It is fortunate for us that U.S. Senators Bernie Sanders, D-VT, and Elizabeth Warren, D-Mass., are persistent advocates. These lawmakers have introduced their latest version of a bill to expand the Social Security program.

By Al Norman 

It is fortunate for us that U.S. Senators Bernie Sanders, D-VT, and Elizabeth Warren, D-Mass., are persistent advocates. These lawmakers have introduced their latest version of a bill to expand the Social Security program. The Social Security Expansion Act (SSEA) repeats some of the provisions of the Social Security 2100 Act.

The SSEA will increase Social Security benefits by $2,400 a year, and extend the solvency of the Social Security Trust Funds for another 75 years. It does so by making wealthy people pay more into the system. This is far different path than that pushed by other lawmakers like Senator Lindsey Graham, R-Fla., who has suggested cutting Social Security, or just privatizing it altogether.

For decades, elder rights groups have complained about the “cap” on wage earnings subject to the Social Security payroll tax (known as FICA). The wage cap currently is $147,000 a year. The SSEA would lift the cap on earnings subject to the Social Security to $250,000. All wage income up to that higher cap would be subject to the FICA payroll tax.

During a recent Senate hearing on this legislation, Senator Sanders said: “Currently, a worker earning $147,000 pays 6.2 percent of their income to Social Security payroll taxes. But if instead they earn $1.47 million, they pay just 0.6 percent of their income to Social Security. That may make sense to somebody. It doesn’t make sense to me.”

The SSEA will also raise the annual Cost of Living Adjustment (COLA) for Social Security checks from the current “Consumer Price Index for Urban Wage Earners” (CPI-W), to a higher index called the “Consumer Price Index for the Elderly” (CPI-E). This higher index is more appropriate for the elderly because it focuses on the cost of items like health care and prescriptions.

The SSEA would also apply the payroll tax to income sources beyond just wages. People would have to pay the FICA tax on investments and business income. Wage workers pay 6.2 percent of their salary into Social Security, with 6.2 percent matched by their employer. (Medicare adds another 1.4 percent for the employee and the employer.) The SSEA broadens the countable income beyond wages, to include business income and investments. The legislation also raises the “Special Minimum Benefit” for low-income workers, and indexes it at 125 percent of the poverty line, which is currently $16,988 for a single worker with a full working career.

The Sanders-Warren bill also restores student benefits for children of disabled or deceased workers, increasing the age limit from 18 to 22, for students who are enrolled in college or vocational school full-time. Congress ended these benefits in 1983. The legislation also combines the Disability Insurance Trust Fund with the Old Age and Survivors Trust Fund, to make them both more secure for beneficiaries.

Critics of the SSEA don’t complain that the bill secures solvency for the Social Security Trust Fund — but they don’t like increasing taxes on wealthy individuals. Billionaires are fighting other tax proposals at the federal and state level.

All this legislation targeting the rich has been proposed for the same reason Willie Sutton robbed banks: “Because that’s where the money is.” (Sutton claims he never said that.) Social Security was sold 87 years ago on the premise that what you received in benefits would be based on what you contributed into the system. But in a pay-as-you-go system, no one is guaranteed that you will get more or less than what you paid in. A person who lives to be 95 will draw out more than what they contributed compared to a person who dies at age 65.

Also unfair is the fact since Social Security was created, sources of non-wage income, like capital gains, have not been taxed like wages for Social Security. If your combined income for federal taxes, including Social Security, for an individual is more than $34,000, you may have to pay up to 85 percent of your Social Security benefits to the IRS. Isn’t that double taxation? In many ways our Social Security system has moved beyond a simple wage-based program. As Sen. Sanders notes: Is it fair for wealthy individuals to pay a very small percentage of their income into this program, compared to others with much less income?

When Sanders and Warren were drafting this bill, they asked the Social Security Office of the Chief Actuary to assess the revenue and cost impacts of the SSEA legislation. The Chief Actuary told the lawmakers: “We estimate that enactment of these provisions would extend the ability of the OASDI program to pay scheduled benefits in full and on time throughout the 75-year projection period.” The date of projected depletion of the combined OASI and DI Trust Fund reserves is 2035 under the intermediate assumptions of the 2022 Trustees Report.

The Chief Actuary concludes that over the 75-year period, the SSEA will bring in a $34.2 trillion increase in revenue by “taxing all earnings above the higher of the current-law taxable maximum or $250,000, and applying a separate 12.4 percent tax on net investment income … and a new net investment income tax on active officials in S-corporations and limited partnerships.” The bill will raise costs by $12.9 trillion. The bottom line is a gain of $21.3 trillion. That’s a good result for a bill that serves more people, with a higher benefit, and keeps the program solvent to the year 2097.

     Readers should send a link of this article to their U.S. Representative and tp U.S. Senators. Tell them you like the bottom line of the Social Security Expansion Act.

Al Norman worked in the elder home care field in Massachusetts for nearly 4 decades. He has written opinion editorials for the 50+Life for almost his entire career.