Congressman Al Lawson (D-FL) recently proposed a social security bill. Scored By the SSA office of the Chief Actuary. Lawson’s proposal is the second major social security bill in a month.Following Congressman John Larson (D-CT) Social Security 2100: Sacred Trust..
To be on the safe side, social security actuaries forecast a program deficit of 3.54% of taxable salaries over the next 75 years. This deficit reflects a combination of rising costs and a certain level of income (see Figure 1). Increased costs are the result of slowing labor growth and the retirement of baby boomers, which increases the ratio of retirees to workers. The social security deficit can be eliminated by raising the income rate or lowering the cost rate.
Both the Lawson and Larson bills maintain their current interests. In other words, it does not reduce the cost rate. Instead, they raise their income rate by raising the maximum taxable income cap. The area where the two bills differ most is the enhancement of benefits. The Lawson bill offers 12 enhancements in five years, while the Lawson bill provides four enhancements permanently.
Specifically, Lawson’s law proposes that:
Adjust inflation profits using the CPI-E, which is rising faster than the CPI-W price index historically currently used for social security.
For full-time students, the student benefits will be extended to the age of 23.
Increase the special minimum benefit for very low-income workers and index it by increasing average wages.
Establish alternative benefits for surviving spouses, equal to 75% of the couple’s benefits (upper limit applies).
To pay these benefits increases, and more importantly, to reduce the 1975 deficit, Lawson’s law states that after incomes exceed $ 250,000 and the taxable limit reaches $ 250,000. Payroll tax is applied to all income of. The law applies a 2% profit factor on average returns that exceed the current law limits.
Enacting these benefits and revenue provisions will reduce the long-term social security deficit from 3.54% to 1.88% of taxable salaries by approximately half (see Figure 2).
Both bills have some advantages. While maintaining current profits and increasing additional income, at least the Larson bill seems to limit efforts to increase income under President Biden’s pledge not to raise taxes on households with incomes less than $ 400,000.
In terms of improving profits, both “spend” much of the future profit switch from CPI-W to CPI-E to index profits. personally, Do not worry.. The changes in other interests in the Lawson bill are relatively small and positive. Most importantly, they are permanent and avoid the confusion that could be caused by the temporary strengthening of the Larson bill.
However, in the end, any solution can be accompanied by a slight increase in payroll tax. ratio, A change to raise taxes for people under $ 400,000.
Opinion: New proposals will improve social security finances and moderately increase profits
Source link Opinion: New proposals will improve social security finances and moderately increase profits
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