Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., introduced a new bill on Thursday that aims to extend Social Security’s solvency for 75 years by raising taxes on the wealthy, while in some ways making benefits more generous.
The proposal, called the Social Security Expansion Act, would expand benefits for current and new beneficiaries by $200 per month, or $2,400 per year, and would make the monthly checks more generous in other ways.
To do that, and improve the program’s solvency at the same time, the plan also calls for raising taxes on high-earning households.
Sanders and Warren, who are co-chairs of the Expand Social Security Caucus, were joined by Democrats including Sens. Cory Booker of New Jersey, Kirsten Gillibrand of New York, Jeff Merkley of Oregon, Alex Padilla of California, Chris Van Hollen of Maryland and Sheldon Whitehouse of Rhode Island, along with Rep. Peter DeFazio, a Democrat representing Oregon.
More from Personal Finance:
Social Security cost-of-living adjustment in 2023 may be a record
Supplemental Security Income bill may be step toward broader reform
Here are the changes Americans are willing to make to fix Social Security
In 2022, payroll taxes are applied to income up to $147,000. The bill calls for lifting that cap and applying the Social Security payroll tax to all income of more than $250,000.
Social Security payroll taxes are applied at a rate of 6.2% for both the employer and employee, for a total of 12.4%, which is deducted from pay checks.
The bill calls for having the wealthy pay more through a 12.4% tax on investment and business income, increasing the net investment income tax by 12.4% and also applying the levies to certain businesses that are not currently subject to payroll taxes.
“Today, absurdly and unfairly, there is a cap on income subject to Social Security taxes,” Sanders said in prepared remarks during a Thursday Senate hearing.
Under today’s terms, a worker earning $147,000 pays 6.2% of their income to Social Security payroll taxes. But if instead they earn $1.47 million, they pay just 0.6% of their income to Social Security, Sanders said.
“That may make sense to somebody,” Sanders said. “It doesn’t make sense to me.”
Under the terms of the bill, more than 93% of households would not see their taxes go up.
At the same time, it would extend the program’s solvency past 2096.
New projections from the Social Security trustees show the program’s combined funds will only be able to pay full benefits until 2035, at which point 80% of benefits will be payable.
Raising taxes on the wealthy in order to shore up the program is popular among voters, according to a survey released this week by the University of Maryland’s Program for Public Consultation.
This is a breaking news story. Please check back for updates.