As the deadline approaches for Americans to file their taxes, U.S. Senator Sheldon Whitehouse (D-RI) announced new legislation to protect the solvency of Social Security and Medicare by making the nation’s highest earners contribute their fair share. The bill will be filed on Tax Day, when Chairman Whitehouse will hold a Budget Committee hearing on how tax dodging by the wealthy and big corporations holds down the broader economy.
“The ultra-wealthy shouldn’t be able to get out of paying Social Security and Medicare taxes on most of their income,” said Whitehouse. “As President Biden has proposed, my legislation would extend the solvency of Medicare by 20 years and level the playing field so that teachers, police officers, and firefighters aren’t paying a much larger share of their income in taxes than billionaires.”
Medicare and Social Security are twin pillars of economic fairness and retirement security, providing lifelines to seniors, their dependents, and people with disabilities. In 2021, Social Security lifted 26.3 million Americans out of poverty, and nearly 40 percent of seniors rely on the program for the majority of their incomes – benefits they have earned that let them retire with dignity. Medicare protects its over 60 million beneficiaries, one in five of whom have less than $15,000 in savings, from potentially catastrophic health care costs.
Despite the bedrock importance of these programs, both are at risk of being unable to fully pay out benefits within the next 15 years. Without new revenue, the Hospital Insurance trust fund and the Old Age and Survivors Insurance trust fund are expected to become insolvent in 2028 and 2033, respectively.
Whitehouse’s Medicare and Social Security Fair Share Act will:
- Preserve Medicare and Social Security while safeguarding benefits.
- Significantly extend Social Security solvency and extend Medicare solvency by an estimated 20 years.
- Require taxpayers with over $400,000 in income to contribute a fairer share to Social Security.
- Ensure that no matter the source of their income, high-income taxpayers would pay the same tax rate on their income exceeding that threshold.
- Require taxpayers with incomes above $400,000 to contribute more to Medicare and close a loophole in the law that favors high-earners, as proposed by President Biden.
- Increase the rate for income above $400,000 by 1.2 percent.
- Ensure that wealthy owners of pass-through businesses like hedge funds and private equity firms with more than $400,000 in annual income cannot avoid Medicare taxes.
The bill has been endorsed by Social Security Works, American Federation of State, County and Municipal Employees, American Federation of Government Employees, and Americans for Tax Fairness.
Read the fact sheet here.
Whitehouse will also re-introduce his Paying a Fair Share Act to codify the “Buffett Rule,” which would ensure that multi-million-dollar earners pay at least a 30 percent effective federal tax rate. The Paying a Fair Share Act would apply only to taxpayers with income over $1 million, including capital gains and dividends, and would phase in over their second million dollars in income.
In February, Whitehouse introduced the No Tax Breaks for Outsourcing Act, which would level the playing field for American workers and small businesses by making sure multinational corporations pay the same tax rate on profits earned abroad as they do in the United States.
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