What You Need to Know
- The bill would apply the payroll tax to earnings over $400,000 and change the way COLAs are calculated.
- A policy group criticized the bill for raising less revenue and increasing benefits more than the 2019 version of the bill.
- The COVID pandemic and inflation have given a new urgency to act on the bill, Larson said.
The House Ways and Means Social Security Subcommittee plans to debate his Social Security 2100: A Sacred Trust bill soon, Rep. John Larson, D-Conn., chairman of the House Ways and Means Social Security Subcommittee, told ThinkAdvisor in a recent email.
The legislation adopts the consumer price index for the elderly as the basis of the annual cost-of-living adjustment (COLA) and applies the payroll tax to annual wages above $400,000.
“We are in the process of working toward markup, which will be held hopefully very soon,” Larson said in the email.
A new report by the Committee for a Responsible Federal Budget criticizes the bill for only keeping Social Security solvent until 2038 — only four years from its current projected depletion date.
The bill is a “substantial downgrade from 2019′s Social Security 2100 Act (SS2100), which we’ve praised as a responsible solution to Social Security’s financial troubles,” according to the policy group.
The previous version of Social Security 2100 would have subjected earnings over $400,000 to the payroll tax while also gradually raising the payroll tax rate from 12.4% to 14.8%, the report states.
A Sacred Trust “removes nearly half of the solvency-improving revenue from the original bill, while dramatically expanding new spending — but making that spending temporary to cover up the costs. Specifically, the new legislation removes adjustments to the payroll tax rate — which were responsible for closing two-thirds of the solvency gap — while adding eight new benefit expansions that would further increase benefits for disabled workers, spouses, young adults, and the very old,” the report said. “To obscure the cost of its benefit expansions, the legislation would set them all to expire after five years.”