed earnings are counted toward future Social Security benefits, high earners would eventually receive larger benefits themselves.
Juan HernandezAriano, principal of WealthCreate, a wealth management and retirement planning firm in Houston, similarly cautioned against presenting uncapping as a cure-all.
“I think more revenue is probably coming, and I’d be careful with anyone describing it as the fix,” HernandezAriano said.
Congress has other tacks it could take, including changing retirement ages, making cost-of-living adjustments and changing the benefit formula, he said. Combining several of these changes would allow Congress to phase them in gradually, giving households time to adjust their retirement plans.
Not all advisors oppose lifting the cap. Derek Tuz, a CFP with Aegis Financial Partners, said he supports eliminating the payroll tax ceiling but believes workers who pay more should also qualify for higher benefits.
Julie Drainville, a wealth advisor with AAF Wealth Management, said Congress could also consider gradually increasing retirement ages for future generations as Americans live longer.
For advisors, however, the immediate message may be simpler: Don’t build a client’s retirement plan around Washington choosing any one solution.
“My clients don’t ask me whether taxes are going up,” Chancey said. “They ask me to build things so it doesn’t matter.”
“If it only survives one version of Washington’s fix,” he said, “it isn’t a plan. It’s a bet.”