Description of Proposed Provisions:
Provisions Affecting Payroll Taxes

Estimates based on the intermediate assumptions of the 2018 Trustees Report
  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
Current law shortfall in long-range actuarial balance is 2.84 percent of payroll and in annual balance for the 75th year is 4.32 percent of payroll.
E1.1 Increase the payroll tax rate (currently 12.4 percent) to 15.4 percent in 2019 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
2.85 2.97 100% 69%
E1.2 Increase the payroll tax rate (currently 12.4 percent) to 15.5 percent in 2031-2060, and to 18.6 percent in years 2061 and later.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
3.33 5.99 117% 139%
E1.4 Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each year from 2024-2043, until the rate reaches 14.4 percent in 2043 and later.
graph | table | pdf-graph | pdf-table | memo (Larson 2014) | memo (National Academy of Social Insurance)
1.45 1.98 51% 46%
E1.8 Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each year from 2021-2026, until the rate reaches 13.0 percent for 2026 and later.
graph | table | pdf-graph | pdf-table | memo (Moore)
0.54 0.60 19% 14%
E1.9 Increase the payroll tax rate (currently 12.4 percent) by 0.1 percentage point each year from 2022-2045, until the rate reaches 14.8 percent in 2045. Then increase the payroll tax rate an additional 0.1 percentage point in each year from 2084-2088, until the rate reaches 15.3 percent for 2088 and later.
graph | table | pdf-graph | pdf-table | memo (Larson 2017) | memo (Larson 2015)
1.77 2.85 62% 66%
E1.10 Increase the payroll tax rate by 0.1 percentage point per year for 2020 through 2029 so that it equals 13.4 percent for 2029 and later. The increase would be split evenly between the employer and employee share, and would be split between OASI and DI in proportion to currently scheduled payroll tax rates.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016)
0.88 1.00 31% 23%
E2.1 Eliminate the taxable maximum in years 2019 and later, and apply full 12.4 percent payroll tax rate to all earnings. Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (DeFazio 2015) | memo (Social Security Advisory Board)
2.35 2.46 83% 57%
E2.2 Eliminate the taxable maximum in years 2019 and later, and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
1.93 1.68 68% 39%
E2.3 Eliminate the taxable maximum in years 2019 and later, and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit credit for earnings above the current-law taxable maximum. Create a new bend point at the current-law taxable maximum with a 3 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
2.16 2.17 76% 50%
E2.4 Eliminate the taxable maximum for years 2025 and later (phased in 2019-2025), and apply full 12.4 percent payroll tax rate to all earnings. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2018 that were in excess of that year's current-law taxable maximum; (2) a new bend point equal to 134 percent of the monthly current-law taxable maximum; and (3) formula factors of 3 percent and 0.25 percent below and above the new bend point, respectively.
graph | table | pdf-graph | pdf-table | memo (Deutch, Hirono) | memo (Deutch 2015) | memo (Deutch 2010)
2.18 2.35 77% 54%
E2.5 Apply 12.4 percent payroll tax rate on earnings above $250,000 starting in 2019, and tax all earnings once the current-law taxable maximum exceeds $250,000. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Sanders, DeFazio) | memo (Sanders 2016) | memo (Sanders 2015) | memo (Sanders 2013) | memo (DeFazio 2011)
2.20 2.46 77% 57%
E2.6 Apply a 3 percent payroll tax on earnings above the current-law taxable maximum starting in 2019. Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (AARP)
0.61 0.63 21% 15%
E2.8 Apply a 2 percent payroll tax on earnings above the current-law taxable maximum for years 2021-2068, and a 3 percent rate for years 2069 and later. Do not provide benefit credit for earnings above the current-law taxable maximum.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA)
0.44 0.63 16% 15%
E2.11 Eliminate the taxable maximum in years 2024 and later. Phase in elimination by taxing all earnings above the current-law taxable maximum at: 2.48 percent in 2020, 4.96 percent in 2021, and so on, up to 12.40 percent in 2024. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2019 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Sanchez) | memo (Schatz) | memo (Harkin 2013)
2.11 2.20 74% 51%
E2.12 Eliminate the taxable maximum in years 2030 and later. Phase in elimination by taxing all earnings above the current-law taxable maximum at: 1.24 percent in 2021, 2.48 percent in 2022, and so on, up to 12.40 percent in 2030. Provide benefit credit for earnings above the current-law taxable maximum. Create a new bend point at the current-law taxable maximum with a 3 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Moore)
1.93 2.17 68% 50%
E2.13 Apply OASDI 12.4 percent payroll tax rate on earnings above $400,000 starting in 2020, and tax all earnings once the current-law taxable maximum exceeds $400,000. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2019 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson 2015) | memo (Larson 2014)
1.90 2.35 67% 54%
E2.14 Apply OASDI 12.4 percent payroll tax rate on earnings above $250,000 starting in 2020, and tax all earnings once the current-law taxable maximum exceeds $250,000. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2019 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Lawson)
2.13 2.35 75% 54%
E2.15 Apply OASDI 12.4 percent payroll tax rate on earnings above $300,000 starting in 2020, and tax all earnings once the current-law taxable maximum exceeds $300,000. Provide benefit credit for earnings above the current-law taxable maximum that are subject to the payroll tax, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from annual earnings from each year after 2019 that were in excess of that year's current-law taxable maximum; and (2) a formula factor of 3 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Crist)
2.03 2.30 71% 53%
E3.1 Increase the taxable maximum such that 90 percent of earnings would be subject to the payroll tax (phased in 2019-2028). Provide benefit credit for earnings up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Social Security Advisory Board)
0.79 0.68 28% 16%
E3.2 Increase the taxable maximum such that 90 percent of earnings would be subject to the payroll tax (phased in 2019-2028). Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Liebman, MacGuineas, Samwick)
0.98 1.11 35% 26%
E3.5 Increase the taxable maximum each year by an additional 2 percent beginning in 2019 until taxable earnings equal 90 percent of covered earnings. Provide benefit credit for earnings up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center 2010) | memo (National Academy of Social Insurance)
0.65 0.70 23% 16%
E3.6 Increase the taxable maximum each year by an additional 2 percent beginning in 2021 until taxable earnings equal 90 percent of covered earnings. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (NRC/NAPA)
0.75 1.10 26% 26%
E3.7 Increase the taxable maximum by an additional 2 percent per year beginning in 2020 until taxable earnings equal 90 percent of covered earnings. Provide benefit credit for earnings up to the revised taxable maximum. Create a new bend point equal to the current-law taxable maximum with a 5 percent formula factor applying above the new bend point.
graph | table | pdf-graph | pdf-table | memo (Fiscal Commission)
0.66 0.80 23% 19%
E3.8 Beginning in 2026, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $200,000 in 2017 (about $279,300 in 2026), with the threshold wage-indexed after 2026. Provide proportional benefit credit for additional earnings taxed, based on the payroll tax rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.20 0.17 7% 4%
E3.9 Beginning in 2026, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $200,000 in 2017 (about $279,300 in 2026), with the threshold wage-indexed after 2026. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.25 0.29 9% 7%
E3.10 Beginning in 2026, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $300,000 in 2017 (about $419,100 in 2026), with the threshold wage-indexed after 2026. Provide proportional benefit credit for additional earnings taxed, based on the payroll tax rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.14 0.12 5% 3%
E3.11 Beginning in 2026, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $300,000 in 2017 (about $419,100 in 2026), with the threshold wage-indexed after 2026. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.18 0.22 6% 5%
E3.12 Beginning in 2026, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $400,000 in 2017 (about $558,900 in 2026), with the threshold wage-indexed after 2026. Provide proportional benefit credit for additional earnings taxed, based on the payroll tax rate applied to the additional earnings divided by the full 12.4 percent payroll tax rate.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.12 0.10 4% 2%
E3.13 Beginning in 2026, apply 2 percent payroll tax rate on earnings over the wage-indexed equivalent of $400,000 in 2017 (about $558,900 in 2026), with the threshold wage-indexed after 2026. Do not provide benefit credit for additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Johnson, Brady, Ryan) (includes similar provisions with 3 percent and 4 percent payroll tax rates)
0.15 0.18 5% 4%
E3.14 Eliminate the taxable maximum for the employer payroll tax (6.2 percent) beginning in 2019. For the employee payroll tax (6.2 percent) and for benefit credit purposes, beginning in 2019, increase the taxable maximum by an additional 2 percent per year until taxable earnings equal 90 percent of covered earnings.
graph | table | pdf-graph | pdf-table | memo (National Academy of Social Insurance)
1.45 1.41 51% 33%
E3.15 Increase the taxable maximum such that 90 percent of earnings are subject to the payroll tax (phased in 2019-2028). In addition, apply a tax rate of 6.2 percent for earnings above the revised taxable maximum (phased in from 2019-2028). Provide benefit credit for earnings taxed up to the revised taxable maximum.
graph | table | pdf-graph | pdf-table | memo (Senate Special Committee on Aging)
1.41 1.39 50% 32%
E3.16 Beginning in 2020, apply 4 percent payroll tax rate on earnings above the wage-indexed equivalent of $400,000 in 2015 (about $462,300 in 2020), with the threshold wage-indexed after 2020. 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 $462,300 and $578,100 in 2020 (with thresholds wage-indexed after 2020); and (2) a formula factor of 2 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Larson 2017) | memo (Begich, Murray)
0.31 0.33 11% 8%
E3.17 Beginning in 2020, increase the taxable maximum by twice the rate of increase in the national Average Wage Index, but never by less than 3 percent. Provide benefit credit for earnings up to the revised taxable maximum levels.
graph | table | pdf-graph | pdf-table | memo (Murphy)
1.08 1.51 38% 35%
E3.18 Increase the taxable maximum linearly over 4 years to $222,600 for 2023. After 2023, index the taxable maximum to AWI plus 0.5 percentage point. Apply benefit credit on additional earnings taxed.
graph | table | pdf-graph | pdf-table | memo (Bipartisan Policy Center October 2016) | memo (Bipartisan Policy Center June 2016)
0.63 0.70 22% 16%
E3.19 Increase the taxable maximum such that 90 percent of earnings would be subject to the payroll tax (phased in linearly from 2020-2025). Provide benefit credit for additional earnings taxed, using a secondary PIA formula. This secondary PIA formula involves: (1) an "AIME+" derived from additional annual earnings taxed over the current-law taxable maximum; and (2) a formula factor of 2.5 percent on this newly computed "AIME+".
graph | table | pdf-graph | pdf-table | memo (Ribble)
0.96 1.04 34% 24%