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 2021 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 3.54 percent of payroll and in annual balance for the 75th year is 4.34 percent of payroll. | ||||||
| F1 |
Starting in 2022, 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) |
0.14 | -0.16 | 4% | -4% | |
| F2 |
Starting in 2022, 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) |
-0.64 | -0.84 | -18% | -19% | |
| F3 |
Expand covered earnings to include employer and employee premiums for employer-sponsored
group health insurance (ESI). Starting in 2025, phase out the OASDI payroll tax exclusion
for ESI premiums. Set an exclusion level at the 75th percentile of premium distribution
in 2025, with amounts above that subject to the payroll tax. Reduce the exclusion level
each year by 10 percent of the 2025 exclusion level until fully eliminated in 2035.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
1.21 | 0.85 | 34% | 20% | |
| F4 |
Expand covered earnings to include contributions to voluntary salary reduction
plans (such as Cafeteria 125 plans and Flexible Spending Accounts). Starting in
2022, 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) |
0.37 | 0.25 | 11% | 6% | |
| F5 |
Tax Reform for Business: Establish a value added tax (VAT) of 3.0 percent
for 2023 and 6.5 percent for 2024 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) |
-0.01 | 0.17 | -0% | 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 2023. 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) |
0.96 | 1.19 | 27% | 27% | |
| 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
2021 and gifts made after 2021, 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) |
0.60 | 0.78 | 17% | 18% | |