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| Actuarial Publications |
Summary of Provisions That Would Change the Social Security Program |
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Description of Proposed Provisions:
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Estimates based on the intermediate assumptions of the 2014 Trustees Report
| Printer-friendly Version (PDF) |
| Change from present law [percent of payroll] |
Shortfall eliminated | |||||
|---|---|---|---|---|---|---|
| Long-range actuarial balance |
Annual balance in 75th year |
Long-range actuarial balance |
Annual balance in 75th year |
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| Present law shortfall in long-range actuarial balance is 2.88 percent of payroll and annual balance in the 75th year is 4.90 percent of payroll. | ||||||
| E1.1 |
Increase the payroll tax rate (currently 12.4 percent) to 15.5
percent in 2015 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
2.94 | 3.07 | 102% | 63% | |
| E1.2 |
Increase the payroll tax rate (currently 12.4 percent) to 15.5 percent in 2027-2056,
and to 18.6 percent in years 2057 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
3.24 | 6.00 | 112% | 122% | |
| E1.3 |
Reduce the payroll tax rate (currently 12.4 percent) to 11.4 percent in 2015 and later.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
-0.97 | -1.01 | -34% | -21% | |
| E1.4 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1
percentage point each year from 2020-2039, until the rate reaches
14.4 percent in 2039 and later.
graph | table | pdf-graph | pdf-table | Larson | memo (National Academy of Social Insurance) |
1.42 | 1.99 | 49% | 41% | |
| E1.5 |
Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2017, 12.9 percent
in 2025, 13.1 in percent in 2035, 13.9 percent in 2045, 13.5 percent in 2055, and 13.3 percent
in 2065 and later.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.74 | 0.91 | 26% | 19% | |
| E1.6 |
Increase the payroll tax rate (currently 12.4 percent) to 12.6 percent in 2017, 12.9 percent
in 2025, 13.3 in percent in 2035, 13.8 percent in 2045, 14.4 percent in 2065, and 14.5 percent
in 2080 and later.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
1.04 | 2.07 | 36% | 42% | |
| E1.7 |
Increase the payroll tax rate (currently 12.4 percent) to 12.7 percent in 2017, 13.0 percent
in 2030, 13.3 in percent in 2045, 14.0 percent in 2065, 14.5 percent in 2075, and 14.7
percent in 2085 and later.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.85 | 2.25 | 29% | 46% | |
| E1.8 |
Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each
year from 2017-2022, until the rate reaches 13.0 percent for 2022 and later.
graph | table | pdf-graph | pdf-table | memo (Moore) |
0.53 | 0.60 | 19% | 12% | |
| E2.1 |
Eliminate the taxable maximum in years 2015 and later, and apply full 12.4 percent
payroll tax rate to all earnings. Do not provide benefit credit for earnings above
the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
2.35 | 2.47 | 82% | 50% | |
| E2.2 |
Eliminate the taxable maximum in years 2015 and later, and apply full 12.4 percent
payroll tax rate to all earnings. Provide benefit credit for earnings above the
current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
1.91 | 1.60 | 66% | 33% | |
| E2.3 |
Eliminate the taxable maximum in years 2015 and later, and apply full 12.4 percent
payroll tax rate to all earnings. Provide benefit credit for earnings above the
current-law taxable maximum, adding a bend point at the current-law taxable maximum
and applying a formula factor of 3 percent for AIME above this new bend point.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
2.15 | 2.16 | 75% | 44% | |
| E2.4 |
Eliminate the taxable maximum for years 2021 and later (phased in
2015-2020), and apply full 12.4 percent payroll tax rate to all
earnings. Provide benefit credit for earnings above the current-law
taxable maximum that are subject to the payroll tax, using a
secondary PIA formula. This secondary PIA formula involves: (1) an
"AIME+" derived from annual earnings from each year after 2014 that
were in excess of that year's current-law taxable maximum; (2) a new
bend point equal to 134 percent of the monthly current-law
taxable maximum; and (3) formula factors of 3 percent and 0.25
percent below and above the new bend point, respectively.
graph | table | pdf-graph | pdf-table | memo (Deutch) |
2.18 | 2.35 | 76% | 48% | |
| E2.5 |
Apply 12.4 percent payroll tax rate on earnings above $250,000 starting in 2015, and tax all
earnings once the current-law taxable maximum exceeds $250,000. Do not provide benefit credit
for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Sanders) | memo (DeFazio) |
2.16 | 2.47 | 75% | 50% | |
| E2.6 |
Apply a 3 percent payroll tax on earnings above the current-law taxable maximum starting in 2015.
Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.61 | 0.64 | 21% | 13% | |
| E2.7 |
Apply a 6 percent payroll tax on earnings above the current-law taxable maximum starting in 2015.
Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Wexler) |
1.19 | 1.25 | 41% | 26% | |
| E2.8 |
Apply a 2 percent payroll tax on earnings above the current-law taxable maximum for years 2017-2064,
and a 3 percent rate for years 2065 and later. Do not provide benefit credit for earnings above the
current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.44 | 0.63 | 15% | 13% | |
| E2.9 |
Apply the following payroll tax rates above the current-law taxable maximum: 2.0 percent in
2017, 3.0 percent in 2030, 3.5 percent in 2045, 4.5 percent in 2055, and 5.5 percent in 2065
and later. Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.70 | 1.14 | 24% | 23% | |
| E2.10 |
Eliminate the taxable maximum in years 2025 and later. Phase in elimination by taxing all
earnings above the current-law taxable maximum at: 1.24 percent in 2016, 2.48 percent in 2017,
and so on, up to 11.16 percent in 2024. Provide benefit credit for earnings above the current-law
taxable maximum, adding a bend point at the current-law taxable maximum and applying a formula
factor of 5 percent for AIME above this new bend point.
graph | table | pdf-graph | pdf-table | memo (Harkin 2012) |
1.91 | 2.05 | 66% | 42% | |
| E2.11 |
Eliminate the taxable maximum in years 2020 and later. Phase in elimination by taxing all
earnings above the current-law taxable maximum at: 2.48 percent in 2016, 4.96 percent in 2017,
and so on, up to 12.40 percent in 2020. Provide benefit credit for earnings above the current-law
taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This
secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after
2014 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of
5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Harkin 2013) |
2.09 | 2.16 | 72% | 44% | |
| E2.12 |
Eliminate the taxable maximum in years 2026 and later. Phase in elimination by taxing all
earnings above the current-law taxable maximum at: 1.24 percent in 2017, 2.48 percent in
2018, and so on, up to 11.16 percent in 2025. Provide benefit credit for earnings above
the current-law taxable maximum. Create a new bend point at the current-law taxable maximum
with a 3 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Moore) |
1.91 | 2.15 | 66% | 44% | |
| E2.13 |
Apply OASDI payroll tax rate on earnings above $400,000 starting in
2016, and tax all earnings once the current-law taxable maximum exceeds $400,000.
Provide benefit credit for earnings above the current-law taxable maximum that
are subject to the payroll tax, using a secondary PIA formula. This secondary
PIA formula involves: (1) an "AIME+" derived from annual earnings from each year
after 2015 that were in excess of that year's current-law taxable maximum; and
(2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson) |
1.84 | 2.35 | 64% | 48% | |
| E3.1 |
Increase the taxable maximum such that 90 percent of earnings would be subject to the
payroll tax (phased in 2015-2024). Provide benefit credit for earnings up to the
revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board) |
0.77 | 0.63 | 27% | 13% | |
| E3.2 |
Increase the taxable maximum such that 90 percent of earnings would be subject to the
payroll tax (phased in 2015-2024). Do not provide benefit credit for additional earnings
taxed.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick) |
0.97 | 1.11 | 34% | 23% | |
| E3.3 |
Increase the taxable maximum such that 90 percent of earnings would be subject to the
payroll tax (phased in 2016-2021). Provide benefit credit for earnings up to the revised
taxable maximum.
graph | table | pdf-graph | pdf-table | memo (AARP) |
0.78 | 0.63 | 27% | 13% | |
| E3.4 |
Increase the taxable maximum from $106,800 to $115,200 (in 2009 AWI-indexed dollars),
phased in 2015-2017. Provide benefit credit for earnings up to the revised taxable
maximum.
graph | table | pdf-graph | pdf-table | memo (Warshawsky) |
0.11 | 0.08 | 4% | 2% | |
| E3.5 |
Increase the taxable maximum each year by an additional 2 percent beginning in 2015 until
taxable earnings equal 90 percent of covered earnings. Provide benefit credit for earnings
up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center) | memo (National Academy of Social Insurance) |
0.62 | 0.66 | 21% | 14% | |
| E3.6 |
Increase the taxable maximum each year by an additional 2 percent beginning in 2017 until
taxable earnings equal 90 percent of covered earnings. Do not provide benefit credit for
additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA) |
0.72 | 1.10 | 25% | 22% | |
| E3.7 |
Increase the taxable maximum by an additional 2 percent per year beginning in 2016 until
taxable earnings equal 90 percent of covered earnings. Provide benefit credit for earnings
up to the revised taxable maximum. Create a new bend point equal to the current-law
taxable maximum with a 5 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission) |
0.62 | 0.77 | 22% | 16% | |
| E3.8 |
Beginning in 2022, apply 2 percent payroll tax rate on earnings over the wage-indexed
equivalent of $200,000 in 2017, with the threshold wage-indexed after 2022. Provide
proportional benefit credit for additional earnings taxed, based on the payroll tax
rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.20 | 0.16 | 7% | 3% | |
| E3.9 |
Beginning in 2022, apply 2 percent payroll tax rate on earnings over the wage-indexed
equivalent of $200,000 in 2017, with the threshold wage-indexed after 2022. Do not
provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.25 | 0.30 | 9% | 6% | |
| E3.10 |
Beginning in 2022, apply 2 percent payroll tax rate on earnings over the wage-indexed
equivalent of $300,000 in 2017, with the threshold wage-indexed after 2022. Provide
proportional benefit credit for additional earnings taxed, based on the payroll tax
rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.15 | 0.12 | 5% | 2% | |
| E3.11 |
Beginning in 2022, apply 2 percent payroll tax rate on earnings over the wage-indexed
equivalent of $300,000 in 2017, with the threshold wage-indexed after 2022. Do not
provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.19 | 0.23 | 7% | 5% | |
| E3.12 |
Beginning in 2022, apply 2 percent payroll tax rate on earnings over the wage-indexed
equivalent of $400,000 in 2017, with the threshold wage-indexed after 2022. Provide
proportional benefit credit for additional earnings taxed, based on the payroll tax
rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.12 | 0.10 | 4% | 2% | |
| E3.13 |
Beginning in 2022, apply 2 percent payroll tax rate on earnings over the wage-indexed
equivalent of $400,000 in 2017, with the threshold wage-indexed after 2022. Do not
provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates) |
0.16 | 0.19 | 5% | 4% | |
| E3.14 |
Eliminate the taxable maximum for the employer payroll tax (6.2 percent) beginning in
2015. For the employee payroll tax (6.2 percent) and for benefit credit purposes,
beginning in 2015, increase the taxable maximum by an additional 2 percent per year until
taxable earnings equal 90 percent of covered earnings.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance) |
1.43 | 1.38 | 50% | 28% | |
| E3.15 |
Increase the taxable maximum such that 90 percent of earnings are subject to the payroll tax
(phased in 2015-2024). In addition, apply a tax rate of 6.2 percent for earnings above the
revised taxable maximum (phased in from 2015-2024). Provide benefit credit for earnings
taxed up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging) |
1.40 | 1.34 | 48% | 27% | |
| E3.16 |
Beginning in 2016, apply 4 percent payroll tax rate on earnings
above the wage-indexed equivalent of $400,000 in 2015, with the
threshold wage-indexed after 2016. Provide benefit credit for
additional earnings taxed, using a secondary PIA formula. This
secondary PIA formula involves: (1) an "AIME+" derived from annual
earnings taxed only between 2015 wage-indexed equivalents of
$400,000 and $500,000; and (2) a formula factor of 2 percent on this
newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo(Begich, Murray) |
0.32 | 0.35 | 11% | 7% | |
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