Description of Proposed Provision:
E3.16: Beginning in 2020, apply 4 percent payroll tax rate on earnings above the wage-indexed equivalent of $400,000 in 2015 (about $462,300 in 2020), with the threshold wage-indexed after 2020. 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, or about $462,300 and $578,100 in 2020 (with thresholds wage-indexed after 2020); and (2) a formula factor of 2 percent on this newly computed "AIME+".

Estimates based on the intermediate assumptions of the 2018 Trustees Report

Summary Measures
Current law
[percent of payroll]		   Change from current law
[percent of payroll]		   Shortfall eliminated
Long-range
actuarial
balance		 Annual
balance in
75th year		   Long-range
actuarial
balance		 Annual
balance in
75th year		   Long-range
actuarial
balance		 Annual
balance in
75th year
-2.84 -4.32   0.31 0.33   11% 8%

graph of OASDI cost rates and income rates by year, under current law and provision. click on graph to view underlying data. graph of OASDI trust fund ratio by year, under current law and provision. click on graph to view underlying data.