Donald Trump’s self-proclaimed refusal to even contemplate cuts to Social Security during last year’s presidential race reeked of a con for a basic reason: It almost certainly was one. His statements were simultaneously strident, certain, and vague—all too reminiscent of Trump University’s get-rich-quick, positive-thinking vibe. “I am going to save Social Security without any cuts. I know where to get the money from. Nobody else does,” he once tweeted. Another time, at a 2016 campaign rally, he claimed, “We’re going to save your Social Security without killing it like so many people want to do.”
It’s all but certain these sorts of sentiments helped Trump prevail in the Republican primary, where competitors ranging from Marco Rubio to Ted Cruz seemingly competed to see who could toss more future senior citizens under the bus. It’s also likely they had an impact in the November election as well. Trump denied he wanted to make cuts to the program. Why worry?
Now, details of a possible Trump administration plan for Social Security are emerging, and you don’t need any knowledge at all of what’s in his still-unreleased tax filings to know it will favor the Trump family bottom line—at the expense of yours and mine. That’s how Donald Trump rolls.
According to the Associated Press, someone described as a “lobbyist with close ties to the Trump administration,” is promoting a scheme that would do away with the 12.4 percent payroll tax—which is jointly paid by workers and their employers—and replacing it something resembling a value-added tax (VAT). The money raised by the new tax would be used to fund Social Security. As the Associated Press reported, “This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay.” A tax cut! What could go wrong?
Like with most Trump proposals: a lot! The Social Security tax is—notoriously—a regressive tax; it impacts lower-income people more than higher-income ones. Earned income in excess of $127,200 is not taxed for Social Security benefits, nor is dividend income or money earned on capital gains. But a VAT can also be regressive. Businesses will almost certainly pass the costs on to their customers. Since lower- and middle-income people use a much greater share of their paycheck for day-to-day expenses than the wealthy, they could be disproportionately hit.
But if you think that’s bad, you ain’t seen nothin’ yet.
The 12.4 percent payroll tax—regressive though it may be—represents not just dedicated funding, but money we see directly in action. That’s why Social Security is popularly thought of as an entitlement. People suppose they earned their retirement stipend because they themselves put money into the system for the entirety of their working lives. Heck, Trump himself has endorsed this sentiment. “It’s not unreasonable for people who paid into a system for decades to expect to get their money’s worth—that’s not an ‘entitlement,’ that’s honoring a deal,” he wrote in his 2011 book Time to Get Tough.