Warren's proposal includes a provision to create a new Social Security credit for those who leave the work force to care for family members—a disproportionate number of whom are women. (Photo: Diego M. Radzinschi/THE NATIONAL LAW JOURNAL)
Senator Elizabeth Warren, D-MA, has a plan for Social Security. And while retirees will love it; the wealthy, not so much. The New York Times reports that Warren's plan to boost Social Security benefits by $200 a month would be financed by an increase in taxes on the wealthy—specifically, the very rich, who would end up paying more in Social Security taxes than they would eventually reap in benefits.
Democrats in the House are already considering a bill to boost Social Security benefits that would be funded by raising taxes on middle- and high-income workers—a long way from the party's former attitude of simply protecting the program or slowing the pace of benefits increases.
One Obama-era proposal to do the latter, in an attempt to gain Republican support on a budget agreement, would have switched the cost-of-living index used to determine benefits increases to the so-called "chained Consumer Price Index," which would leave seniors struggling to keep up with costs already rising faster than their benefits.
But Warren goes much further, by proposing to boost the average Social Security benefit of $16,248 by $2,400 a year.
In addition, her plan would change the way cost-of-living increases are calculated so that benefits would rise more quickly, not less. And to do all this, she "would impose a new 14.8 percent payroll tax on individuals who earn more than $250,000 a year, to be split by workers and their employers, and a 14.8 percent tax on investment income that would apply to the top 2 percent of earners," says the report.
Women would benefit from her plan as well, since it includes a provision to create a new Social Security credit for those who leave the work force to care for family members—a disproportionate number of whom are women. Warren has said in the report that it would make the program fairer for women.
In addition, her campaign cited a Moody's Analytics study in its estimate that her plan would cut the federal budget deficit by $1.1 trillion over 10 years, thanks to a $4.2 trillion tax increase over the same period.
While candidate Trump had promised to "protect" Social Security, his March budget proposal instead "called for a $26 billion reduction in spending on Social Security programs, including a $10 billion cut to the Social Security Disability Insurance program, which provides benefits to disabled workers." The Trump administration has severely criticized her plan.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
