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.
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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. The part of the base that keeps moving above the cap as top pay pulls away is inside this figure rather than a separate argument: it is the same money, and it is worth what money is worth. 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. Two things move that figure over the twenty years. The share of wages above the cap has grown by about a quarter of a point a year for four decades; carried on at that pace and averaged over the horizon, it adds a tenth to the base, in a range from 4 to 20 percent. And a fifth less kept on every dollar above the cap means about five percent of those earnings stop being reported — the same response, at the same elasticity of 0.25, that the argument on work and reporting is built on, so that one number governs both sides. Together that is 334 billion dollars a year, or 288 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 collected in the first six years builds reserves rather than paying anybody; but the programme already costs about 1.7 trillion dollars in 2026 and more every year, so the cut it prevents from late 2032 runs at 450 billion dollars a year or more and exceeds the yearly revenue; over the fourteen years from 2033 the cuts prevented come to about 7 trillion dollars against about 6.7 trillion collected over all twenty, so the reserves built early are paid out inside the horizon — this evaluation does not discount within it. 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.
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| Revenue from charging the tax above the cap, before anybody changes behaviour static estimate over the next ten years [3] | 320 billion dollars a year, 2027 to 2036 | 320 billion dollars a year | |
| × | Base that keeps moving above the cap over the twenty years Setting, range 1.04 to 1.20: the covered share has fallen from 90 to about 83 percent since the cap was designed, roughly a quarter of a point a year; carried on at that pace and averaged over the horizon, that adds a tenth to the base above the cap [4] | 1.10 | 352 billion dollars a year |
| × | Earnings that stop being reported at the higher rate the same response as in the argument on work and reporting: elasticity 0.25, a fifth less kept, five percent less reported — one number for both legs and for the output lost [5] | 0.95 | 334 billion dollars a year |
| ÷ | In euro exchange rate used throughout this evaluation | 1.16 dollars to the euro | 288 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 | 403.2 billion euro a year |
| ÷ | Normalised Impact scale of this evaluation | 50 billion euro a point | 8.06 |
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: definitional — a statutory rate on reported earnings is collected in every case and, once the fund would otherwise be empty, pays benefits that current law would otherwise cut; the pair takes the form of its better-identified leg (rule of 14 September 2026), and P 5.5 on both legs is a judgement on the size of the shared sum, not on whether the payment happens. 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 — that doubt concerns the measure as a whole and is carried in the shared eintritt_gruppe over both legs, named and unresolved. Direction: no reverse causation. Ceiling: projection 6.0 binds.