House Bill Would Expand Social Security, Raise Payroll Tax

A key House lawmaker has introduced legislation that would increase Social Security benefits for various recipients and make other reforms to the system, including a payroll tax increase.   

Noting that benefits have not been improved in more than 50 years, Rep. John Larson (D-CT), chairman of the House Ways and Means Social Security Subcommittee, introduced the legislation, Social Security 2100: A Sacred Trust, on Oct. 26. 

“The pandemic has only underscored what we already knew and has exacerbated systemic inequities—current benefits are not enough,” Larson said in a statement. “For too long, Congress has forsaken its duty to enhance benefits. With 10,000 Baby Boomers a day becoming eligible, and with Millennials needing Social Security more than any generation, the time for Congress to act is now.” House Ways and Means Chairman Rep. Richard Neal (D-MA) is a cosponsor of the bill.

The bill will be referred to the House Ways and Means Committee for consideration, but it’s not clear whether it will find any traction in the current Congress. During a press conference about the bill, nonetheless, Larson said the Committee will hold a hearing in November, followed shortly thereafter by a markup and action by the full House. 

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

• Benefit increase for current and new beneficiaries: Provide an increase for all beneficiaries that is the equivalent to about 2% of the average benefit. 
• Protection against inflation: Improve 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 and Government Pension Offset.

A section-by-section summary can be found here.