Trump Social Security tax plan vs. bipartisan approach: Experts weigh in
Experts analyze President Trump's proposal to eliminate Social Security taxes and Brookings' bipartisan plan, noting impacts on beneficiaries and solvency.
President Donald Trump's initiative to remove taxes on Social Security benefits has sparked debate, especially when contrasted with a bipartisan reform proposal from the Brookings Institution.
Experts provided insights to Newsweek into the potential outcomes of both plans.
Why It MattersSocial Security serves as a financial lifeline for many Americans. As of January 2025, approximately 73 million people received benefits from programs administered by the Social Security Administration (SSA). According to the SSA, among beneficiaries aged 65 and older, about 12 percent of men and 15 percent of women rely on Social Security for 90 percent or more of their income.
Trump's proposal aims to eliminate income taxes on Social Security benefits, potentially increasing retirees' monthly income. However, critics argue this could accelerate the program's insolvency.
In contrast, the Brookings Institution has introduced a bipartisan plan designed to ensure long-term solvency through a combination of tax adjustments and benefit modifications. Former members of Congress have expressed their support for this plan, highlighting its importance for the financial security of current and future retirees.
What To KnowTrump's proposal focuses on eliminating the taxation of Social Security benefits. Currently, beneficiaries with combined income above certain thresholds pay taxes on a portion of their benefits. The Penn Wharton Budget Model estimates that removing this taxation would reduce federal revenues by $1.5 trillion over the next decade and hasten the depletion of the Social Security Trust Fund from December 2034 to December 2032.
President Donald Trump speaks during an executive order signing in the Oval Office at the White House on February 11, 2025, in Washington, DC. President Donald Trump speaks during an executive order signing in the Oval Office at the White House on February 11, 2025, in Washington, DC. Andrew Harnik / Staff/Getty ImagesThe benefits of this tax elimination would disproportionately favor higher-income retirees, according to the Penn Wharton Budget Model. Households in the highest income brackets could see annual tax reductions between $1,625 and $2,450, while middle-income households might save around $340, and the lowest-income recipients would see minimal changes.
The Brookings Institution's planâsupported by 16 former members of Congress, including Democrats Tom Daschle and Dick Gephardt along with Republicans Fred Upton and Jim McCreryâaims to ensure Social Security's solvency over the next 75 years and involves a balanced approach of revenue increases and benefit adjustments. Key components include taxing Social Security benefits for individuals with incomes above $100,000 and couples above $125,000, raising the taxable income ceiling and gradually increasing the retirement age for higher earners.
The plan also enhances benefits for disabled individuals, survivors and caregivers, and aims to achieve universal coverage and improve the program's progressivity. Wendell Primus, a visiting fellow at Brookings and one of the plan's authors, told Newsweek it emphasizes the need for an equitable mix of tax increases and benefit reductions, drawing parallels to successful reforms enacted in 1983.
Romina Boccia, director of budget and entitlement policy at the Cato Institute, acknowledged that the Brookings plan makes an effort to address Social Security's unsustainable finances through a mix of revenue increases and benefit reductions. However, she cautioned that the plan leans heavily on tax hikes, which could discourage work and investment, and she suggested that more structural reforms are needed to tackle the root issues.
Kevin Thompson, founder and CEO of 9i Capital Group, pointed out that the Brookings plan could significantly impact small business owners by increasing their tax burdens. While he saw merit in enhancing support for vulnerable groups, he expressed concern over proposals like the 0.2 percent payroll tax increase, which he viewed as a tax on lower-income workers. Thompson also noted to Newsweek that, unlike the Brookings plan, the Trump administration has not presented a concrete strategy to address Social Security's long-term solvency.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, emphasized the necessity of implementing changes to ensure Social Security's viability for future generations. He appreciated the gradual approach of the Brookings plan but highlighted the political challenges in enacting such reforms, given potential public resistance to changes like increasing the retirement age.
Christian Weller, a senior fellow at the Center for American Progress, raised concerns about the proposal from the Brookings Institution to raise the retirement age, noting that such measures could disproportionately affect individuals without a college degree, whose life expectancy has not increased significantly over the past decades. He argued that this approach could result in regressive benefit cuts, adversely impacting lower-income workers.
What People Are SayingWendell Primus, a visiting fellow at Brookings and one of the plan's authors, told Newsweek: "I think what distinguishes this proposal is it's tried to be equal on the tax increases versus the benefit reductions. And I think that's ultimately what it's going to take to get a Social Security solvency plan, like we did in 1983, adopted."
Max Richtman, president and CEO at the National Committee to Preserve Social Security and Medicare, previously told Newsweek: "To look at Trump's proposal to eliminate taxes on Social Security benefits in terms of federal debt is incorrect. Social Security does not contribute to the debt. In fact, it lends the government money because Social Security trust fund surpluses are invested in special treasury notes. Social Security cannot legally incur debt.
"Trump's proposal is harmful because it would hasten the projected depletion of the Social Security trust fund, at which time beneficiaries would receive an automatic benefit cut of at least 17 percent, unless Congress takes pre-emptive action. We strongly prefer Rep. John Larson's solution. His Social Security 2100 Act would extend the solvency of the trust fund AND reduce taxes on Social Security benefits, by asking the wealthy to pay their fair share in payroll contributions. The difference is that Rep. Larson's tax cut on benefits is paid for, whereas President Trump's is not."
Romina Boccia, director of budget and entitlement policy at the Cato Institute, told Newsweek: "The Brookings proposal acknowledges the reality that Social Security's finances are unsustainable and offers a balanced plan with revenue increases and benefit reductions on the table. However, the plan leans too heavily on tax increases, which could discourage work and investment, while failing to address the root problem: Social Security's excessive promises. Bolder structural reforms would focus on reducing benefits for higher earners and transitioning away from earnings replacement to providing a predictable antipoverty benefit. The Trump administration has not put forward a concrete plan for Social Security reformâexcept for targeting the small share of improper payments and calling for repeal of Social Security benefit taxation."
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "The current administration hasn't made many promises for Social Security outside of promising to keep the program largely unchanged and opening the door to potentially eliminating taxes on benefits for recipients. We know a budget proposal from Republicans calls for potential cuts, but what those cuts would affect remains to be seen. As needed as Brookings' plan is, its widespread acceptance in Washington will be a hard one. Most legislators are terrified with making any changes to benefits as they thinkârightfullyâit would significantly hurt their reelection chances. It's a touchy issue, and that's putting it lightly."
Kevin Thompson, founder and CEO of 9i Capital Group, told Newsweek: "At first glance, the Brookings plan attempts to address Social Security solvency, whereas I haven't seen anything from the Trump administration tackling that issue directly. Instead, their focus seems to be on reducing the taxability of Social Security benefits, which, while appealing to some, doesn't do much to improve the program's long-term financial health. Brookings at least puts forth some viable optionsâhigher taxation, means testing for high earners, and raising retirement agesâwhile I haven't seen any comparable proposals from the Trump administration that address solvency."
What Happens NextRecent news about key Social Security stories includes Michelle King's resignation as SSA acting commissioner following a request from the Department of Government Efficiency (DOGE) to access sensitive records. Frank Bisignano has been nominated to lead the SSA. Additionally, former Commissioner Martin O'Malley warned of potential benefit interruptions due to DOGE's audit.
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