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 2023 Trustees Report
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|
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 3.61 percent of payroll and in annual balance for the 75th year is 4.35 percent of payroll. | ||||||
| F1 |
Starting in 2024, cover newly hired State and local government employees.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission 2010) | memo (Bipartisan Policy Center 2010) | memo (Warshawsky 2008) | memo (Social Security Advisory Board 2005) |
0.14 | -0.16 | 4% | -4% | |
| F2 |
Starting in 2024, 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 2008) |
-0.79 | -1.00 | -22% | -23% | |
| F3 |
Expand covered earnings to include employer and employee premiums for employer-sponsored
group health insurance (ESI). Starting in 2027, phase out the OASDI payroll tax exclusion
for ESI premiums. Set an exclusion level at the 75th percentile of premium distribution
in 2027, with amounts above that subject to the payroll tax. Reduce the exclusion level
each year by 10 percent of the 2027 exclusion level until fully eliminated in 2037.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) |
1.13 | 0.77 | 31% | 18% | |
| F4 |
Expand covered earnings to include contributions to voluntary salary reduction
plans (such as Cafeteria 125 plans and Flexible Spending Accounts). Starting in
2024, 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) |
0.33 | 0.22 | 9% | 5% | |
| F6 |
Apply a separate 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 2025.
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) |
0.67 | 0.80 | 19% | 18% | |
| 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 2023 and gifts made after 2023, 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 2019) |
0.61 | 0.77 | 17% | 18% | |
| F8 |
For active S-corporation officers and limited partners, apply a 16.2 percent
tax on investment income as defined in the ACA, with unindexed thresholds as
in the ACA ($200,000 single filer, $250,000 for married filing joint), starting
in 2024. Proceeds go to the OASDI Trust Funds for tax attributable to 12.4
percent of the total 16.2 percent tax rate.
graph | table | pdf-graph | pdf-table | memo (Sanders 2023) | memo (Sanders, DeFazio 2022) |
0.93 | 1.01 | 26% | 23% | |
| F9 |
Apply a separate 12.4 percent tax on investment income as defined in the
Affordable Care Act (ACA), with unindexed thresholds as in the ACA ($200,000
single filer, $250,000 for married filing joint), starting in 2025. Proceeds
go to the OASDI Trust Funds.
graph | table | pdf-graph | pdf-table | memo (Sanders 2023) | memo (Sanders, DeFazio 2022) |
1.31 | 1.57 | 36% | 36% | |
| F10 |
Expand the tax on net investment income (NII) as defined in the Affordable
Care Act (ACA) to cover earnings from active S corporation holders and active
limited partners. Apply a 12.4-percent tax on this expanded definition of NII,
payable to the OASI and DI Trust Funds with specified thresholds, effective
for 2024 and later. The unindexed thresholds for this provision are $400,000
for a single filer and $500,000 for a married couple filing jointly. The NII
tax would apply to the lesser of NII and the excess of modified adjusted income
(MAGI) above the unindexed thresholds.
graph | table | pdf-graph | pdf-table | memo (Whitehouse, Boyle 2023) |
1.79 | 2.22 | 50% | 51% | |
| F11 |
Apply a separate 12.4-percent tax on net investment income (NII), as defined
in the Affordable Care Act (ACA), payable to the OASI and DI Trust Funds with
an unindexed threshold of $400,000, effective 2025 and later. The NII tax would
apply to the lesser of NII and the excess of modified adjusted income (MAGI)
above the unindexed threshold of $400,000. This single threshold would apply
regardless of tax filing status.
graph | table | pdf-graph | pdf-table | memo (Larson 2023) |
1.20 | 1.53 | 33% | 35% | |