Medicare and Social Security Fair Share Act Boosts Taxes on Wealthy
The bill would also require owners of pass-through businesses like hedge funds, private equity firms, and certain oil and gas companies making more than $400,000 to contribute to Medicare and Social Security on their pass-through business income. These types of businesses, according to the bill summary, can “avoid Medicare taxes and the Net Investment Income Tax by disguising earned income as distributed business profits.”
New analysis released Tuesday by the Social Security Administration’s Office of the Chief Actuary estimates that enactment of certain provisions in the bill “would extend the ability of the [Old-Age, Survivors and Disability Insurance] program to pay scheduled benefits in full and on time throughout the 75-year projection period.”
Further, the analysis states, “enactment of these provisions, the OASDI program would meet the further conditions for sustainable solvency, because projected combined trust fund reserves would be growing as a percentage of the annual cost of the program at the end of the long-range period.”
The Institute on Taxation and Economic Policy, a think tank that favors increasing tax revenue and opposes loopholes that favor the wealthy, said Tuesday in a brief that under the bill, “Virtually no one outside of the richest 5% of taxpayers would pay more under the proposal and 93% of the total tax increase would be paid by the richest 1% alone in 2024.”
Advocates Weigh In
Dan Adcock, Director of Government Relations and Policy at the National Committee to Preserve Social Security and Medicare, told ThinkAdvisor Wednesday in an email that the group supports “provisions in the bill that would extend Social Security and Medicare Part A trust fund solvency by having the wealthy pay their fair share into both programs.”
Adcock said the committee has “not yet taken a position on Senator Whitehouse and Congressman Boyle’s bill,” as the group is reviewing the bill.
Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League, said the group “strongly supports this legislation that would strengthen Social Security for the long term.”
That said, Johnson continued, “while this legislation would require earners with incomes over $400,000 to pay on all covered earnings, there would be no credit of those earnings towards benefits.”
The Senior Citizens League “believes that to gain buy-in from workers for this approach, the Social Security benefit formula could be modified to allow a modest credit for those additional payroll taxes,” she said. “In other words we feel it fair to consider approaches that allow workers who pay in more to get a little more in their benefits.”
