Warren’s New Wealth Tax Will Boost Social Security Payments $200 a Month
Massachusetts Sen. Elizabeth Warren’s latest plan to win her the 2020 Democratic primary would expand Social Security benefits by $200 a month with a payroll tax increase on incomes above $250,000, and $400,000 for joint filers.
“So how will we pay for this? Easy. We can immediately increase Social Security benefits and extend the program’s solvency by nearly two decades by asking the top 2% of families to contribute their fair share to the program.”
If enacted by 2020, the plan would raise the average Social Security benefits paid out from $1,395 to $1,595, according to analysis by Moody’s economist Mark Zandi and then shared by Warren’s campaign.
The proposal would impose a 14.8% tax on annual earnings above $250,000 and $400,000 for joint filers. The 14.8% tax would be split between employer and employee (so each would pay 7.4% of the tax).
The plan also would impose a separate 14.8% tax on investment income, which would be horrible news for investors.
Warren says her plan also would extend the solvency of Social Security to 2054. Current estimates show Social Security will be insolvent by 2035 unless Congress finally acts to shore up the program’s finances instead of continuing to kick the can down the road.
Warren has been a fountain of policy proposals, many of which she says will help the middle class by soaking the rich, during her campaign for the Democratic primary.
Fellow 2020 primary hopeful Bernie Sanders, I-Vt., also pushed for Social Security expansion during his unsuccessful 2016 campaign, and he is pushing for 2020 legislation to expand Social Security, which has been co-signed by 2020 rivals Kamala Harris and Cory Booker.
A report earlier this week covered here on Money and Markets showed that Warren’s other wealth tax proposal, a 2% tax on annual wealth above $50 million and a 3% tax on wealth above $1 billion, would cost the richest Americans about half of their wealth. Warren says the plans will help combat wealth inequality and make for a stronger middle class.
Warren on Her Social Security Expansion Program
Warren detailed her plan in a long thread of tweets Thursday morning. Each paragraph below is a separate tweet.
“It’s getting harder for families to save enough for a decent retirement. A generation of stagnant wages and rising costs for basics like housing and health care have squeezed family budgets. Millions of Americans are sacrificing saving for retirement just to make ends meet.
“Social Security has become the main source of retirement income for most seniors, but the benefits today are quite small. 14% of seniors live in poverty — another 28% of seniors are close to it. Seniors are cutting pills and skipping meals to save money. This is unacceptable.
“My plan would immediately increase Social Security benefits by $200 a month — $2,400 a year — for every current and future Social Security beneficiary in America. This would immediately lift around 4.9 million seniors out of poverty and cut the senior poverty rate by nearly 70%.
“For the 63 million Americans who count on Social Security — including the 10 million Americans with disabilities and their families — my plan will provide more economic security. Money to see the doctor or do necessary home repairs.
“Those who face work and pay discrimination, like women and caregivers, low-income workers, people of color, and people with disabilities, have lower benefits in retirement. I’ll update outdated Social Security rules to ensure everyone gets fairer benefits.
“So how will we pay for this? Easy. We can immediately increase Social Security benefits and extend the program’s solvency by nearly two decades by asking the top 2% of families to contribute their fair share to the program.
“Another big benefit: My plan will increase economic growth in the long term and reduce the deficit by more than $1 trillion over the next ten years.”