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February 16, 2023 at 02:53 PM
What You Need to Know
- The Social Security Expansion Act would fund the increase with a 12.4% investment tax on high earners and expand the payroll tax.
- The bill would keep Social Security solvent for the next 75 years.
- A Social Security advocacy group suggests high earners should get increased benefits in exchange for tax hikes.
Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., have introduced legislation to increase Social Security benefits by $2,400 a year and adopt the Consumer Price Index for the Elderly (CPI-E) to determine cost-of-living adjustments for Social Security beneficiaries.
The bill, H.R. 1046, the Social Security Expansion Act — co-sponsored by Reps. Jan Schakowsky, D-Ill., and Val Hoyle, D-Ore. — “strengthens Social Security’s financial foundations by increasing revenue dedicated to support the program,” Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, told Sanders in a letter.
“First, it extends the payroll tax to all wages paid to workers that are in excess of $250,000,” Richman said. “Over time, this provision would completely eliminate the cap on Social Security taxes.”
The bill would also impose a 12.4% tax on investment income for individuals earning more than $200,000 and couples earning more than $250,000. This is in addition to the 3.8% net investment income tax they pay under the Affordable Care Act.
While the advocacy group supports these positions, it believes “providing additional Social Security benefits for the enhanced contributions [of high earners] would better preserve the earned nature of the Social Security program,” according to the letter.
The Social Security Administration conducted an analysis of the bill, in which Chief Actuary Stephen Goss said enactment “would extend the ability of the OASDI program to pay scheduled benefits in full and on time” for the next 75 years.
