Democratic Reps. John Larson (Conn.), Conor Lamb (Pa.) and Jahana Hayes (Conn.) are introducing the Social Security 2100 Act on Wednesday, legislation that would expand Social Security benefits across the board and prolong the program’s solvency for the next 75 years and beyond. The legislation finances a more generous benefit and cost-of-living adjustment formula, a reduction in income taxes on benefits and the closure of Social Security’s long-term funding gap by lifting the cap on income subject to payroll taxes and raising those tax rates...
To finance the ambitious legislation, Larson would subject earnings of $400,000 or more to the Social Security payroll tax.
Currently, Americans pay Social Security taxes only on the first $132,900 that they earn based on a cap that rises with average wage growth. The new legislation would leave income between $132,900 and $400,000 untaxed. Over time, the present-day cap would rise to $400,000, at which point all earnings would be subject to the tax.
Larson’s legislation would also raise the payroll tax by 1.2 percentage points on both employees and employers, phasing in the change over 24 years.
At the same time, the bill cuts income taxes on Social Security benefits for those who receive them by raising the income threshold at which they would be taxed. Under the legislation, 12 million beneficiaries ― out of nearly 63 million total ― would receive a tax cut, according to Larson.
