Democrats introduce bill to expand Social Security benefits, payroll tax

Democrats introduce bill to expand Social Security benefits, payroll tax
The bill would increase the average benefit by 2% and impose the payroll tax on wages above $400,000.
OCT 26, 2021

House Democrats introduced comprehensive Social Security reform legislation Tuesday that would boost payments and expand the payroll tax that supports the program.

The bill, the Social Security 2001: A Sacred Trust Act, would increase the average benefit for Social Security recipients by about 2%. It also modifies the cost-of-living adjustment formula to better protect against inflation, sets a new minimum benefit at 25% above the poverty line and ends the five-month waiting period for disability benefits, among its 17 enhancements to Social Security.  

The bill would pay for the additional benefits by applying the Social Security payroll tax to wages above $400,000, according to a summary. The levy is currently capped at $142,800; an annual inflation adjustment would gradually push that $142,800 cap up to $400,000, at which point all wages would be subject to the payroll tax. The measure also creates a unified Social Security trust fund by combining the two funds that currently comprise it – one for retirement and survivor benefits and one for disability insurance.

House Ways and Means Committee Democrats rolled out the bill in a Capitol Hill press conference that lasted more than an hour and included statements of support from more than a dozen lawmakers. The bill has nearly 200 original co-sponsors.

Democrats touted the measure with a sense of urgency — not only in terms of the millions of Americans who they said were struggling to get by on Social Security payments below the poverty level but also in terms of a political moment when Democrats control the House, Senate and White House.

“It’s now time to expand benefits [for] everyday, hard-working, decent Americans who work hard and play by the rules and contribute … through the payroll tax to this great program that has never missed a payment and stands as a hallmark to what good government is,” the bill’s author, Rep. John Larson, D-Conn. and chairman of the Ways and Means subcommittee on Social Security, said at the press conference.

Democrats maintain a three-seat majority in the House and the thinnest possible majority in the 50-50 Senate thanks to the tie-breaking vote of Vice President Kamala Harris. But the bill’s backers likely will have trouble obtaining Republican support, and the GOP can block legislation through a Senate filibuster.

But Democrats concentrated on their majorities at the Tuesday press conference.

“We have this rare moment to accomplish seismic achievements,” said Ways and Means Committee Chairman Richard Neal, D-Mass. “This is the time to do it.”

Rep. Bill Pascrell, D-N.J. and a co-sponsor of the bill, said: “With unified control of government, we must get this done for the American people.”

The Social Security Board of Trustees said in its annual report in August that the trust fund would be depleted one year sooner than previously predicted — in 2034 — as a result of the economic fallout from the coronavirus pandemic.

Democrats propose to bolster the trust fund and finance increased benefits by turning to a prominent theme of their agenda — increasing taxes on high-earners.

“The bill pays for these commonsense enhancements by asking the wealthy making over $400,000, who have been exempt, to pay their fair share,” Larson said.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.