Blog: Rep. DeFazio, Sen. Sanders introduce bill to expand Social Security – Financial Regulation News – Financial Regulation News

U.S. Rep. Peter DeFazio (D-OR) and Sen. Bernie Sanders (I-VT) introduced joint legislation to strengthen and expand Social Security.

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The Social Security Expansion Act (SSEA) would extend the solvency of the Social Security trust fund 75 years through 2096. It would lift the income tax cap and subject all income above $250,000 to the Social Security Payroll tax. Currently, workers have 12.4 percent taken out of each paycheck and contributed to the Trust Fund, half paid by the employer and half by the worker. This bill would require the wealthy to pay the same 12.4 percent on their investments and business income by increasing the net investment income tax by 12.4 percent and applying it to certain business income not already covered by payroll taxes.

The lawmakers note that more than 93 percent of households would not see their taxes go up as a result of this bill.

It would also expand Social Security benefits for current and new beneficiaries. For example, someone turning 62 next year would see their benefits increase by $200 per month. Further, it would more accurately measure the spending patterns of seniors by adopting the Consumer Price Index for the Elderly (CPI-E), which would change the formula to reflect what seniors spend a disproportionate amount of their income on, such as health care and prescription drugs.

“With the cost of living at an all-time high, Social Security has never been more important, yet Congressional Republicans continue to play games with its funding,” DeFazio said. “This legislation would ensure that the Social Security Trust Fund remains solvent for another 75 years, increase monthly benefits for most recipients by $200, and alter the cost-of-living-adjustment (COLA) formula to meet the everyday needs of our nation’s seniors.”

Additionally, for low-income workers, it would increase the Special Minimum Benefit and index the benefit level so that it is equal to 125 percent of the poverty line or about $17,000 for a single worker who had worked their full career.

“It’s time to scrap the cap, expand benefits, and fully fund Social Security. I am proud that the Social Security Administration has estimated that our legislation to expand Social Security benefits by $2,400 a year will fully fund Social Security for the next 75 years by applying the payroll tax on all income – including capital gains – above $250,000 a year,” Sanders said.

The bill would also restore student benefits up to age 22 for children of disabled or deceased workers if the child is a full-time student in a college or vocational school. In addition, it would combine the Disability Insurance Trust Fund with the Old Age and Survivors Trust fund to help senior citizens and persons with disabilities.

More than 40 organizations endorsed this legislation, including the National Committee to Preserve Social Security and Medicare.

“Enactment of the Social Security Expansion Act would provide positive proof that Congress takes Social Security seriously and can work together to strengthen and improve this program that is so important to Americans’ economic wellbeing — without privatization or benefit cuts,” Max Richtman, President and CEO of the National Committee to Preserve Social Security and Medicare, said.

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