One flat rate of 5.95% on seventeen revenue bases, replacing the payroll tax. Current-law benefits are unchanged. The methodology, every revenue base and the full workings are published below.
Modeled against the 2026 OASDI Trustees Report, intermediate assumptions · all figures real 2026 dollars · model v91
An improvement of 5.16% — after funding an income floor for 26.0 million seniors. Medicare is entirely outside the plan: no payment flows to it or from it. Reserves — the trust fund’s bonds plus 75% of the investment fund — never fall below one year of benefits across the projection.
The payroll tax reaches wages and stops. It is capped, it falls only on labor, and it collects nothing from capital, inheritance, or business cash flow. When a worker is replaced by automation, Social Security loses their entire contribution with them but NOT the obligation to pay benefits.
This proposal replaces that single collection point with a 5.95% levy on seventeen revenue streams, each taxed once and only once, at point of disbursement. Every wage earner below $192,252 pays less than they do today. The employer's per-head tax disappears entirely, so hiring is no longer taxed.
| Source | Base | Revenue |
|---|---|---|
| 1 Personal income — uncapped | 13,529 | 805 |
| 2 Capital income — incl. retirement accounts | 4,612 | 274 |
| 3 Business cash flow — after foreign dividends | 9,860 | 587 |
| 4 Inheritances — at source, gross, incl. charitable transfers | 2,662 | 158 |
| 5 Employer benefits — excluding health | 698 | 42 |
| 6 Net rent — net of costs and allowance | 275 | 16 |
| 7 Non-profits — gross operating surplus (BEA) | 275 | 16 |
| 8 Foreign holders of US-source income | 1,080 | 64 |
| 9 US persons working abroad — net of local tax | 110 | 7 |
| 10 Government enterprises — operating surplus | 124 | 7 |
| 11 Nonresident-alien student wages (F-1/J-1) | 15 | 1 |
| 12 Residential property disposal gains | 178 | 11 |
| 13 Insurance and annuity inside buildup | 124 | 7 |
| 14 Section 1031 rollover gains | 54 | 3 |
| 15 Lottery prizes and gambling winnings | 137 | 8 |
| 16 Irrevocable trust retained gains | 66 | 4 |
| 17 Royalties to individuals | 53 | 3 |
| Total | 33,852 | 2,014 |
Against $1,368bn from today's 12.4% payroll tax — an increase of $646bn a year.
Nothing is discretionary. Each claim is satisfied in full before the next one begins, and the order is written directly into the model. Medicare sits entirely outside this waterfall — it keeps its own benefit taxation tier and receives nothing from this surplus.
Every employer in the country stops remitting the 6.2% employer payroll contribution. Only some of them pick up a levy on a base of their own. That asymmetry, not the headline rate, decides who gains and who pays.
The rule is one ratio. A payer remits more only if its levied base exceeds 1.042 times its taxable wage payroll — 6.2% divided by 5.95%. The denominator is taxable payroll rather than the full wage bill, because the employer contribution stops at the $184,500 cap while the levy does not.
The state and local figure is the largest and the least discussed: schools, police, fire and transit employers pay the contribution today and would pay essentially nothing under the levy, because government has no cash flow, no operating surplus and no rent. The non-profit result is narrower than it looks and narrower in the sector’s favor — net investment income was removed from the non-profit base at audit, because dividends are already levied at the paying company and interest at the recipient, so endowments are untouched and a university is exposed only on its operating surplus. The self-employed are a separate and larger case again: roughly 16 million people remit the whole 12.40% themselves today.
Sector shares behind these figures are no longer estimates: at v70 the state and local, non-profit and federal wage bills were replaced with BEA wage and salary accruals, and at v74 the state and local figure was further corrected for the roughly 5 million state and local employees who are not covered by Social Security at all and on whom no employer contribution is paid today. An earlier version of the model netted the entire economy-wide employer contribution against the corporate levy alone, which credited corporations with the tax that non-profits and governments actually remit; corrected, corporate remittance rises rather than falls. The aggregate was never affected.
| Sector | Net Cost (BN) |
|---|---|
| Military — DoD & DHS, uniformed and civilian | $(12.24) |
| Rest of federal government and agencies | $(8.51) |
| Federal enterprises — USPS, TVA | $(1.68) |
| State & local government; K-12; public universities | $(58.08) |
| Increased Sales tax, reduced local welfare spending | $(8.90) |
| Non-profit sector | $(43.28) |
| Households employment social security (from BLS) | $(1.70) |
| Private Households Parental Income Support | $(40.00) |
| Total | $(174.39) |
The 75-year result is scored on the Trustees’ intermediate assumptions, which is reasonable for this model. The model also has a shock absorber: if equities drop 45% and revenue drops 5% for three years, starting in 2035 while the fund is still small, coverage is maintained.
Not one year of the Senior Income Supplement is lost. The Supplement is still met 75 of 75 years and the balance is unchanged at +0.74%; the shortfall is paid from the trust fund’s bonds, and reserves dip to 0.88 years of benefits before recovering. The fund ends 2100 at $14.6tn instead of $16.6tn, and debt retirement falls to $5.7tn from $6.6tn. A harsher shock — equities down 60%, revenue down 10% for five years — is also met in full, with the fund ending at $13.5tn and reserves dipping to 0.52 years. The bound is stated so the claim is not open-ended: a revenue fall above about 15% sustained for five years would exceed the surplus and reach benefits, which the stress test does not model. Earlier versions applied the stress to the surplus rather than to revenue, about a sixth of the base; the figures here are on revenue, as described.
What carries the early decades is not the fund, which is small before 2060. It is the trust fund’s bonds, held as the reserve, and the fact that seventeen bases do not fall together: inheritance does not drop in a recession, net rent barely moves, and foreign holders of US-source income follow a different cycle. Under current law Social Security rides one highly cyclical stream.
The balance before the Senior Income Supplement is charged is +2.56%. That figure is not quoted on its own anywhere in these materials, because it is gross of a commitment the proposal itself makes.
Every printed figure traces to a named cell in the model, and the model’s Reconciliation tab ties each one back to its source. The documents below set out the method, the assumptions and all seventeen revenue sources in full.