New legislation would extend the solvency of Social Security and Medicare by at least 75 years by eliminating the cap on Social Security payroll taxes and increasing the net investment income tax, which supports Medicare, by 1.2% (to 5%) for taxpayers earning over $400,000 a year.
The bill, the Medicare & Social Security Fair Share Act, is sponsored by Sen. Sheldon Whitehouse, D-R.I., and Rep. Brendan Boyle, D-Pa.
As summarized by the National Committee to Preserve Social Security and Medicare in a letter of support to the lawmakers, the bill "strengthens Social Security’s financial foundations by increasing revenue dedicated to support the program through an extension of the payroll tax to the wages and unearned income of taxpayers in excess of $400,000.
"Over time, the provision establishing a new wage threshold for payroll taxes would completely eliminate the cap on Social Security taxes."
Under current law, a 6.2% Social Security payroll tax is withheld from wages up to $176,100, a threshold that is adjusted annually for inflation. The employer pays another 6.2%.
Taxing investment income, according to the lobbying group, "better reflects the evolution of income for our nation’s workforce, as higher-income workers receive increasingly smaller portions of their income from wages."
The bill would "ensure that wealthy owners of pass-through businesses like hedge funds and private equity firms with more than $400,000 in annual income cannot avoid Medicare taxes," according to its sponsors.
Analyses from the Centers for Medicare and Medicaid Services Office of the Actuary and the Social Security Administration’s Office of the Chief Actuary say the legislation would extend benefits by at least 75 years.
Max Richtman, president and CEO of the NCPSSM, called the bill "a bold and forceful step on behalf of seniors and all Americans by strengthening and safeguarding Social Security for future beneficiaries.”
Boyle said in a statement: “Now, with Donald Trump, Elon Musk, and DOGE-fueled billionaires openly attacking these programs, that fight is more urgent than ever. This bill would protect Social Security and Medicare for generations by making the wealthiest Americans pay what they owe. While Republicans are pushing a $7 trillion tax giveaway to the ultra-rich, we’re working to protect the benefits that millions of Americans have earned—and we won’t let them be stolen to fund another billionaire windfall."
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