Labor Economist Says Musk Paying Full Annual Social Security Taxes Would Cut The Deficit By 1/20 – 'Imagine Expanding That To 20,000 Others'

Social Security is one of the most critical safety nets for retirees in the U.S., but it faces a funding shortfall that could result in benefit cuts within the next decade. While some argue for raising the retirement age or reducing payouts, labor economist Teresa Ghilarducci believes the real solution is increasing revenue.

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Ghilarducci, a professor of economics at The New School, suggests that requiring the wealthiest Americans to contribute more to Social Security could significantly reduce the deficit. “If Elon Musk paid for Social Security just on his salary for the entire year and some of his capital gains were taxed to fund Social Security, just one person, it would save 1/20 of the deficit in Social Security,” she said in a 2024 Bloomberg interview. “Imagine broadening that out to maybe 20,000 other people.”

Public Support for Higher Taxes on the Wealthy

A recent survey from multiple organizations, including AARP and the U.S. Chamber of Commerce, found that most Americans support tax increases to maintain Social Security benefits. Eighty-five percent of respondents said they would rather see taxes increase than their benefits cut.

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The most popular proposal? Eliminating the payroll tax cap for earnings above $400,000. Currently, Social Security taxes only apply to income up to $176,100 in 2025, meaning high earners stop contributing after that threshold. Raising or removing the cap would require top earners to pay more and increase their eventual benefits.

Another widely supported measure is gradually increasing the payroll tax rate from 6.2% to 7.2% for both workers and employers. The incremental change would generate more funding without significantly burdening middle-class Americans.

The Myth of Working Longer as a Solution

While some believe people should work longer to improve retirement security, Ghilarducci strongly disagrees. “Not everyone is living longer,” she explained. While wealthier Americans in white-collar jobs often have longer life expectancies, many blue-collar and service workers face declining health due to physically demanding work, stress, and economic hardship. “A lot of jobs that aren’t blue-collar have become pink-collar … requiring a lot of heavy lifting, stooping and bending. Those jobs break bodies down,” she said.

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A New Retirement Plan for Millions

Ghilarducci also backs a national retirement savings plan that would automatically enroll workers who don’t have access to employer-sponsored pensions. The Retirement Savings for Americans Act would create a government-administered pension plan with mandatory contributions. Workers earning below the median income would receive a 5% government match, helping them build long-term savings.

She argues that this model, which resembles pension systems in other developed nations, is far superior to the current 401(k) system, which she calls a “mistake.” “The 401(k) system was a mistake if it was meant to be the retirement system for all Americans. It was meant to supplement SS and pensions.”

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