Legislative Update: August 2022

TSCL Endorses Legislation That Would Boost Benefits $2,400 per Year

By Doug Osborne, TSCL Legislative Liaison

Social Security recipients have been hit hard by inflation this year.  Inflation is eating into the buying power of savings and millions of retired and disabled beneficiaries are carrying debt — particularly for medical expenses.

But legislation has been introduced in the House and Senate that would boost Social Security payments by $2,400 annually while increasing program solvency for 75 years.  TSCL believes The Social Security Expansion Act introduced by Representative Peter DeFazio (OR-4th) and Senator Bernie Sanders (VT) could make a significant difference for many Social Security recipients.  The legislation comes as Social Security is forecast to reach the point where it can no longer pay full benefits by 2035 unless Congress takes action to boost the program’s finances.

TSCL recently endorsed the legislation which includes another change that would boost benefits by using the Consumer Price Index for the Elderly (CPI-E) to calculate the annual cost-of-living adjustment (COLA).  These are exactly the types of benefit changes that have the strongest support from participants in TSCL’s recent surveys.

The bill strengthens Social Security finances with adjustments to existing sources of revenue and two new ones.  For example, in 2022 Social Security payroll taxes are applied to earnings up to $147,000.  The legislation would lift that and apply the payroll tax to all wages above $250,000.  That proposal also has the support of large majorities of TSCL survey participants.

The legislation would create a completely new source of revenue by applying the 12.4% Social Security tax to investment income and capital gains for individual taxpayers with incomes of $200,000 and up and, married taxpayers who file jointly with incomes of $250,000.  In addition, the bill would also apply a 16.2% tax on active S corporations and active limited partners.

As you can imagine, these tax provisions are controversial and while the legislation has strong support from TSCL and other Social Security advocacy groups, it has met strong resistance in the Senate.

TSCL is eager to hear what you think about this bill.  Please tell us by taking TSCL’s new Retirement Survey.