“We have a very overcrowded budget,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center. “And if social security gets mixed up with everything else, the future program is at risk.”
Joseph R. Biden Jr., the Democratic nominee, has a A proposal more moderate than many offered by the progressive wing of his party. Still, it would make fundamental changes.
Mr Biden suggests widening the payroll tax, but only for the highest-income Americans. Currently, wage tax – 12.4 percent split between employees and employers – applies to the first $ 137,700 of a worker’s income. Under Mr. Biden’s plan, high earners would also have tax assessed on their income above $ 400,000. (As the $ 137,700 threshold rises over time, ultimately all income up to $ 400,000 would be subject to tax – in about 30 years, the Urban Institute estimated.)
For decades, the amount an employee pays into the system has taken into account how much he ultimately receives in benefits. But Mr Biden has suggested that higher earners may not get any consideration for the additional tax they paid, a change that would break a link that has existed since the program began. However, the problem is still being investigated and no decision has been made.
“A key principle of social security in general – and the social security program in particular – is that contributions are tied to benefit calculations,” said William Arnone, executive director of the National Academy of Social Insurance, a bipartisan group of social security experts.
Mr Biden’s plan also provides more generous benefits, including a new minimum benefit for new retirees that is 125 percent of the poverty line, or $ 15,950 in 2020. It would also allow certain caregivers who cannot work full-time to earn social security credits. According to a recent analysis by the Urban Institute, these and other provisions would immediately lift more than 350,000 beneficiaries out of poverty.
And all retirees would likely see their performance reviews grow a little faster. Mr Biden’s plan would calculate cost of living adjustments using a different price index that more accurately captures the expenses of older consumers, such as health bills.