1983 Greenspan Commission on Social Security Reform

Appendix K- Section C

C. ALTERNATIVE SOURCES OF REVENUES

Present law. Income to the OASDI and HI Trust Funds comes from the payroll tax which is paid by employers, employees, and the self-employed. (In addition, there are certain payments to the trust funds from the General Fund of the Treasury to cover the cost of certain transitional benefits for closed groups of persons and military-service wage credits.)

Options.

C-1 Reallocate 50% of the employer-employee HI tax rates to the OASDI Trust Funds, and make up this loss to the HI Trust Fund by payments from the General Fund of the Treasury, effective in 1984 (with corresponding treatment for the self-employed rate).

25-Year Cost: -1.33% of taxable payroll
50-Year Cost: -1.39% of taxable payroll
Long-Term Cost: -1.42% of taxable payroll

C-2 Same as Option C-1, except effective in 1990.

25-Year Cost: -.99% of taxable payroll
50-Year Cost: -1.23% of taxable payroll
Long-Term Cost: -1.30% of taxable payroll

C-3 Allow the OASDI Trust Funds to borrow from the General Fund of the Treasury whenever their combined balance (assuming interfund borrowing between them) is lower than 15% of the next year's outgo, effective in 1983. The amounts would be paid back to the General Fund, with interest, when the combined OASDI Trust Fund ratios reach 50%. If necessary, the OASDI tax rate would be increased to assure pay-back.

C-4 Impose a new inheritance tax, which would apply only if there is no surviving spouse. It would exclude the first $100,000 in the estate. The next $100,000 would be taxed at a 10% rate, and the third $100,000 would be taxed at a 15% rate, effective for 1985. After 1989, the thresholds for taxation would be indexed by the CPI increases. The proceeds of the tax would be earmarked for the OASI Trust Fund.

Long-Term Cost: Cannot be determined.


C-5 Impose a surcharge of 3 cents a gallon on gasoline, which would be earmarked for the OASI Trust Fund, effective for 1983-89.

Long-Term Cost: -.02% of taxable payroll


C-6 Impose a 5% surcharge on individual income taxes in 1983-89, the proceeds from which would be earmarked for the OASI Trust Fund.

Long-Term Cost: -.09% of taxable payroll

* Interest that would be accumulating on the amounts borrowed is not shown.
** Only one estimate is available. It is based on data provided by the Joint Committee on Taxation and the Congressional Budget Office.

C-7 Impose increased excise taxes on alcohol and tobacco in 1983-89 -increases of 25% over present rates. The proceeds would be earmarked for either the DI or HI Trust Fund.

Long-Term Cost: -.01% of taxable payroll

C-8 Credit to the OASDI Trust Funds, as a lump sum, the present value of the additional cost of OASDI benefits for those military-service wage credits based on service before 1957, effective in 1983.

Long-Term Cost: Negligible

C-9 Credit to the OASDI Trust Funds, as a lump sum, the excess of past benefit payments over past reimbursement payments (including interest) for the cost of additional OASDI benefits for those military-service wage credits based on service before 1957.

Long-Term cost: Negligible

*** Only one estimate is available. Any such estimate is subject to a wide variation, because it depends greatly on future conditions.

C-10 Pay OASDI taxes for current military-service gratuitous wage credits as the service is rendered, effective in 1984.

Long-Term Cost: Negligible

C-11 Credit to the OASDI Trust Funds the OASDI checks which have not been cashed for at least 1 year, effective in 1983.

Long-Term Cost: Negligible

C-12 Provide that the administrative expenses of the OASDI program be paid from the General Fund of the Treasury.

25-Year Cost: -.13% of taxable payroll
50-Year Cost: -.14% of taxable payroll
Long-Term Cost: -.15% of taxable payroll

C-13 Provide a payment from the General Fund of the Treasury equal, for each month, to (a) the excess (if any) of the unemployment rate over 6%, multiplied by (b) the total OASDI tax receipts, effective in 1984.

25-Year Cost: -.07% of taxable payroll
50-Year Cost: -.06% of taxable payroll
Long-Term Cost: -.05% of taxable payroll