New legislation would expand Social Security benefits by $2,400 a year and ensure Social Security is fully funded for the next 75 years by applying the Social Security payroll tax on all income above $250,000.
The bill, the Social Security Expansion Act, was introduced by Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., along with Reps. Val Hoyle, D-Ore. and Jan Schakowsky, D-Ill.
The legislation adopts the Consumer Price Index for the Elderly, or CPI-E, for benefit increases, and subjects all income above $250,000 — including capital gains — to the Social Security payroll tax.
The Social Security Administration analyzed the bill at the request of Sanders in 2023.
The bill would more accurately measure the spending patterns for seniors by adopting the CPI-E to calculate cost-of-living adjustments, according to the bill's fact sheet. But a look at previous COLAs shows that the senior-focused index would not always have resulted in higher benefits than the current formula, which uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
As the fact sheet explains, the bill would increase the net investment income tax by 12.4% and apply it to certain business income not already covered by payroll taxes. The NII currently applies to the investment income of individuals earning more than $200,000 and couples earning more than $250,000.
"While the average Social Security benefit is only $1,838 a month, nearly 40% of seniors rely on Social Security for a majority of their income; one in seven rely on it for more than 90% of their income; and nearly half of Americans aged 65 and 74 have no retirement savings at all," the lawmakers said in a statement.
"By requiring millionaires and billionaires to finally pay their fair share into the program, the Social Security Expansion Act would ensure the fund’s solvency to the end of the century, help low-income workers stay out of poverty by improving the Special Minimum Benefit, restore student benefits up to age 22 for children of disabled or deceased workers, strengthen benefits for senior citizens and people with disabilities, increase Cost-Of-Living-Adjustments (COLAs) and expand program benefits across-the-board," the lawmakers added.
Twenty-five groups have endorsed the bill, including Social Security Works, MoveOn, the National Committee to Preserve Social Security and Medicare, the Strengthen Social Security Coalition and the American Federation of Teachers.
"At a time when President Trump and Elon Musk are doing everything they can to disrupt the Social Security program," the bill "offers a positive path forward," said Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare, in a statement shared with ThinkAdvisor Monday.
The committee strongly prefer the bill's "approach to the wrecking ball tactics of Trump and Musk — and the proposals Republicans in Congress have floated to cut benefits by raising the retirement age and other means. Seniors should not bear the burden of strengthening Social Security. As we speak, millionaires are done contributing to Social Security for the year, while everyone else continues to pay into the system until December 31," Richtman said. "That is grossly unfair."
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