The latest Social Security-related legislation to be proposed on Capitol Hill is a bill introduced this week by Rep. Gwen Moore (D-WI) that aims to prevent Social Security beneficiaries from living in poverty—and would pay for it by increasing the Social Security payroll tax rate and phasing out the taxable earnings base.
Earlier this week, Moore reintroduced the Social Security Enhancement and Protection Act, which she first introduced back in Dec. 2019.
In order to deliver on the bill’s promise to strengthen and improve the program benefits so that Social Security works better for vulnerable Americans, it calls for gradually increasing the Social Security payroll tax rate from 6.2% to 6.5% over six years. It also phases out the taxable earnings base, thereby applying the payroll taxes (which currently applies to wages up to $142,800) to a greater amount of a worker’s earnings.
“It’s only right that I commemorate the 86th anniversary of Social Security by reintroducing the Social Security Enhancement and Protection Act, which would strengthen this crucial program so many rely on,” Moore said in an Aug. 17 statement. “I am a living testament to the transformative powers strong safety net programs can have on a person’s life.”
Moore said the bill would improve Social Security coverage/benefits for women, people of color, and low-income people in three key ways:
- The bill would increase the Special Minimum Benefit to pay 100% of the poverty threshold, for those who have worked at least 30 years under Social Security, and claimed their benefits when they reached full retirement age. The benefit would be phased down proportionally to allow access for workers with fewer than 30 but more than 10 years of work. It would also allow child care credits, so that the years in which a parent has a young child (under age 6) could count as a year of coverage for Social Security benefits, up to a maximum of 5 years (which would count toward the 30 years required to be eligible for the full Special Minimum Benefit).
- Increasing benefits 20 years after becoming eligible for retirement. People who live beyond the age of 85 are more likely to be financially vulnerable, even with Social Security. They may have exhausted their savings by this point, or have more serious health problems that have been a drain on their finances. The bill would provide additional security by increasing benefits for all beneficiaries 20 years after retirement by a uniform amount equal to 5% of the average retired worker benefit in the prior year. It would be phased in 1% each year, after beneficiaries hit 16 years of eligibility, until beneficiaries hit the full 5% increase 20 years after they begin receiving benefits.
- Reinstating the student benefit. Social Security benefits are paid to children whose working parent has died, become disabled, or retired, up to age 18. Moore’s bill would restore the student benefit for children of deceased and disabled workers up to age 26 as long as they are enrolled in college or vocational schools.
“I know that Social Security is both a vital safety net and too often the main or only retirement plan for so many. Social Security lifts millions out of poverty and provides needed income and financial stability to hard-working Americans in retirement, with a disability or after losing a loved one,” Moore said. “That is why my proposal would help us ensure that Social Security does what it was intended to do: protect all older Americans from spending their retirement living in deep poverty.”
The bill’s “pay-fors” of increasing the Social Security payroll tax and phasing out the earnings cap likely mean an uphill battle on Capitol Hill.
On the Ways and Means Committee, Moore is a member of the Select Revenue Measures Subcommittee, which aims to create a more fair and progressive tax code that provides Americans greater opportunity and financial security. She is also a member of the Worker and Family Support Subcommittee and Social Security Subcommittee.
Read more about the Social Security Enhancement and Protection Act here
SEE ALSO:
- 2022 Social Security COLA Estimate Ticks Up Yet Again
- ‘Fair COLA for Seniors Act of 2021’ Introduced in House
- ‘Know Your Social Security Act’ Introduced in Congress
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
Increased eligibility, more credits and benefits for having children, etc. Combined with the Democrats amnesty for illegal aliens spells a worse future for SS, rather than better. Since this is a 401k website, just keep watching for the other shoe. Any day now, after increasing what you pay in, will come “means testing.” Punish people who try and save for themselves. I encourage my rep ans senators to vote no to ANY bill introduced by a Democrat!