A new bill called Social Security Expansion Act from Senators Sanders and Warren aims to make Social Security solvent for 75 years and to improve benefits, especially for lower-income employees and retirees.
Social Security Expansion Act
The Social Security Expansion Act, introduced by Senators Bernie Sanders, I-Vermont, and Elizabeth Warren, D-Massachusetts, aims to create Social Security solvent through the end of the 21st century and enhance benefits. It was introduced last week and a tax of 12.4% on investment income for individuals earning $200,000 or more and married couples earning $250,000 or more, matching the combined employee and employer payroll rates.
The Social Security Expansion Act would also make all income more than $250,000 subject to the full Social Security payroll tax rate, income greater than $160,200 is not subject to the full payroll tax rate. It also includes that income between $160,200 and $250,000 would not be taxed differently at first, but the $160,200 threshold would be allowed to increase normally until it reaches $250,000, projected to happen in 2035. Hence, all income would be subject to the full payroll rate. Additionally, any income grander than $250,000 would not be counted for benefit calculation purposes.
Since the bill would raise taxes, it must be formally instructed first in the House of Representatives. Jan Schakowsky, D-Illinois, sponsored in the House by Representatives the bill was referred to the House Committee on Ways and Means. The Social Security Expansion Act has 26 co-sponsors in the House, all of whom are Democrats. Republicans handle the House, and the Committee on Ways and Means is chaired by Representative Jason Smith, R-Missouri.
Social Security Expansion Act Could Change The Cost-Of-Living Index
A report demonstrated that the bill would alter the cost-of-living index used to calculate Social Security benefit growths from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E). The statement calculated that the cost-of-living adjustment would increase by “0.2 percentage points per year on average” as a result.
According to the Bureau of Labor Statistics, the CPI-E is a statistic that weighs inflation to account for the spending patterns of those aged 62 and older, such as their higher proportional spending on healthcare. The Bureau cautioned that this statistic has certain limitations. According to a factsheet for the bill, it would also improve the Special Minimum Benefit to 125% of the poverty line, “or over $18,000 for a single worker who had worked their full career.”
The Social Security Expansion Act would also enrich the first income-percentage “bend point” from 90% to 95%. This means that going on, 95% of the first $1,115 in monthly wages (for 2023, indexed to inflation) would count toward Social Security benefits, up from 90%. This includes the effect of frontloading benefit boosts such low-income workers benefit proportionally more from them. Sanders’s office calculates that the annual Social Security benefit would improve on average by $2,400 a year.
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