(IntegrityPress.org) – The future of Social Security, a cornerstone of American retirement, is a hot topic in 2023, with the Social Security 2100 Act promising sweeping changes to the program’s financial structure. Introduced by John Larson, Democratic Representative, the legislation aims to fix the program’s finances by reapplying taxes to the top 1.8 percent of earners—those making over $400,000 annually.
The current state of Social Security is precarious. If no significant action is taken, the Social Security Board of Trustees predicts that, by 2035, the program will only be capable of providing 75 percent of the benefits promised to retirees.
Larson’s proposed Social Security 2100 Act is a significant move towards securing the future of this vital program, constituting the first significant upgrade to Social Security in over half a century. The legislation proposes a “donut hole” approach to taxing earnings, which would leave a tax-free zone for wages between $160,200 and $400,000—effectively protecting lower-income classes from additional tax burdens while placing the onus on the highest earners.
Larson’s proposal would see earnings over $400,000 taxed at the existing 6.2 percent rate. This proposal would result in an additional $37,200 in Social Security taxes, taking the individual’s total yearly contribution to $47,132.40.
The Social Security 2100 Act is a comprehensive plan to enhance the program, featuring improved cost-of-living adjustments, a 2 percent increase in benefits, extended student benefits, and the consolidation of the Old-Age and Survivors Insurance (OASI) and the Disability Insurance (DI) Trust Funds into a single fund.
The legislation yet to reach the House floor for a vote would also bolster the annual Social Security balance by 1 to 1.1 percent of the current law payroll from 2025 through to 2034.
Despite the bill’s potential, it’s unlikely to be voted on shortly due to more pressing concerns, such as averting a government shutdown. However, Larson and his supporters remain hopeful, urging Republicans to put the Social Security 2100 Act to a vote.
The Act has its critics, too. Alicia Munnell, a former Assistant Secretary of the Treasury for Economic Policy, expressed concerns about the sustainability of the Act’s proposed benefit increases and aggressive revenue targets. She warned that making temporary increases permanent could strain resources. She questioned the plan to link payroll taxes to investment income, suggesting it might not align with the program’s long-term objectives.
Despite this criticism, the Social Security 2100 Act enjoys bipartisan support for raising the payroll tax cap, with Democrats and Republicans calling for its passage. The Social Security Office of the Chief Actuary has also suggested that, if enacted, the Act could extend the anticipated depletion date of the combined OASDI Trust Fund reserves from 2034 to 2066.
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