Bill to Boost Social Security, Expand Payroll Taxes Coming

Legislation that would increase Social Security benefits through various reforms to the system, including a payroll tax increase, is set to be reintroduced in the House of Representatives.  

Following the Oct. 12 announcement that the Social Security cost of living adjustment for 2022 will be 5.9%, Rep. John Larson (D-CT), chairman of the House Ways and Means Social Security Subcommittee, announced that he will introduce his bill—“Social Security 2100: A Sacred Trust.” 

“While this year’s cost of living adjustment (COLA) is welcome news, it only further underscores the need for Congress to act on Social Security. It has been more than 50 years since Congress has improved Social Security benefits,” Larson said in a statement. “Seniors are suffering—five million are living below the poverty line—current Social Security benefits are not enough!”

In noting that he will be introducing the bill, Larson explained that the COLA is intended to protect benefits against losing their purchasing power over time when the cost of rent, food and other expenses increase, and is partially consumed by Medicare premiums.  

Following the release of the 2021 Social Security Trustees Report in August, which showed that the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2034—one year earlier than projected last year—Rep. Larson noted that he will be reintroducing his legislation this fall. 

“The Trustees Report confirms that Social Security’s financing is strong in the near term yet underscores why it is so important that Congress take action now to prevent 22% in cuts across the board on all benefits in 2034,” Larson stated. “With the loss of traditional pensions, rising health care costs, and many people unable to save enough for retirement, there is a growing retirement crisis,” he added. 

A fact sheet released by Larson’s office notes that the bill would make the following changes, among others: 

• Benefit increase for current and new beneficiaries: Provides an increase for all beneficiaries that is the equivalent to about 2% of the average benefit. 
• Protection against inflation: Improves the annual COLA formula to better reflect the costs incurred by seniors through adopting a CPI-E formula. The fact sheet explains that this provision will help seniors who spend a greater portion of their income on health care and other necessities. 
• Protections for low-income workers: Noting that no one who paid into the system over a lifetime should retire into poverty, the new minimum benefit would be set at 25% above the poverty line and would be tied to wage levels to ensure that the minimum benefit does not fall behind. The fact sheet also notes that the legislation improves benefits for widows and widowers.  
• Payroll tax increase: The payroll tax wage base is set to increase to $147,000 in 2022. The legislation would apply the payroll tax to wages above $400,000. The fact sheet contends that this provision would only affect the top 0.4% of wage earners. 
• Social Security Trust Fund established: Noting that Social Security provides all-in-one retirement, survivor, and disability benefits funded through the dedicated FICA contribution paid by workers, but there are technically the two trust funds, the legislation would combine the trust funds into one Social Security Trust Fund to ensure that all benefits will be paid.

The legislation would also repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).