A new analysis published by the Committee for a Responsible Federal Budget warns that eliminating taxes on Social Security benefits, tips and overtime would cut up to three years off the Social Security program's projected solvency — advancing the insolvency date from 2034 to as early as 2031.
Former President Donald Trump has repeatedly pledged to enact these policies while on the campaign trail, according to the CRFB, which advocates for narrowing the gap between how much revenue the federal government raises and how much it spends.
"President Trump's proposals to eliminate taxation of Social Security benefits, end taxes on tips and overtime, impose tariffs, and expand deportations would all widen Social Security's cash deficits," the authors warn. "Under our central estimate, we find that President Trump's agenda would increase Social Security's 10-year cash shortfall by $2.3 trillion through FY 2035."
If such policies were enacted and nothing was done to shore up Social Security, the federal government would need to make a 33% across-the-board benefit cut, the CRFB warns. This projected cut is up from the 23% that the Congressional Budget Office projects under current law.
"Social Security will be only nine years away from insolvency when the next President takes office," the authors note. "If President Trump's campaign agenda were enacted in full, we estimate it would shrink that window by one-third, to only six years."
Asked for a comment on the CRFB report, Karoline Leavitt, the Trump campaign's national press secretary, shared the following statement: "The so-called experts at CRFB have been consistently wrong throughout the years. President Trump delivered on his promise to protect Social Security in his first term, and President Trump will continue to strongly protect Social Security in his second term."
The statement then attacked the positions of the "dangerously liberal Kamala Harris" before arguing that Trump's policies would support Social Security by "unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies."
"President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come, all the while eliminating taxes on Social Security for America's well-deserving seniors," the statement concludes.
Tips, Taxes and Tariffs
Ending taxation of Social Security benefits might sound like a winning proposition, the authors admit, but it would actually would eliminate a revenue stream currently used to help finance Social Security. Ending all taxes on overtime pay and tips would have a similar effect by reducing payroll tax collection accruing to the Social Security trust funds.
Imposing large tariffs on imports would not directly affect Social Security's bottom line, but it would raise the prospect of higher inflation, according to the analysis, which would either increase annual cost-of-living adjustments (COLAs) or reduce taxable payroll through slower growth.
The authors further warn that deporting large numbers of unauthorized immigrants would reduce the number of immigrant workers paying into the Social Security trust funds, adding yet more strain to the Social Security system.
