Legislation that would dramatically increase Social Security taxes and benefits has been introduced in the House and Senate.
Chairman of the House Ways and Means Social Security Subcommittee John Larson (D-CT) has introduced H.R. 860, the Social Security 2100 Act. Under the legislation the Social Security tax rate for both the employer and the employee would gradually increase beginning in 2020 through 2043 from 6.2 percent to 7.4 percent.
The bill would also impose new payroll taxes. Today wages over $132,900 per year are not subject to payroll taxes. H.R. 860 would continue to impose payroll taxes on wages up to $132,900 but would also then start imposing payroll taxes again on all wages above $400,000.
The increased payroll taxes are meant to address the solvency of the Social Security “Trust Fund” for the next 75 years and to provide increased benefits.
H.R. 860 would increase Social Security benefits for all recipients by an amount equal to 2 percent of the average benefit, increase the annual cost of living adjustment formula, establish a new minimum benefit which would be 25 percent above the poverty line, and tax Social Security benefits if non-Social Security benefits exceed $50,000 per year for individuals or $100,000 for couples.
Senator Bernie Sanders (I-VT) introduced similar legislation, S. 478, the Social Security Expansion Act, in the Senate.
S. 478 would create new payroll taxes on all wages above $250,000 per year rather than $400,000 as the House bill would.
The Senate bill would also increase benefits for low-income workers by approximately $1,300 per year and provide benefits to full-time students under 23 who are children of disabled or deceased parents.
No action has taken place on either bill. It is possible that the H.R. 860 may be approved by the Democrat-controlled House, but neither bill is unlikely to be considered in the Republican-controlled Senate.