A lawmaker warns that Trump's proposal to eliminate taxes on Social Security income could have dire consequences for benefits.

• The Social Security program is facing imminent fund depletion dates as it celebrates its 89th anniversary.
• Proposed tax changes by lawmakers involve either removing taxes on benefits or increasing the contribution of the wealthy to the program.
• Here's what those changes would mean for benefits.

Donald Trump, the previous president, has proposed a daring plan for Social Security: eliminating taxes on benefit payments.

Trump argued on Truth Social on July 31 and in an Aug. 7 Fox & Friends interview that seniors should not be required to pay taxes on their Social Security benefits.

Rep. John Larson, D-Conn., stated in an exclusive interview with bizfocushub.com that while Trump's plan would allow beneficiaries to keep more of their monthly checks, it contains a "fatal mistake" because it does not compensate for the lost revenue.

In 2025, the Social Security cost-of-living adjustment may be 2.6%. The backlog of Social Security claims has resulted in $1.1 billion in improper payments. Retirement "super savers" typically have the largest 401(k) balances.

"Larson, the ranking member of the House Ways and Means subcommittee on Social Security, stated that the proposed tax break would lead to cutting the Social Security trust fund, even though he did not specify how he would pay for it."

Voters say Social Security is a 'top' election issue

On Wednesday, the Social Security program marked its 89th anniversary since President Franklin D. Roosevelt signed it into law.

If Congress does not act, beneficiaries of the program may face a 17% benefit cut in 2035 when its combined trust funds are projected to run dry.

In 2033, the program's trust fund that provides retirement benefits will be depleted, potentially resulting in a 21% reduction in benefits.

The CNBC poll reveals that Social Security's future is a "very important" issue for voters when selecting presidential candidates in the November election.

According to Social Security Commissioner Martin O'Malley, who spoke on CNBC "Squawk Box" on Wednesday, there is a willingness among people on both sides of the aisle in Congress to investigate and continue the program for many years to come, based on his conversations with numerous individuals.

Social Security fixes likely to include tax changes

The You Earned It, You Keep It Act, a Democratic bill introduced in January in the House of Representatives, also proposes eliminating taxes on Social Security benefits, like Trump has suggested.

The Senior Citizens League, a non-partisan senior group, recently estimated that if the bill were enacted, it would save the typical senior household approximately $560 per year.

The Committee for a Responsible Federal Budget found that Trump's plan would increase federal deficits by $1.6 trillion to $1.8 trillion through 2035, and also increase Social Security's 75-year shortfall by 25%.

A Trump campaign spokesman did not return a request for comment by CNBC.

Larson is now promoting a comprehensive reform plan - the Social Security 2100 Act - which aims to enhance benefits and finance the changes through increased taxes on the wealthy.

The bill would feature a 2% uniform increase in benefits, along with additional increases for low-income seniors, widows and widowers, and students. Additionally, the proposal would abolish the Windfall Elimination Provision and Government Pension Offset, which currently reduce benefits for public servants.

The bill proposes raising the Social Security payroll tax thresholds for wealthy earners, with earnings up to $168,600 subject to the levies in 2024. Additionally, the bill suggests reapplying the tax on earnings over $400,000 and applying a higher net investment income tax rate for those higher earners.

Last year, the Social Security Office of the Chief Actuary estimated that the bill's provisions could help the program pay full benefits for an additional 32 years.

The Social Security 2100 bill has been reintroduced in Congress by Larson, who plans to do so again in the next session.

Larson hopes for the support of two other prominent Democrats, Kamala Harris and Tim Walz, who currently have 188 co-sponsors.

As senator, Harris supported a bill that aimed to increase benefits while raising taxes on the wealthy. As vice president, the White House administration advocated for expanding Social Security and taxing the wealthy.

As a congressman representing Minnesota, Walz was an original co-sponsor of Social Security 2100. As governor of Minnesota, he increased the state tax exemption for Social Security benefits.

The Harris-Walz campaign did not return a request for comment from CNBC.

Larson hopes to convince Republicans to support his Social Security proposal, which includes lowering the retirement age.

"Larson stated, "We're going to lift the cap on people earning over $400,000, and the other side says, 'Here you go again. It's tax the wealthy,'" but Larson countered, "No, it's have them pay their fair share.""

In congressional hearings, Republicans have raised concerns about the costs of reforming Social Security and suggested that restoring its solvency may require a compromise involving tax increases and benefit cuts.

During an April Ways and Means Social Security subcommittee hearing, Rep. Jodey Arrington, R-Texas, praised Larson for his enthusiasm and for submitting a plan.

Despite my disagreement, even if it's extreme, with his approach to resolving the issue, we must come together and hold hands as we take a leap of faith off the cliff of those who criticize us and work towards reforming the program, as Arrington stated.

Larson hopes to see progress on Social Security in the next Congress or in the coming lame duck session, despite critics questioning whether lawmakers will bring the bill forward for a vote.