Here is my simple proposal to help move Social Security towards solvency:

Increase, from age 70 to age 75, the age at which an individual stops accruing additional Social Security benefits. This proposal deals with the real demographic problem with Social Security: the decreasing ratio of workers to retirees. This proposal does not rely on decreasing benefits or raising tax rates on anyone.

Explanation. Currently the working taxpayer accrues no additional Social Security benefits after age 70. Prior to age 70 those benefits increase at a rate of about 8% per annum from the first eligibility to receive Social Security at age 62 until age 70.

We have an unusually low unemployment rate and we have had an unusually high number who could work but are not looking, especially starting during the pandemic years.

When I was 70, I kept working. When I was 71, I realized why many people who were able to work, physically and mentally, stop. They would be paying FICA taxes of 15% on earned income. This is explicit for those who are self-employed, but in real economic terms, it is also true for those employed by others paid on a W-2 basis. The cost of working (time and effort) remains the same, but the financial benefit of working past age 70 is much less.

For the US Treasury, there are budget costs and benefits. The benefit is that it will incentivize more people over 70 to work, paying income tax and FICA. From the first to the fifth year, the benefits will gradually be balanced by costs. The cost to the federal government in out years is that it will pay a higher Social Security benefit to those who take advantage of this new opportunity. My opinion is that this proposal still be a net positive for the treasury even after the fifth year.

At the state level, however, this proposal is all benefit. Taxpayers will be encouraged to remain working during their early 70s and will pay income tax to the state of North Carolina. Their increased income will result in some additional sales tax.

There are 40 states that tax income. This would be an extremely popular proposal among 80 senators and a large majority of the House.

Since President Trump has repeatedly stated that he will not raise the retirement age for Social Security (and this is in the platform which he personally authored), this proposal is one of the only ways that the tax system can recognize demographic and fiscal reality. A few decades ago, there were 16 workers paying taxes into Social Security for every retiree. America has lost 360,000 workers in the last year alone. Now the ratio is 2.5 workers for every retiree. The next generation can not bear this burden.

Conclusion. This proposal will provide better physical and mental health and enjoyment of life for many seniors. It will immediately reduce the annual federal deficit over the next five years. This will help plug the gap between our state income tax collections as projected into the future and will reduce the necessity, or desirability (for some), of adding sin taxes, which, in addition to the moral component, implicate issues of tax efficiency with their huge transactional costs.

Once again this change in law will put North Carolina on the pedestal for states engaging in true tax reform.