Bill to change Social Security COLA, expand payroll tax coming Wednesday

House Ways and Means Social Security Subcommittee Chairman John Larson, D-Conn., plans to introduce Wednesday a new bill called Social Security 2100: A Sacred Trust. The bill adopts the Consumer Price Index for the Elderly as the basis of the annual cost-of-living adjustment (COLA), applies the payroll tax to wages above $400,000, and combines the Old-Age and Survivors and Disability Insurance trust funds.

According to the bill’s fact sheet, adopting a CPI-E formula “will help seniors who spend a greater portion of their income on health care and other necessities. Improved inflation protection will especially help older retirees and widows who are more likely to rely on Social Security benefits as they age.”

The bill also includes a benefit bump for current and new beneficiaries — equivalent to about 2% of the average benefit, the fact sheet explains.

Larson’s bill would require millionaires and billionaires to “pay the same rate as everyone else,” the fact-sheet states. “Presently, payroll taxes are not collected on wages over $142,800.” The bill would apply the payroll tax to wages above $400,000 and “would only affect the top 0.4% of wage earners.”

Larson said Wednesday that while the Social Security cost-of-living adjustment (COLA) for 2022 of 5.9% “is welcome news, it only further underscores the need for Congress to act on Social Security.”

Larson noted in a statement that “it has been more than 50 years since Congress has improved Social Security benefits. Seniors are suffering — five million are living below the poverty line — current Social Security benefits are not enough!”

The bill would also:

• Set a new minimum benefit at 25% above the poverty line and would be tied to wage levels to ensure that the minimum benefit does not fall behind.
• Improve benefits for widows and widowers in two-income households
• End the 5-month waiting period to receive disability benefits.
• Provide caregiver credits to ensure that caregivers are not penalized in retirement for taking time out of the workforce to care for children or other dependents.
• Extend benefits for students through age 22.
• Increase access to benefits for children who live with grandparents or other relatives.
• Extend the depletion date (when a 20% cut to benefits would occur) to 2038, giving Congress more time to ensure long term solvency of the Trust Funds.
• Combine the OASI & DI trust funds into one Social Security Trust Fund, to ensure that all benefits will be paid.