Elizabeth Warren released a plan on Thursday to expand Social Security benefits through increased taxes on the rich.
The proposal, which the Massachusetts senator called the “biggest and most progressive increase in Social Security benefits in nearly half a century,” would see every retiree receive at least $200 more each month and extend the solvency of the Social Security fund by 20 years. It would be financed by two new mechanisms targeting the top 2 percent of earners in the country.
Currently, Social Security is paid for through a 12.4 percent payroll tax applied to salary and wages up to $132,900 a year, split equally between employer and employee. So a person who makes $132,900 pays the same amount as a person who makes $250,000 a year, who pays the same amount as someone who makes $1,000,000 a year, and someone who makes $10,000,000 a year. And none of it applies to investment income. Warren’s plan would change that two ways:
- a 14.8 percent payroll tax on individual salaries above $250,000, split equally between employer and employee.
- a new 14.8 percent tax on net investment income for individuals who earn above $250,000.
The plan, which was released hours before the third Democratic presidential primary debate, recasts the political conversation around entitlement reform, which for decades has played out almost entirely in terms of what can be cut.
“It’s time Washington stopped trying to slash Social Security benefits for people who’ve earned them,” the senator urged. “It’s time to expand Social Security.”
Kevin Drum has more.