Recently Congressman John Larson of Connecticut reintroduced a bill to increase Social Security benefits in the future. The Social Security 2100 Act would expand Social Security benefits, while extending future program solvency. There are both proponents and critics of the bill. Let’s take a closer look, and explore how this could impact Social Security Disability benefits.
A Problem of Solvency
One of the most pressing concerns regarding Social Security is ongoing solvency, as the cost of the program is growing faster than workers’ earnings can support. With Americans now living longer, they now collect benefits over a larger portion of their lives. At the same time, a lower birthrate in the U.S. means fewer workers are paying into the system.
According to Social Security trustees, repairing the current shortfall would require an increase in the payroll tax rate from 12.4% to 15.2% on all workers. Other solutions indicate a 21% across-the-board decrease in benefits for all future claimants. Even so, these measures may not be sufficient to sustain the program past 2034—the year Social Security experts predict insolvency.
The Larson Plan
The bill would raise payroll taxes for employers and employees by 1.2% over 24 years. It would also cut income taxes on Social Security benefits, raising the income threshold at which benefits would be taxed. According to Larson, some 12 million of Social Security’s more than 63 million total beneficiaries would receive a tax cut.
It would also subject any earnings in excess of $400,000 to Social Security payroll taxes. Currently, Social Security taxes only apply to a wage earner’s first $132,900 of income. Income between $132,900 and $400,000 is not taxed. Over time, the bill would eliminate the cap, subjecting all earnings to tax.
Bill supporters believe that lifting the cap on income subject to payroll taxes and raising tax rates could finance generous benefit and cost-of-living adjustments and help ensure program solvency for more than 75 years, while reducing income taxes on benefits and closing Social Security’s long-term funding gap.
However, critics are concerned the bill would worsen income losses for younger workers by expanding benefits and costs faster than current law allows. They also suggest that the increase in payroll taxes could hurt workers with lower incomes.
Another main concern surrounding the Larson bill is a provision to merge the disability insurance trust fund with the retirement trust fund. Under the current policy agreement, the Social Security Disability benefits program is not allowed to divert funds from the Social Security retirement program.
We Can Help
If you are disabled and unable to work, call Disability Attorneys of Michigan for a free confidential consultation. We’ll let you know if we can help you get a monthly check and help you determine if any money or assets you receive could impact your eligibility for disability benefits.
Disability Attorneys of Michigan works hard every day helping the disabled of Michigan seek the Social Security Disability benefits they need. If you are unable to work due to a physical, mental, or cognitive impairment; call Disability Attorneys of Michigan now for a free consultation at 800-949- 2900.
Let Michigan’s experienced Social Security Disability law firm help you get the benefits you deserve.
Disability Attorneys of Michigan, Compassionate Excellence.