New Social Security 2100 Act Would Revamp COLA, Expand Payroll Tax

Rep. John Larson, D-Conn., has revived the bill previously known as Social Security 2100: A Sacred Trust, with a tweak to the cost-of-living adjustment intended to provide a bigger inflation buffer.

The legislation, reintroduced July 12, applies the payroll tax to annual wages above $400,000 and expands the net investment income tax.

This year's version of H.R. 4853, the Social Security 2100 Act, takes a new tack on calculating Social Security COLAs, Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League, explained.

Previous versions of Larson's bill tied the annual COLA to the Consumer Price Index for the Elderly (CPI-E).

"Concerns were raised in 2021 and 2022 however, when the price of oil-based products shot up to record levels," Johnson said in an email message Friday. "That drove the CPI-W to levels that were higher than the CPI-E, and paid a higher COLA than the CPI-E would have. That quite rightly gave many a pause to rethink the idea."

This new version of the Social Security 2100 Act resolves that issue by stipulating "the higher of either the CPI-E or the CPI-W," Johnson said.

The Senior Citizens League, Johnson said, "strongly supports this legislation since it would redesign Social Security benefits to provide more adequate income from Social Security while extending the solvency of the program by about 32 years," according to the Social Security Office of the Chief Actuary.

Other Social Security advocacy groups applauded the bill's reintroduction.

"The version of Social Security 2100 that was introduced in the last Congress was excellent and this one is even better," agreed Nancy Altman, president of Social Security Works, in another email. "It brings in considerably more revenue, while continuing to propose both across-the-board and important targeted increases."

The new bill "brings in investment income, as well as wage income," Altman explained, as set out in the new Section 203, which is described by the SSA chief actuary as: applying "a separate 12.4-percent tax on net investment income (NII), as defined in the Affordable Care Act (ACA), payable to the OASI and DI Trust Funds with an unindexed threshold of $400,000, effective 2025 and later."

The NII tax "would apply to the lesser of NII and the excess of modified adjusted gross income (MAGI) above the unindexed threshold of $400,000," according to the chief actuary. "This single threshold would apply regardless of tax filing status."

Max Richtman, president and CEO of the National Association to Preserve Social Security and Medicare, said in another message shared with ThinkAdivsor that Larson's bill is a "commonsense plan for keeping the program's trust fund solvent for decades to come, while also giving seniors a much-needed benefit boost, adopting a more accurate COLA formula, and repealing the unpopular and unfair WEP/GPO rules."

He was referring to the Windfall Elimination Provision and the Government Pension Offset, which can reduce benefits for public workers who did not pay Social Security taxes.

The bill, Richtman said, "would bring more revenue into the program by having the wealthy contribute their fair share in payroll taxes."

Will the Social Security 2100 Act Pass?

Richtman and Altman agreed that Larson's bill is unlikely to see a vote on the House floor anytime soon.

The legislation has not yet been passed out of the House Ways & Means Social Security subcommittee or the full committee, Richtman said.

Further, during the 11 legislative days in the House calendar during September, "lawmakers will be contending with spending issues and avoiding a government shutdown," Richtman said. "The remainder of the fall will likely be devoted to keeping the government functioning."

House Majority Leader Kevin McCarthy and his Republican caucus, however, "should have the courage of their convictions and bring Social Security 2100 up for a vote, alongside the Republican Social Security plan described in the Republican Study Committee budget," Richtman opined.

In the meantime, "we and other advocacy groups will continue to build grassroots support for the improvements in Rep. Larson's bill," Richtman relayed, "and you can bet that protecting and boosting Social Security will be an issue in the 2024 campaign."