Since the 2010 report was transmitted to Congress on August 5, 2010, two laws were enacted that are expected to have direct financial effects on the OASDI program.
The Small Business Jobs Act of 2010, Public Law 111-240, was enacted on September 27, 2010. It allows business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members when calculating their 2010 self-employment taxable income. The amount of self-employment taxes collected by the combined OASI and DI Trust Funds is estimated to be reduced by about $1.3 billion in calendar year 2011. The financial effect of this law over the long-range period is estimated to be negligible.
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Public Law 111-312, was enacted on December 17, 2010. Two provisions of this law directly affect the financial status of the OASDI program. First, this law extended the temporary lowering of Federal income tax rates scheduled through tax year 2010 for two additional years, through 2012. This first provision is expected to have a small financial impact over the short-range period and a negligible financial impact over the long-range period, due to reduced taxes paid on OASDI benefits in 2011 and 2012. Second, this law reduced the OASDI payroll tax rate for 2011 by 2 percentage points for employees and for self-employed workers. This law provides for reimbursements from the General Fund of the Treasury to the OASI and DI Trust Funds to make up for the reduction in payroll tax revenue. Therefore, this second provision is estimated to have no financial impact on the OASDI program over the short-range and long-range periods.
The financial projections shown in this report include the effects of these laws. Sections
IV.A.4 and
IV.B.7 of this report provide further analysis of the nature and magnitude of the effect of these laws on the financial status of the OASDI program.
