New Social Security 2100 expanded payroll tax bill to come this fall
The bill is expected to extend payroll taxes to high earners and change the way COLAs are calculated.
Rep. John Larson, D-Conn., chairman of the House Ways and Means Social Security Subcommittee, plans to introduce this fall — likely later this month — a revised bill, called Social Security 2100: A Sacred Trust, to increase benefits and extend the program’s solvency.
The bill would impose the payroll tax on wages over $400,000 a year. Full details are not yet available, but the bill also “increases benefits across the board” and is expected to change the way cost-of-living adjustments (COLAs) are calculated, according to the National Committee to Preserve Social Security & Medicare.
Walter Gottlieb, of the National Committee to Preserve Social Security & Medicare, told ThinkAdvisor Wednesday in an email that Larson’s original Social Security 2100 Act “included a 2% benefit boost for all beneficiaries. We would expect a similar provision in Sacred Trust but the details of that are not public yet.”
In commenting on the release Tuesday of the 2021 Social Security Trustees Report, Larson said that Social Security is expected to pay a COLA at the end of this year “that is significantly higher than in recent years, largely because of the pandemic.
“While it’s welcome, it is not a benefit increase,” Larson said. “It reflects inflation and keeps purchasing power steady for Social Security beneficiaries. It will be absorbed by Medicare premiums and the increase in costs for food, housing and prescription drugs.”
That’s why Larson says he’s working with President Joe Biden to pass Social Security 2100: A Sacred Trust.
“The Trustees Report confirms that Social Security’s financing is strong in the near term yet underscores why it is so important that Congress take action now to prevent 22% in cuts across the board on all benefits in 2034,” Larson said. “With the loss of traditional pensions, rising health care costs, and many people unable to save enough for retirement, there is a growing retirement crisis — 65 million Americans currently rely on Social Security benefits, yet millions are suffering and can’t make ends meet.”
The Trustees Report says that the trust fund that pays benefits to retirees is on track to go bust by 2033.
The report also shows “that this year the cost of paying out benefits will exceed the income from the Federal Insurance Contribution Act (FICA) payments,” Larson said.
As the National Committee to Preserve Social Security & Medicare explained recently, Larson’s bill would pay for enhancements to Social Security by imposing payroll taxes on the highest earners.
Social Security contributions are currently capped at $142,800 in annual wages, the committee explained. “The new bill would reimpose the payroll tax after $400,000 in wages, bringing the program much-needed revenue — and honoring President Biden’s pledge not to raise taxes on anyone earning under $400,000 a year.”
Larson’s bill also would prevent unnecessary field office closures and require the agency to mail annual statements to all workers 25 and older.
The Committee says Larson’s bill:
- Increases benefits across the board for all Social Security beneficiaries;
- Improves the cost-of-living adjustment (COLA), so it reflects the inflation actually experienced by seniors;
- Ensures no one retires into poverty after a full career of work by improving benefits for long-serving, low-wage workers;
- Improves benefits for widows and widowers from two-income households; and
- Restores student benefits up to age 22 for the dependent children of disabled, deceased or retired workers.
“These are long-awaited improvements that Social Security beneficiaries need after years of flat incomes and rising living expenses,” the Committee said.
In the 116th Congress, Larson introduced the Social Security 2100 Act, which would extend the life of the program’s trust fund for most of the rest of this century, Max Richtman, president and CEO of the National Committee to Preserve Social Security & Medicare, explained in an April commentary for ThinkAdvisor.
“However, rather than cutting benefits, Larson wants to expand them, partly by asking the wealthy to begin contributing their fair share of Social Security payroll taxes,” Richtman said.
Larson is currently seeking co-sponsors in the House for his revised bill. The previous legislation, the Social Security 2100 Act, had 208 co-sponsors.
Larson may introduce his revised bill in September, after the House returns from summer recess. However, introduction may get pushed back due to budget reconciliation and debt limit negotiations this month.
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