The problem I have with means-testing is the same problem that both you and I have with the cap on earnings. Social security is supposed to be equitable. You pay in money to the system, and draw out upon retirement.
Because it really is a tax-financed government safety net program. Some people can't possibly pay in the same amount they'll take out. (The example I mentioned earlier of someone who only worked a relatively short time, then got permanently disabled and will collect SSD all the way until retirement age--and then collect regular SS at that point.) It is not and never was an IRA.
There is and never has been a specific guarantee of how much you'll get back. In fact, it depends primarily on how long you stay alive for most people.
With the cap on earnings: 100% of my smaller income is taxable, while for the wealthy man down the street only has 50% of his income subject to payroll taxes. Why should I pay more of my income when we'll receive the same benefit?
I agree with you on this point. A regressive tax doesn't make sense to me. But I fail to see how that is analogous to means testing. In fact, I think the current means testing we have is also "regressive" in that it punishes lower income people who are actually working for their money and have to be concerned about not making too much lest they lose their SS benefit. For retirees making high incomes from investments, there generally is no need to take a part time job in retirement.
With means-testing, why should the wealthy man and I both have 100% of our income subject to the tax, but my checks are 30-50% larger each month than his? It would seem that if you're going to means-test the program, it would make sense that the wealthy person shouldn't have all his income subject to the tax because it is exactly that income which will prevent him from receiving the same payments as me.
[ETA: The pithier answer to the question: same reason you don't get SSD if you're not disabled.]
Again, we already have means testing, but it's only based on work earnings. If you keep working, and earn enough, you don't get your SS benefit. But if you don't work, and earn 6 figures in investment income, you do. That doesn't make much sense.
The reason payouts aren't "equitable" (in that they go back in exactly the same amounts as money paid in) is that SS isn't an investment. It has to do things investments can't. It already isn't "equitable" in the sense you mean, since there are people who already get more in benefit than they paid in (by living long, or being disabled for a long time).
At any rate, my primary point is that there is not a legal barrier to implementing means testing that takes into account pensions, annuities and all other investment income. No more than there is a barrier to what you suggest, simply raising the age of eligibility for all retirees. Contrary to what some are saying, SS is not a contract or "insurance policy" between the government and individual workers.
I'm OK with almost any of these various means of guaranteeing the long-term solvency of SS (but not Perry's idea--making the tax optional thereby effectively eliminating Social Security). Personally, I don't see any strong arguments against means testing. If we're going to reduce the overall benefits paid, I see no reason to ignore the fact that benefits currently go to some people who don't need it, while any benefit cuts to others could be really traumatic.
(I've only seen two arguments against means testing. One is that since it only makes up some half of the shortfall it's not worth doing. The other is that it will mess with the financial plans of people who don't actually need the benefit for subsistence. That's easily enough addressed by phasing in the changes gradually over a decade or even two. I dismiss a third class of arguments against means testing because they're based on distortions of what SS is.)
