If you want to restore progressivity to the overall tax system you do it by raising top marginal income tax rates and taxing capital gains as regular income. There is absolutely no reason to launder the money through a Social Security system that is scheduled to deliver a $200 billion per year surplus on average for the next ten years.
The payroll tax is only regressive if you regard Social Security as a government program like any other, as if it were in fact a welfare plan that should be funded by wealth transfers. But the fundamental strength of Social Security is that it is worker funded insurance that benefits workers. It draws nothing from capital and so owes nothing to capital, particularly nothing in the form of direct political control. The cap serves as political insulation, it is almost the only thing that prevents Social Security being relegated to the 'spending we cannot afford' category (think SCIPS) as opposed to the 'spending we can't NOT afford (anything military). Leave the cap alone, the cap is our friend. If you really think you have the political strength to simply extract another 6.2% (or 12.4%) from the wealthy then take marginal rates back to 39%, don't tinker with the cap.
If Social Security was actually facing some serious funding crisis we might consider tinkering with the cap. But it isn't. Once you actually put numbers to those dates like 2017 ($30 billion) and examine the growth numbers that produce them (2.2% Real GDP in 2015 - a 33% slowdown from 2006) you realize there is a reason they never talk dollars in articles that talk about Social Security. Instead it is always adjectives like 'looming'. The reason for this are pretty clear, 95% of America has fallen for a deliberate con game. Dean Baker and colleague Mark Weisbrot spotted the con in the 1990s and responded by writing Social Security: the Phony Crisis in 1999. The link is to the introduction in which Dean and Mark describe the situation as follows
We have a chance, said President Clinton, to “fix the roof while the sun is still shining.” He was talking about dealing with Social Security immediately, while the economy is growing and the federal budget is balanced. The audience was a regional conference on Social Security, in Kansas City, Missouri, that the White House had helped bring together.Well the economy actually outperformed 1998 for a number of years and has now and has settled back in a glide path for total solvency.
The roof analogy is illuminating, but we can make it more accurate. Imagine that it’s not going to rain for more than 30 years. And the rain, when it does arrive (and it might not), will be pretty light. And imagine that the average household will have a lot more income for roof repair by the time the rain approaches.
Now add this: most of the people who say they want to fix the roof actually want to knock holes in it.
This is the situation facing Social Security, and it is well known to those who have looked at the numbers. The program will take in enough revenue to keep all of its promises for over 30 years, without any changes at all. Thirty years is a long time—it’s hard to think of any other program that can claim to be secure for that long. Furthermore, the forecast of a shortfall in 2034 is based on the economy limping along at less than a 1.7 percent annual rate of growth—about half the rate of the previous three decades. If the economy were to grow at 1998’s rate, for example, the system would never run short of money.
This is going to sound pretty harsh to a pretty politically sophisticated group, but unless you are familiar with what Baker and Krugman have written on the topic of Social Security your knowledge base is more likely than not to be negative.
Here are some questions for you. In 1997 the Social Security Trustees said the Trust Fund would go to depletion in 2029. In 2007 they now project it to go to depletion in 2041. What are the implications of having a future date recede in time at a rate of more than a year per year? Obviously if Social Security continues to improve at that same rate then we need to do nothing, and certainly not right away. Two what caused the date to move out so steadily in the first place? What is the causal explanation for the trend seen in this table? EPI: Changes in the Trustees Projections over Time Those are the questions we should have been discussing over the last ten years, not listening to the scary stories of people who have always hated Social Security to start with.
Take Dean Baker's advice. Take a look at the numbers for yourselves. You will probably be amazed at what you will find. The Reports are available at http://www.ssa.gov/OACT/TR/index.html or via my website.