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| Actuarial Publications |
Summary of Provisions That Would Change the Social Security Program |
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Description of Proposed Provisions:
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Estimates based on the intermediate assumptions of the 2016 Trustees Report
| Printer-friendly Version (PDF) |
| Change from present law [percent of payroll] |
Shortfall eliminated | |||||
|---|---|---|---|---|---|---|
| Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
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| Present law shortfall in long-range actuarial balance is 2.66 percent of payroll and in annual balance for the 75th year is 4.35 percent of payroll. | ||||||
| E1.1 |
Increase the payroll tax rate (currently 12.4 percent) to 15.2 percent in 2017 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
2.67 | 2.77 | 100% | 64% | |
| E1.2 |
Increase the payroll tax rate (currently 12.4 percent) to 15.2 percent in
2029-2058, and to 18.0 percent in years 2059 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
3.03 | 5.42 | 114% | 125% | |
| E1.3 |
Reduce the payroll tax rate (currently 12.4 percent) to 11.4 percent in
2017 and later.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
-0.97 | -1.01 | -36% | -23% | |
| E1.4 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point
each year from 2022-2041, until the rate reaches 14.4 percent in 2041 and later.
graph | table | pdf-graph | pdf-table | memo (Larson 2014) | memo (National Academy of Social Insurance) |
1.45 | 1.98 | 55% | 46% | |
| E1.5 |
Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2019,
12.9 percent in 2027, 13.1 in percent in 2037, 13.9 percent in 2047, 13.5 percent
in 2057, and 13.3 percent in 2067 and later.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.76 | 0.91 | 29% | 21% | |
| E1.6 |
Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2019,
12.9 percent in 2027, 13.3 in percent in 2037, 13.8 percent in 2047, 14.4 percent
in 2067, and 14.5 percent in 2082 and later.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
1.08 | 2.07 | 41% | 48% | |
| E1.7 |
Increase the payroll tax rate (currently 12.4 percent) to 12.7 percent in 2019,
13.0 percent in 2032, 13.3 in percent in 2047, 14.0 percent in 2067, 14.5 percent
in 2077, and 14.7 percent in 2087 and later.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.88 | 2.24 | 33% | 52% | |
| E1.8 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2019-2024, until the rate reaches 13.0 percent for
2024 and later.
graph | table | pdf-graph | pdf-table | memo (Moore) |
0.54 | 0.60 | 20% | 14% | |
| E1.9 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage
point each year from 2020-2043, until the rate reaches 14.8 percent in
2043. Then increase the payroll tax rate an additional 0.1 percentage point
in each year from 2082-2086, until the rate reaches 15.3 percent for 2086
and later.
graph | table | pdf-graph | pdf-table | memo (Larson 2015) |
1.77 | 2.85 | 67% | 66% | |
| E1.10 |
Increase the payroll tax rate by 0.1 percentage point per year for 2018 through
2027 so that it equals 13.4 percent for 2027 and later. The increase would be
split evenly between the employer and employee share, and would be split between
OASI and DI in proportion to currently scheduled payroll tax rates.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.88 | 1.00 | 33% | 23% | |
| E2.1 |
Eliminate the taxable maximum in years 2017 and later, and apply full 12.4
percent payroll tax rate to all earnings. Do not provide benefit credit for
earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (DeFazio 2015) | memo (Social Security Advisory Board) |
2.36 | 2.45 | 89% | 56% | |
| E2.2 |
Eliminate the taxable maximum in years 2017 and later, and apply full 12.4
percent payroll tax rate to all earnings. Provide benefit credit for earnings
above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.90 | 1.61 | 72% | 37% | |
| E2.3 |
Eliminate the taxable maximum in years 2017 and later, and apply full 12.4
percent payroll tax rate to all earnings. Provide benefit credit for earnings
above the current-law taxable maximum, adding a bend point at the current-law
taxable maximum and applying a formula factor of 3 percent for AIME above this
new bend point.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
2.16 | 2.15 | 81% | 49% | |
| E2.4 |
Eliminate the taxable maximum for years 2023 and later (phased in 2017-2022),
and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit
credit for earnings above the current-law taxable maximum that are subject to
the payroll tax, using a secondary PIA formula. This secondary PIA formula
involves: (1) an "AIME+" derived from annual earnings from each year after 2016
that were in excess of that year's current-law taxable maximum; (2) a new bend
point equal to 134 percent of the monthly current-law taxable maximum; and (3)
formula factors of 3 percent and 0.25 percent below and above the new bend point,
respectively.
graph | table | pdf-graph | pdf-table | memo (Deutch 2015) | memo (Deutch 2010) |
2.19 | 2.34 | 82% | 54% | |
| E2.5 |
Apply 12.4 percent payroll tax rate on earnings above $250,000 starting
in 2017, and tax all earnings once the current-law taxable maximum exceeds
$250,000. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio) | memo (Sanders 2016) | memo (Sanders 2015) | memo (Sanders 2013) | memo (DeFazio 2011) |
2.19 | 2.45 | 82% | 56% | |
| E2.6 |
Apply a 3 percent payroll tax on earnings above the current-law taxable
maximum starting in 2017. Do not provide benefit credit for earnings above
the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.61 | 0.63 | 23% | 15% | |
| E2.7 |
Apply a 6 percent payroll tax on earnings above the current-law taxable
maximum starting in 2017. Do not provide benefit credit for earnings above
the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Wexler) |
1.19 | 1.24 | 45% | 29% | |
| E2.8 |
Apply a 2 percent payroll tax on earnings above the current-law taxable
maximum for years 2019-2066, and a 3 percent rate for years 2067 and later.
Do not provide benefit credit for earnings above the current-law taxable
maximum.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.44 | 0.63 | 17% | 14% | |
| E2.9 |
Apply the following payroll tax rates above the current-law taxable maximum:
2.0 percent in 2019, 3.0 percent in 2032, 3.5 percent in 2047, 4.5 percent in
2057, and 5.5 percent in 2067 and later. Do not provide benefit credit for
earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.72 | 1.13 | 27% | 26% | |
| E2.10 |
Eliminate the taxable maximum in years 2027 and later. Phase in elimination by
taxing all earnings above the current-law taxable maximum at: 1.24 percent in
2018, 2.48 percent in 2019, and so on, up to 12.40 percent in 2027. Provide
benefit credit for earnings above the current-law taxable maximum, adding a bend
point at the current-law taxable maximum and applying a formula factor of 5 percent
for AIME above this new bend point.
graph | table | pdf-graph | pdf-table | memo (Harkin 2012) |
1.92 | 2.05 | 72% | 47% | |
| E2.11 |
Eliminate the taxable maximum in years 2022 and later. Phase in elimination by
taxing all earnings above the current-law taxable maximum at: 2.48 percent in
2018, 4.96 percent in 2019, and so on, up to 12.40 percent in 2022. Provide
benefit credit for earnings above the current-law taxable maximum that are
subject to the payroll tax, using a secondary PIA formula. This secondary PIA
formula involves: (1) an "AIME+" derived from annual earnings from each year
after 2017 that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Sanchez) | memo (Schatz) | memo (Harkin 2013) |
2.10 | 2.16 | 79% | 50% | |
| E2.12 |
Eliminate the taxable maximum in years 2028 and later. Phase in elimination by
taxing all earnings above the current-law taxable maximum at: 1.24 percent in
2019, 2.48 percent in 2020, and so on, up to 12.40 percent in 2028. Provide
benefit credit for earnings above the current-law taxable maximum. Create a new
bend point at the current-law taxable maximum with a 3 percent formula factor
applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Moore) |
1.93 | 2.15 | 73% | 49% | |
| E2.13 |
Apply OASDI payroll tax rate on earnings above $400,000 starting in 2018,
and tax all earnings once the current-law taxable maximum exceeds $400,000.
Provide benefit credit for earnings above the current-law taxable maximum
that are subject to the payroll tax, using a secondary PIA formula. This
secondary PIA formula involves: (1) an "AIME+" derived from annual earnings
from each year after 2017 that were in excess of that year's current-law
taxable maximum; and (2) a formula factor of 2 percent on this newly
computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson 2015) | memo (Larson 2014) |
1.88 | 2.33 | 71% | 54% | |
| E3.1 |
Increase the taxable maximum such that 90 percent of earnings would be subject
to the payroll tax (phased in 2017-2026). Provide benefit credit for earnings
up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.77 | 0.64 | 29% | 15% | |
| E3.2 |
Increase the taxable maximum such that 90 percent of earnings would be subject
to the payroll tax (phased in 2017-2026). Do not provide benefit credit for
additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick) |
0.98 | 1.10 | 37% | 25% | |
| E3.3 |
Increase the taxable maximum such that 90 percent of earnings would be
subject to the payroll tax (phased in 2018-2023). Provide benefit credit
for earnings up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.78 | 0.64 | 29% | 15% | |
| E3.4 |
Increase the taxable maximum from $106,800 to $115,200 (in 2009 AWI-indexed
dollars), phased in 2017-2019. Provide benefit credit for earnings up to
the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
0.11 | 0.08 | 4% | 2% | |
| E3.5 |
Increase the taxable maximum each year by an additional 2 percent
beginning in 2017 until taxable earnings equal 90 percent of covered
earnings. Provide benefit credit for earnings up to the revised taxable
maximum.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) | memo (National Academy of Social Insurance) |
0.63 | 0.67 | 24% | 15% | |
| E3.6 |
Increase the taxable maximum each year by an additional 2 percent beginning in
2019 until taxable earnings equal 90 percent of covered earnings. Do not provide
benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.74 | 1.10 | 28% | 25% | |
| E3.7 |
Increase the taxable maximum by an additional 2 percent per year beginning in
2018 until taxable earnings equal 90 percent of covered earnings. Provide benefit
credit for earnings up to the revised taxable maximum. Create a new bend point
equal to the current-law taxable maximum with a 5 percent formula factor applying
above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) |
0.64 | 0.77 | 24% | 18% | |
| E3.8 |
Beginning in 2024, apply 2 percent payroll tax rate on earnings over the
wage-indexed equivalent of $200,000 in 2017, with the threshold wage-indexed
after 2024. Provide proportional benefit credit for additional earnings taxed,
based on the payroll tax rate applied to the additional earnings divided by the
full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.19 | 0.16 | 7% | 4% | |
| E3.9 |
Beginning in 2024, apply 2 percent payroll tax rate on earnings over the
wage-indexed equivalent of $200,000 in 2017, with the threshold wage-indexed
after 2024. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.25 | 0.29 | 9% | 7% | |
| E3.10 |
Beginning in 2024, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $300,000 in 2017, with the threshold
wage-indexed after 2024. Provide proportional benefit credit for
additional earnings taxed, based on the payroll tax rate applied to
the additional earnings divided by the full 12.4 percent payroll tax
rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.14 | 0.12 | 5% | 3% | |
| E3.11 |
Beginning in 2024, apply 2 percent payroll tax rate on earnings over
the wage-indexed equivalent of $300,000 in 2017, with the threshold
wage-indexed after 2024. Do not provide benefit credit for additional
earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.19 | 0.22 | 7% | 5% | |
| E3.12 |
Beginning in 2024, apply 2 percent payroll tax rate on earnings over the
wage-indexed equivalent of $400,000 in 2017, with the threshold wage-indexed
after 2024. Provide proportional benefit credit for additional earnings taxed,
based on the payroll tax rate applied to the additional earnings divided by
the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.12 | 0.10 | 4% | 2% | |
| E3.13 |
Beginning in 2024, apply 2 percent payroll tax rate on earnings over the
wage-indexed equivalent of $400,000 in 2017, with the threshold wage-indexed
after 2024. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.15 | 0.18 | 6% | 4% | |
| E3.14 |
Eliminate the taxable maximum for the employer payroll tax (6.2 percent)
beginning in 2017. For the employee payroll tax (6.2 percent) and for
benefit credit purposes, beginning in 2017, increase the taxable maximum
by an additional 2 percent per year until taxable earnings equal 90 percent
of covered earnings.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
1.44 | 1.38 | 54% | 32% | |
| E3.15 |
Increase the taxable maximum such that 90 percent of earnings are subject
to the payroll tax (phased in 2017-2026). In addition, apply a tax rate of
6.2 percent for earnings above the revised taxable maximum (phased in from
2017-2026). Provide benefit credit for earnings taxed up to the revised
taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging) |
1.40 | 1.35 | 53% | 31% | |
| E3.16 |
Beginning in 2018, apply 4 percent payroll tax rate on earnings above the
wage-indexed equivalent of $400,000 in 2015, with the threshold wage-indexed
after 2018. Provide benefit credit for additional earnings taxed, using a
secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+"
derived from annual earnings taxed only between 2015 wage-indexed equivalents
of $400,000 and $500,000 (with thresholds wage-indexed after 2018); and (2)
a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Begich, Murray) |
0.32 | 0.34 | 12% | 8% | |
| E3.17 |
Beginning in 2018, increase the taxable maximum by twice the rate of increase
in the national Average Wage Index, but never by less than 3 percent. Provide
benefit credit for earnings up to the revised taxable maximum levels.
graph | table | pdf-graph | pdf-table | memo (Murphy) |
1.05 | 1.48 | 40% | 34% | |
| E3.18 |
Increase the taxable maximum linearly over 4 years to $203,700 for
2021. After 2021, index the taxable maximum to AWI plus 0.5 percentage
point. Apply benefit credit on additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016) |
0.56 | 0.63 | 21% | 14% | |
| E3.19 |
Increase the taxable maximum such that 90 percent of earnings would be
subject to the payroll tax (phased in linearly from 2018-2023). Provide
benefit credit for additional earnings taxed, using a secondary PIA formula.
This secondary PIA formula involves: (1) an "AIME+" derived from additional
annual earnings taxed over the current-law taxable maximum; and (2) a formula
factor of 2.5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Ribble) |
0.99 | 1.06 | 37% | 24% | |
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