The social security system serves as both a safety net for livelihoods and a stabilizer for societal operations. Despite its significance, limited research has investigated how social security taxation influences corporate investment decisions. Leveraging the introduction of social security taxation as an institutional reform context, this study is the first to explore how improved efficiency in social security fee collection and management impacts firms' shift from real to virtual economy. The results indicate that implementing social security taxation significantly curtails this shift. Mechanism analyses reveal that the effect operates through three primary channels: the insurance effect, the collection and management effect, and the governance effect. Heterogeneity analyses show that the inhibitory effect is more pronounced in regions with high government intervention, labor-intensive industries, private enterprises, stringent tax enforcement, and firms with weak internal controls and analyst attention. Further analysis demonstrates that social security taxation promotes industrial investment and improves corporate performance by curbing the shift from real to virtual economy. These findings offer new perspectives on governance strategies to mitigate such shifts and prevent systemic financial risks, while also providing empirical evidence for enhancing reforms in social security fee collection and management.