What Biden’s latest moves could signal for Social Security reform efforts
President Joe Biden attends the Democratic National Committee’s “Back on Track” drive-in car rally to celebrate his 100th day in office at the Infinite Energy Center in Duluth, Georgia, April 29, 2021.
Evelyn Hockstein | Reuters
People who earn more than $400,000 would be subject to the 3.8% Medicare tax, if President Joe Biden’s new tax proposal goes through.
But another change, one left over from Biden’s campaign — that would apply Social Security payroll taxes to people in higher income thresholds — did not make the cut.
That’s notable because the trust funds that support Social Security are running dry and may be tapped out in less than 20 years, according to some estimates.
Biden’s campaign called for applying Social Security payroll taxes to those making $400,000 and up. This year, wages up to $142,800 are subject to that tax, which is 6.2% of wages for both workers and employers.
More from Your Money, Your Future:
Here’s a look at more on how to manage, grow and protect your money.
That would create a so-called donut hole, exempting those above the wage threshold, and then reapplied starting at $400,000.
However, over time, that gap would close as the wage base is increased each year.
Biden called for the increased levies to help pay for proposed benefit increases, including raising the minimum Social Security benefit to at least 125% of the federal poverty level.
There are several reasons why higher Medicare levies would make it into Biden’s tax package, while the Social Security wouldn’t, according to Shai Akabas, director of economic policy at the Bipartisan Policy Center.
For one, Biden’s tax package is likely to get taken up via budget reconciliation, and Social Security cannot be used in that process, per legislative rules.
“Even just proposing a payroll tax increase for Social Security would draw in naturally a larger debate about the solvency of the program,” Akabas said.
The Medicare changes don’t have the same gravity, he said.
How much the solvency of Social Security has been impacted by the Covid-19 pandemic is open to debate.
The agency’s annual trustees report is expected to be released soon. Last April, the trustees’ analysis pointed to the program’s funds running out in 2035, at which point 79% of promised benefits would be payable.
Other reports have suggested that date could be even sooner due to the pandemic.
However, Nancy Altman, president of Social Security Works, an advocacy group for expanding the program, said she does not expect the difference in the upcoming trustees’ report to be that big.
It could advance the date by when the funds are expected to run dry to 2034 from 2035, for example.
“It’s not going to show that much of a difference,” Altman said.
That may not necessarily stop Democratic leaders in Washington from coming up with a proposal to fix the program. That could include a reintroduction of the Social Security Act, a House proposal put forward by Rep. John Larson, D-Conn., that had 209 co-sponsors in the last Congress.
“I wouldn’t be surprised if sometime this summer there is a Social Security plan,” Altman said.
- Amcham finds 42% of members surveyed are planning or considering leaving Hong Kong
- Tuchel: I lied to Auba about meeting times
- ‘You breathe differently when you aren’t the only one:’ Women are leading America’s key news outlets
- Police: Babies abducted during Savannah shooting found safe, suspect now in custody
- Greg Gutfeld: Despite statistics showing low outdoor COVID spread, media peddles fear
- Liz Cheney shames colleagues who will purge her for disloyalty to Trump
- Favre yet to repay state $600K, Mississippi says
- One in four cities cannot afford climate crisis protection measures – study
- This Day in History: May 12
- British troops were twice as likely to be killed in Afghanistan as US forces
Common Symptoms Of COVID-19
The CDC has a collection of nine Roche antibody assays designed to provide rapid results from COVID-19 rapid antigen test. If you are a potential carrier of the human papilloma virus (HPV) and are looking for HPV testing kits for the home, it is important…
Things You Never Knew About The Best Water Purifier
Things You Never Knew About The Best Water Purifier: We all know the importance of having a water purifier at home, but not many people know the things they need to know before buying one. Most of the time, we miss out on the most…
Med hub smart pill, a device for patients having medicines intake in the daily schedule.
Med hub smart pill: The drug prescribed by a doctor will be effective if it would be taken at the right time suggested by the doctor because it is necessary for our healing process. When a patient takes too many medicians in a day also…
10 Best Effective Plants to Fight Pollution – Diwali Edition
Effective Plants to Fight Pollution: Few more months and the most awaited festival of the year will be here. We Indians love our festivals, and the biggest festival of India, especially north India, is Diwali. It is a massive affair here. It generally falls in…