Social Security Could Be Safe for Generations Under New Tax Plan

Social Security could remain solvent for generations to come if a tax plan proposed by Democratic lawmakers is enacted, according to a new analysis.

Shoring up Social Security has become a major issue ahead of the 2024 election. The annual Social Security and Medicare trustees' report warned in March that the program's trust fund could be depleted in a decade and is forecast to cover only 77 percent of benefits starting in 2033.

But the Medicare and Social Security Fair Share Act, introduced by Rep. Brendan Boyle (D-PA) and Sen. Sheldon Whitehouse (D-RI), would extend Social Security's lifespan by at least 75 years, according to an analysis by the Social Security Administration's Office of the Chief Actuary.

The bill would require taxpayers making more than $400,000 to contribute "a fairer share" to Social Security. It would also require them to contribute more to Medicare, close a loophole that favors high-earners and ensure that "wealthy owners of pass-through businesses like hedge funds and private equity firms with more than $400,000 in annual income cannot avoid Medicare taxes."

In a news release, Whitehouse and Boyle said the legislation, if passed, would "extend Social Security solvency indefinitely by making the nation's highest earners contribute their fair share."

According to the analysis, if enacted, the legislation's provisions would extend the ability of the Old Age, Survivors, and Disability Insurance (OASDI) program to "pay scheduled benefits in full and on time throughout the 75-year projection period."

Additionally, the analysis found that by enacting the 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."

Nancy Altman, the president of advocacy group Social Security Works, told Newsweek that there are "only two options to eliminate Social Security's protected shortfall: cut benefits or increase revenue."

"Democrats and Republicans pose dramatically different visions for Social Security's future," Altman said.

"Given Social Security's inadequately low benefits, Democrats have ruled out cuts. Given today's enormous and destabilizing wealth and income inequality, Democrats propose raising the needed revenue from millionaires and billionaires. The Medicare and Social Security Fair Share Act does just that."

In a statement, Boyle, a ranking member of the House Budget Committee, said the legislation "saves Social Security and Medicare for generations to come.

"Social Security and Medicare represent a commitment made by this country decades ago to honor the dignity and independence of senior citizens and disabled citizens. Rather than tearing these programs down, as some in Congress want to do, we should be strengthening and securing them."

Whitehouse, chairman of the Senate Budget Committee, said the "mega-rich—taking advantage of our rigged tax code—have avoided paying Social Security taxes on most of their income, threatening the promise of Social Security for future generations.

"But as the new analysis from the Social Security Administration shows, we can protect this bedrock program for all and improve our broken tax code—a win-win in my book."

Whitehouse noted that some Republicans had recently joined Democrats in promising not to cut Social Security.

That "leaves raising revenue as the only option to protect the program," he said. "I invite my Republican colleagues to join me in shoring up this vital lifeline by leveling the playing field so that teachers, nurses, and firefighters aren't paying more of their income in taxes than billionaires.

"In sharp contrast, Republicans oppose tax increases even for the very wealthiest, leaving only Social Security benefit cuts. The choice for voters on this vital issue could not be clearer."

Republicans have not united behind a plan to keep Social Security solvent. A plan offered up by members of the House Republican Study Committee proposed raising the age at which someone could start claiming full Social Security benefits.

In May, House Speaker Kevin McCarthy announced the launch of a fiscal commission tasked with finding ways to reduce the national debt. The Republican leader later said the commission would "look at" reducing funding for Social Security and Medicare. "I'm going to make some people uncomfortable," he said.

Newsweek contacted McCarthy's office on Wednesday via email for comment.

The Senate Budget Committee is holding a hearing to consider ways to protect Social Security on Wednesday morning.