Strengthen Social Security, Increase Benefits, Cut Taxes for Seniors

[Helena]

.

Bill was introduced in House yesterday. It will likely pass the House... but unfortunately, may die in the Senate.


"Social Security 2100 Act will Strengthen Social Security, Increase Benefits, Cut Taxes for Seniors "


January 30, 2019

Press Release

" Social Security 2100 Act will Strengthen Social Security, Increase Benefits, Cut Taxes for Seniors

Washington, D.C. – Today, John B. Larson (CT-01), Chairman of the Ways & Means Social Security Subcommittee, introduced the “Social Security 2100 Act,” H.R. 860, a bill that increases Social Security’s vital benefits while making the system financially strong throughout the 21st century.

“Today, over 200 Members of Congress came together on the anniversary of President Franklin Delano Roosevelt’s birth to honor his legacy, and to enhance and expand the nation’s most successful insurance program, Social Security, which touches the lives of every American. With 10,000 baby boomers becoming eligible for Social Security every day, the time to act is now. The Social Security 2100 Act will provide economic security not just for today’s seniors but for future generations too."


More info at links below.

https://larson.house.gov/media-cent...s-congress-introduce-landmark-social-security

https://larson.house.gov/social-security-2100

.

 

[braumeister]

And the funding for this would come from ... ?

 

[Exrook]

When I post a link, I try to summarize the content to help others decide whether it is worth the time.


To answer the question:

• Have millionaires and billionaires pay the same rate as everyone else – Presently, payroll taxes are not collected on wages over $132,900. This legislation would apply the payroll tax to wages above $400,000. This provision would only affect the top 0.4% of wage earners. [Sec. 201, 202]

• 50 cents per week to keep the system solvent – Gradually phase in an increase in the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4% instead of 6.2% today. For the average worker this would mean paying an additional 50 cents per week every year to keep the system solvent. [Sec. 203]

 

[Popeye]

From a fact sheet on the bill, here’s the strengthen part.

The Social Security 2100 Act Strengthens the Trust Fund

Have millionaires and billionaires pay the same rate as everyone else – Presently, payroll taxes are not collected on wages over $132,900. This legislation would apply the payroll tax to wages above $400,000. This provision would only affect the top 0.4% of wage earners. [Sec. 201, 202]

50 cents per week to keep the system solvent – Gradually phase in an increase in the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4% instead of 6.2% today. For the average worker this would mean paying an additional 50 cents per week every year to keep the system solvent. [Sec. 203]

Social Security Trust Fund Established – Social Security provides all-in-one retirement, survivor, and disability benefits funded through the dedicated FICA contribution paid by workers. There are technically two trust funds, Old-Age and Survivors (OASI) and Disability Insurance (DI), and that are usually referred to as the Social Security Trust Fund. This provision combines the OASI & DI trust funds into one Social Security Trust Fund, to ensure that all benefits will be paid. [Sec. 204]

Based on the independent analysis of the SS 2100 Act by SSA’s Chief Actuary that estimates it will keep the OASDI Trust Fund solvent beyond 2092.

 

[Lakewood90712]

Medicare funding is the Elephant in the room right now. I do mean now.

Hey, why doesn't this thread have the hot button topic warning ? Mod's are going to have to keep a leash on it or it may get closed.

 

[USGrant1962]

I tried to enter this scenario into my fave SS-fix calculator at The Reformer: An Interactive Tool to Fix Social Security but that website seems to be broken. Is it working for anyone else?

 

[aaronc879]

The proposals seems reasonable to me. Instead of increasing the level where SS starts getting taxed from $25K/yr to $50K/yr for single people I would maybe increase it less and index it to inflation. If there was pushback against the bill and something had to be tweaked I think this is the best option but otherwise it's good as is.

 

[CardsFan]

.

Bill was introduced in House yesterday. It will likely pass the House... but unfortunately, may die in the Senate.

.

IMHO, No bill of this importance, proposed by only one side, SHOULD pass without review and change. Not to say that hasn't happened in the past 8 years.

That said, a quick review says to me it is a good starting point. Now lets see what happens.

 

[Helena]

.

I especially like the part of the bill that gives a tax cut for millions of seniors by increasing the income thresholds for taxing Social Security. Those income thresholds were never indexed for inflation since the 1984 law to tax Social Security income. And now, due to decades of inflation, even lower income seniors have to pay taxes on their Social Security income.

Pity this wasn't addressed in last year's tax reform bill/law.

.

 

[USGrant1962]

Increasing SS tax from 6.2% to 7.4% is not 50 cents a week - not even close. Average U.S. wage is ~$48,000/yr. 1.2% of that is $576, or $11/week. It is still $7.25 if you want to use median wage of ~$32,000/yr. And both are times two of course for the employers share.

Makes me wonder what other math they got wrong.

 

[marko]

Have millionaires and billionaires pay the same rate as everyone else – Presently, payroll taxes are not collected on wages over $132,900. This legislation would apply the payroll tax to wages above $400,000. This provision would only affect the top 0.4% of wage earners. [Sec. 201, 202][/I]

"Millionaires and billionaires" seem to be the ATM of the hour but I wonder how many millionaires and billionaires actually pay payroll tax vs interest, dividends and cap gains. Right now, this millionaire hasn't paid payroll tax in 14 years.

Is .04% enough to cover? I was once in the $400K pay realm and never understood or agreed with the SS cap but I'm not sure there's enough out there to make the plan work.

 

[Lakewood90712]

The best thing that could happen is doing nothing, and hitting the wall with an approx 25 % benefit reduction thereafter.

Only then will the pay as you go system , as it was originally established , work properly.

Raising taxes to build up temporary cushions is the problem, not the solution.

We have been thru this ( raising taxes for SS ) before and it never results in a permanent fix.

 

[JDARNELL]

I don’t see the bill going anywhere out of the house. Nothing will get done until the last minute as always.

 

[Helena]

Increasing SS tax from 6.2% to 7.4% is not 50 cents a week - not even close. Average U.S. wage is ~$48,000/yr. 1.2% of that is $576, or $11/week. It is still $7.25 if you want to use median wage of ~$32,000/yr. And both are times two of course for the employers share.

Makes me wonder what other math they got wrong.

In the bill that increase is incremental over decades.

" * 50 cents per week to keep the system solvent – Gradually phase in an increase in the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4% instead of 6.2% today. For the average worker this would mean paying an additional 50 cents per week every year to keep the system solvent. [Sec. 203]"

.

 

[MichaelB]

Multiple posts that are off-topic and contentious in nature were removed. This is a relevant subject that does effect us, so it's in everyone's best interest to stay on the topic and steer away from the divisive sociopolitical commentary

The interesting discussion here is not "will it pass" but "how does it affect us?"

 

[ckelly78z]

Increasing SS tax from 6.2% to 7.4% is not 50 cents a week - not even close. Average U.S. wage is ~$48,000/yr. 1.2% of that is $576, or $11/week. It is still $7.25 if you want to use median wage of ~$32,000/yr. And both are times two of course for the employers share.

Makes me wonder what other math they got wrong.

I'm sure telling most Americans that it will only be .50 cents per week is a marketing move, that borders on downright lying, but most Americans wouldn't actually do the math to discover that it's wrong.

 

[Spock]

Not sure I like the "merge retirement and disability funds into one" bit... granular accounting is always better since it seems disability is where more of the fraud happens as its harder to fake your age and reported income to increase benefits. Since I would draw from the retirement end I don't think keeping it afloat should have to drag the disability anchor. Retirement is almost pure age demographics where disability is not.

 

[USGrant1962]

In the bill that increase is incremental over decades.

" * 50 cents per week to keep the system solvent – Gradually phase in an increase in the contribution rate beginning in 2020 so that by 2043, workers and employers would pay 7.4% instead of 6.2% today. For the average worker this would mean paying an additional 50 cents per week every year to keep the system solvent. [Sec. 203]"

.

Oh, I see what they did there. IMO, that is highly misleading. They mean 23 years x 50 cents increase every year = $11.50/week when phased in. That is a 19.35% increase in SS taxes and about $1,200/year between you and your employer - no small sum.

Most people reading that are going to think "it's only 50 cents", which is what the politicians want the people to think.

Anyway, here's the SS Actuary's report on the bill with all the numbers: https://www.ssa.gov/OACT/solvency/LarsonBlumenthalVanHollen_20190130.pdf

I think the bill is a good starting point for discussion, though for better or worse it will likely be a very long discussion.

 

[target2019]

Multiple posts that are off-topic and contentious in nature were removed. This is a relevant subject that does effect us, so it's in everyone's best interest to stay on the topic and steer away from the divisive sociopolitical commentary

The interesting discussion here is not "will it pass" but "how does it affect us?"

Any tax increase by this would be mild, for us. The benefit would be no longer thinking about a payout cut down the road.

 

[Mdlerth]

Much ado about

Meh.

I won't have SS-taxable earnings for much longer, so increasing it from 6.2 to 7.4% won't affect me. Ditto for boosting the cap.

If I live to 70 and start collecting, I anticipate that I'll have sufficient income from all sources that my SS benefit will continue to be taxable, so it won't affect me then either.

Suppose this tax hike passes and miraculously forestalls the haircut in 2034? You mean I won't face a ~25% reduction in some fraction of my retirement cash flow? Hardly earth-shattering whether it happens or not.

Of course, the original SS tax rate was 1%. Eight decades of boosting rates didn't make it solvent, but this one will? Call me skeptical.

 

[Lakewood90712]

SS was created as a safety net , not a retirement plan. Deviation from that has created this intractable situation. The baby boom population bubble will just about all be beneficiaries by the time the system has no surplus.

Now is the time to do nothing. Yes, doing nothing is better than continuing to monkey with the system. Put me in the nut job category if you don't agree, I'm sticking to my position.

It will not go bankrupt, but just revert to real sustainability.

The working poor do not have a nickel to fund an IRA, i understand, and likely will work until disability or death. I spent over a decade in municipal gov. , often knee deep in very low income neighborhoods. SS cant fix this.

SS just is not a full retirement plan

Off my soapbox for today.

 

[Beststash]

As a elderly person, SS recipient, and retiree - I like the idea. I also think it is time to stabilize SS for those that follow in our footsteps. Most of the increases will be put back into the economy unlike tax cuts and those at the bottom of the economic scale would greatly benefit. I think this would get great support from the elderly (and the numbers are growing) and it would stabilize the social safety net till at least the turn of the century. I also think the way of calculating COLA should be revisited. In today's world "trillions" seems to the be norm where in my youth "millions" was the standard monetary benchmark. I don't think SS has kept up with the economics of today.

 

[gwraigty]

As a 55 yr. old SAHM/SAHW, I like some parts of this, but not other parts. I believe that SS benefits should not be taxable at all. Since that's not going to happen, I'm glad they're raising the amounts that trigger taxation. I'm in favor of raising the minimum SS benefits for the poorest recipients.

I don't like the idea of taxing current workers more to pay for immediate raises for all current SS recipients.

No offense meant, but it's easy to be in favor of something and put a positive spin on it when you stand to benefit without having to pay the higher taxes. People my age have already had FICA taxes raised. It didn't solve the problem, did it?

 

[ncbill]

Sort of scary that SS is in such bad shape that not only does it need to remove the cap but also phase in a 20% increase in actual taxes paid.

 

[Chuckanut]

.

I especially like the part of the bill that gives a tax cut for millions of seniors by increasing the income thresholds for taxing Social Security. Those income thresholds were never indexed for inflation since the 1984 law to tax Social Security income. And now, due to decades of inflation, even lower income seniors have to pay taxes on their Social Security income.

Pity this wasn't addressed in last year's tax reform bill/law.

.

I completely agree.