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August 04, 2023 at 03:19 PM
What You Need to Know
- The latest version of Rep. John Larson's bill takes a new tack on calculating Social Security COLAs.
- The bill would extend Social Security's solvency by about 32 years, according to SSA's chief actuary.
- The bill, supported by Social Security advocacy groups, faces an uphill battle in the House.
Rep. John Larson, D-Conn., has revived the bill previously known as Social Security 2100: A Sacred Trust, with a tweak to the cost-of-living adjustment intended to provide a bigger inflation buffer.
The legislation, reintroduced July 12, applies the payroll tax to annual wages above $400,000 and expands the net investment income tax.
This year’s version of H.R. 4853, the Social Security 2100 Act, takes a new tack on calculating Social Security COLAs, Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League, explained.
Previous versions of Larson’s bill tied the annual COLA to the Consumer Price Index for the Elderly (CPI-E).
“Concerns were raised in 2021 and 2022 however, when the price of oil-based products shot up to record levels,” Johnson said in an email message Friday. “That drove the CPI-W to levels that were higher than the CPI-E, and paid a higher COLA than the CPI-E would have. That quite rightly gave many a pause to rethink the idea.”
This new version of the Social Security 2100 Act resolves that issue by stipulating “the higher of either the CPI-E or the CPI-W,” Johnson said.
The Senior Citizens League, Johnson said, “strongly supports this legislation since it would redesign Social Security benefits to provide more adequate income from Social Security while extending the solvency of the program by about 32 years,” according to the Social Security Office of the Chief Actuary.
Other Social Security advocacy groups applauded the bill’s reintroduction.
“The version of Social Security 2100 that was introduced in the last Congress was excellent and this one is even better,” agreed Nancy Altman, president of Social Security Works, in another email. “It brings in considerably more revenue, while continuing to propose both across-the-board and important targeted increases.”
The new bill “brings in investment income, as well as wage income,” Altman explained, as set out in the new Section 203, which is described by the SSA chief actuary as: applying “a separate 12.4-percent tax on net investment income (NII), as defined in the Affordable Care Act (ACA), payable to the OASI and DI Trust Funds with an unindexed threshold of $400,000, effective 2025 and later.”
