Description of Proposed Provision:
E3.16: Beginning in 2021, apply 4 percent payroll tax rate on earnings above the wage-indexed equivalent of $400,000 in 2015 (about $480,000 in 2021), with the threshold wage-indexed after 2021. Provide benefit credit for additional earnings taxed, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings taxed only between 2015 wage-indexed equivalents of $400,000 and $500,000, or about $480,000 and $600,000 in 2021 (with thresholds wage-indexed after 2021); and (2) a formula factor of 2 percent on this newly computed "AIME+".

Estimates based on the intermediate assumptions of the 2019 Trustees Report

Summary Measures
Current law
[percent of payroll]
  Change from current law
[percent of payroll]
  Shortfall eliminated
Long-range
actuarial
balance
Annual
balance in
75th year
  Long-range
actuarial
balance
Annual
balance in
75th year
  Long-range
actuarial
balance
Annual
balance in
75th year
-2.78 -4.11   0.30 0.32   11% 8%

graph of OASDI cost rates and income rates by year, under
                 current law and provision. click on graph to view underlying
                 data. graph of OASDI trust fund ratio by year, under current law
                 and provision. click on graph to view underlying data.