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Louis Jacobson
By Louis Jacobson December 17, 2021

House bill would expand taxation for wealthy Americans to support Social Security

On Oct, 26, Rep. John Larson, D-Conn., introduced H.R. 5723, which includes many of the proposals on Social Security that Joe Biden outlined during the 2020 presidential campaign. 

The bill would expand benefits in several ways; we're tracking those provisions in a separate Biden promise. But it would also address the issue of Social Security's long-term solvency. 

When he made his promise, Biden said that he would ask Americans "with especially high wages to pay the same taxes on those earnings that middle-class families pay."

The Larson bill takes the approach Biden outlined by changing the calculations for payroll taxes, which undergird the trust funds that support Social Security. 

Currently, payroll taxes are collected on an individual's annual wages only up to $142,800. The Larson bill would newly apply the payroll tax to any wages above $400,000 also. Wages between those two thresholds would not subject to additional payroll taxes.

Backers of the bill say the tax provision would affect only 0.4% of wage earners but would raise enough revenue to fill more than half the current shortfall in the Social Security trust funds.

The measure had attracted 196 co-sponsors by mid-December, all of them Democrats, and on Dec. 7, the House Ways and Means Subcommittee on Social Security held a hearing on the measure. 

It's too early to say how much attention Democratic leaders will give this legislation, or what the Congressional Budget Office, Congress' independent budget arbiter, will conclude about its impact on the trust fund shortfall.

Still, the bill's introduction is enough to move this promise to In the Works.

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