US senator Bernie Sanders has announced a plan to raise payroll taxes on people making more than US$250,000 in a bid to boost social security cover for all citizens no matter what their income.
According to CNN, the presidential candidate is also preparing to introduce a 'Medicare for all' proposal over the coming weeks by ensuring the rich pay more to fund it.
"At a time when more than half of older Americans over the age of 55 have no retirement savings, our job is to expand Social Security to make sure that everyone in this country can retire with the dignity they have earned and everyone with a disability can live with the security they need," Sanders said.
The Social Security Expansion Act would increase benefits for all recipients, with low-income seniors receiving a boost of nearly US$1,300 a year. It would also make the annual cost of living adjustment more generous by shifting the formula to take into account health care and prescription drug costs, which rise faster than inflation.
To pay for the move, Sanders would require everyone with income of more than US$250,000 to pay the existing 12.4% Social Security payroll tax, which is split between workers and employers. It is currently only applied to salaries of up to US$132,900. Sanders also intends to levy a new 6.2% tax on single people with investment income of more than US$200,000 and couples earning over US$250,000.
The extra revenue would finance the Social Security fund for an additional 52 years, claimed Sanders' office. As it stands now, the system will no longer be able to pay out full benefits as of 2034, according to the 2018 annual report from the Social Security and Medicare trustees.
Democratic lawmakers in both chambers are looking for ways to boost benefits for retirees by asking the rich to contribute more. Connecticut Representative John Larson, along with more than 200 other lawmakers, last month reintroduced the Social Security 2100 Act, which would increase benefit and payroll taxes for everyone, but place an additional levy on those earning more than US$400,000. The move is predicted to extend Social Security's solvency beyond 2092.
But scrapping the payroll cap would fundamentally change the way the Social Security system operates. Benefits are based on how much retirees contributed to the system while they were working, a formula that was key to its support when the law was enacted in 1935. Under Sanders' Bill, the wealthy would not receive any extra returns for the additional payroll taxes they pay out.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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US senator Bernie Sanders has announced a plan to raise payroll taxes on people making more than US$250,000 in a bid to boost social security cover for all citizens no matter what their income.
According to CNN, the presidential candidate is also preparing to introduce a 'Medicare for all' proposal over the coming weeks by ensuring the rich pay more to fund it.
"At a time when more than half of older Americans over the age of 55 have no retirement savings, our job is to expand Social Security to make sure that everyone in this country can retire with the dignity they have earned and everyone with a disability can live with the security they need," Sanders said.
The Social Security Expansion Act would increase benefits for all recipients, with low-income seniors receiving a boost of nearly US$1,300 a year. It would also make the annual cost of living adjustment more generous by shifting the formula to take into account health care and prescription drug costs, which rise faster than inflation.
To pay for the move, Sanders would require everyone with income of more than US$250,000 to pay the existing 12.4% Social Security payroll tax, which is split between workers and employers. It is currently only applied to salaries of up to US$132,900. Sanders also intends to levy a new 6.2% tax on single people with investment income of more than US$200,000 and couples earning over US$250,000.
The extra revenue would finance the Social Security fund for an additional 52 years, claimed Sanders' office. As it stands now, the system will no longer be able to pay out full benefits as of 2034, according to the 2018 annual report from the Social Security and Medicare trustees.
Democratic lawmakers in both chambers are looking for ways to boost benefits for retirees by asking the rich to contribute more. Connecticut Representative John Larson, along with more than 200 other lawmakers, last month reintroduced the Social Security 2100 Act, which would increase benefit and payroll taxes for everyone, but place an additional levy on those earning more than US$400,000. The move is predicted to extend Social Security's solvency beyond 2092.
But scrapping the payroll cap would fundamentally change the way the Social Security system operates. Benefits are based on how much retirees contributed to the system while they were working, a formula that was key to its support when the law was enacted in 1935. Under Sanders' Bill, the wealthy would not receive any extra returns for the additional payroll taxes they pay out.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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