Tax Fairness Cited as Rallying Cry in Efforts to Address Social Security - 401(k) Specialist

Senate Budget Committee deliberations this week focused on, among other key points, the revenue side of the Social Security funding dilemma, with Senator Patty Murray (D-WA) presenting a case for bilateral attention to be applied to achieving “tax fairness between the ultra-high-net-worth and other class sizes.” Sen. Murray emphasized the importance of seeking ways to increase Social Security’s revenue as a pathway to extending the program’s ability to pay full benefits, using a comparison between a worker earning close to the maximum amount taxable and a billionaire. Her anaysis stressed the resulting percentage inequity in the amount of revenue each provides.

This strategy is similar to that addressed in Rep. John B. Larson (D-CT)’s “Social Security 2100” Bill reintroduced in the 118th Congress, calling for applying the current payroll tax on all earnings above $400,000, “with those extra earnings counted toward benefits at a reduced rate.” In addition, the Larson bill would increase the Net Investment Income Tax (NIIT) for investment income over $400,000.

The hearing also examined the Republican Study Commission’s proposals for expense-side adjustments to address the looming solvency problem, with Kathleen Romig, director of Social Security and Disability Policy at the Center on Budget and Policy Priorities, weighing in on demographic effects of benefit reductions on various segments of the population.

Amanda Umpierrez, Managing Editor of 401(k) Specialist magazine, provides a review of Sen. Murray’s testimony on You can read the full post here.

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