Tax Foundation Weighs In on Medicare and Social Security Fair Share Act - Tax Foundation
Tax Foundation Senior Policy Analyst Garrett Watson’s detailed study of the proposed Medicare and Social Security Fair Share Act legislation introduced last year concluded that the measures “will not fully solve the entitlement crisis and will hurt economic growth.” In reviewing the House and Senate bills (H.R. 4535 and S.1174) introduced last year, Watson based his conclusions that the impact of massive tax increases resulting from this bill would lead to reductions in gross domestic product, wages, and employment.
Watson also notes that the bills’ comprehensive changes to the Social Security and Medicare funding streams would yield “some of the highest tax rates on income in the Organisation for Economic Co-operation and Development (OECD).” His analysis also points out that the bills’ sole focus on taxes would “put the U.S. in an uncompetitive international position,” yielding a potential combined income tax rate just under 60%.
As Watson suggests in his closing, most folks conclude that a combination of revenue increases and program changes is the likely best path to resolving the Social Security and Medicare long-term solvency problems. Read Watson’s full post here.
With respect to Social Security, an example of the leading thoughts on reform is the proposal developed by the Association of Mature American Citizens (AMAC, Inc.). AMAC believes Social Security must be preserved and modernized. This can be achieved without tax increases by slight modifications to cost-of-living adjustments and payments to high income beneficiaries plus gradually increasing the full (but not early) retirement age. AMAC Action, AMAC’s advocacy arm, supports an increase in the threshold where benefits are taxed and then indexing for inflation, and calls for eliminating the reduction in people’s benefits for those choosing to work before full retirement age. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade.