While Vice President and Democratic candidate Kamala Harris hasn’t yet adopted a formal plan for Social Security, past support on key proposals indicates how she plans to tackle the insolvency.
First, Harris has backed proposals introduced by policymakers that would reinforce taxes on high income earners. As vice president, she supported one proposal by President Biden that would add a 12.4% payroll tax on earned income, which includes wages and salary over $400,000. As California senator, Harris also backed the Social Security Expansion Act, a proposed legislation that would expand Social Security benefits by $2,400 a year and ensure Social Security is fully funded for the next 75 years by subjecting all income above $250,000 to the Social Security payroll tax. Currently, any wages above $168,600 are not taxed for Social Security.
If voted president, it is speculated that Harris would support recent Democratic proposals on Social Security insolvency, including Rep. John Larson’s (D-CT) Social Security 2100 Act and Sen. Sheldon Whitehouse’s (D-RI) Medicare and Social Security Fair Share Act, which both would require taxpayers who earn more than $400,000 to contribute to Social Security with earnings above that amount.
Other potential modifications include changing how the annual Social Security cost-of-living adjustment is calculated, from today’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Consumer Price Index for the Elderly (CPI-E). Supporters of the change say switching to the CPI-E could better track expenses for seniors, including increased spending on healthcare.
Failing to adequately protect Social Security benefits from inflation can lead to a loss of buying power in benefits over time and lower growth in Social Security benefit income throughout retirement. Recent findings from The Senior Citizens League (TSCL) show that Social Security buying power fell 20% since 2010, meaning that payments for retired workers would need to increase by $4,440 per year or $370 per month to rebuild their lost value.
TSCL has long supported a change in calculating annual Social Security COLAs—including altering the current CPI-W to the CPI-E. Last year, the organization stated that if the CPI-E was used instead of CPI-W to calculate the Social Security COLA, the 2024 increase would have been 4% instead of the 3.2% raise beneficiaries received for 2024.
The Social Security 2100 Act, which is speculated to be supported by Harris, would change how the COLA is determined by requiring the higher of the CPI-W or the CPI-E to be used in calculating the COLA.
As Minnesota governor, the new Vice Presidential candidate Tim Walz increased the state tax exemption for Social Security in 2023, meaning that taxpayers grossing less than $78,000, or $100,000 for married couples who file jointly, could deduct Social Security benefits from their earnings.
Walz has previously supported eliminating Social Security tax for 90% of recipients. Instead, he supports taxes for the top 10% of earners.
“I don’t think those at the top of the line — millionaires and billionaires — are concerned about the Social Security tax,” Walz previously told MPR News.
Minnesota is just one of several states that currently tax Social Security benefits, meaning that Minnesotan retirees procure less of the benefit than retirees in other states.
This is on top of the federal tax that retirees pay towards their Social Security. Currently, Social Security beneficiaries with incomes below $25,000 individually are exempt from Social Security taxes entirely. Individuals with total income between $25,000 and $34,000 or couples filing jointly with combined total incomes from $32,000 to $44,000 may have to pay federal income tax on up to 50% of their Social Security benefits, while individuals with total income of more than $34,000 or couples filing jointly more than $44,000 may see up to 85% of their benefits taxed.
If elected, a Harris Walz administration could mean greater payroll taxes for high-income earners, rather than raising the retirement age or reducing benefits.
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