Summary of Provisions That Would Change the Social Security Program
Description of Proposed Provisions:
Provisions Affecting Coverage of Employment or Earnings, or Inclusion
of Other Sources of Revenue
Estimates based on the intermediate assumptions of
the 2019 Trustees Report
Printer-friendly Version (PDF)
|
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 |
|||
| Current law shortfall in long-range actuarial balance is 2.78 percent of payroll and in annual balance for the 75th year is 4.11 percent of payroll. | ||||||
| F1 |
Starting in 2020, cover newly hired State and local government employees.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) | memo (Bipartisan Policy Center 2010) | memo (Warshawsky) | memo (Social Security Advisory Board) |
0.16 | -0.16 | 6% | -4% | |
| F2 |
Starting in 2020, exempt individuals with more than 180 quarters of
coverage from the OASDI payroll tax. Earnings exempted from OASDI payroll
tax would not be used in computing benefits.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
-0.56 | -0.75 | -20% | -18% | |
| F3 |
Expand covered earnings to include employer and employee premiums
for employer-sponsored group health insurance (ESI). Starting in
2023, phase out the OASDI payroll tax exclusion for ESI premiums.
Set an exclusion level at the 75th percentile of premium distribution
in 2023, with amounts above that subject to the payroll tax. Reduce
the exclusion level each year by 10 percent of the 2023 exclusion
level until fully eliminated in 2032. Eliminate the excise tax on
ESI premiums starting in 2023.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
0.87 | 0.58 | 31% | 14% | |
| F4 |
Expand covered earnings to include contributions to voluntary salary
reduction plans (such as Cafeteria 125 plans and Flexible Spending Accounts).
Starting in 2020, subject these contributions to the OASDI payroll tax,
making the payroll tax treatment of these contributions like 401(k)
contributions.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
0.26 | 0.15 | 9% | 4% | |
| F5 |
Tax Reform for Business: Establish a value added tax (VAT) of 3.0
percent for 2021 and 6.5 percent for 2022 and later. Assume about 75% of
personal consumption expenditures is subject to the VAT.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
-0.02 | 0.16 | -1% | 4% | |
| F6 |
Apply a 6.2 percent tax on investment income as defined in the Affordable
Care Act (ACA), with unindexed thresholds as in the ACA ($200,000 for single
filer, $250,000 for married filing jointly), starting in 2021. Proceeds go
to the OASI and DI Trust Funds.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio 2019) | memo (Sanders, DeFazio 2017) | memo (Sanders 2016) | memo (Sanders 2015) |
0.94 | 1.15 | 34% | 28% | |
| F7 |
For the estate tax, gift tax, and generation skipping transfer (GST) tax,
return the respective exemption thresholds and tax rates to 2009 levels
($3.5 million threshold for estate tax with a top 45% tax rate) for deaths
after 2019 and gifts made after 2019, with those levels not indexed in future
years. All proceeds from the estate tax, gift tax, and GST tax would go to
the OASI and DI Trust Funds.
graph | table | pdf-graph | pdf-table | memo (Van Hollen) |
0.58 | 0.78 | 21% | 19% | |