S 5042: Social Security 2100 Act

S 5042 in plain English: The Social Security 2100 Act would make several changes to the Social Security program, including adjusting how benefits are calculated, modifying the earnings thresholds at which benefits are reduced, and changing the income levels at which Social Security contributions apply, including applying payroll taxes to earnings above $400,000.

Stated purpose

To protect the Social Security system and improve benefits for current and future beneficiaries by raising benefit amounts, updating cost-of-living adjustments, and strengthening the program's long-term funding.

Key points

• Applies Social Security payroll taxes to individual earnings above $400,000
• Sets income thresholds of $35,000 (individual) and $50,000 (joint return) for certain benefit calculations
• Reduces certain benefits by $1 for every $2 earned above applicable earnings limits
• Provides minimum damages of $5,000 per act for unauthorized access or disclosure of Social Security information

Arguments supporters make

• Social Security benefits have not kept up with the real costs seniors face, especially for health care, and this bill corrects that by using a price index that better reflects what older Americans actually spend money on.
• Millions of elderly and disabled Americans live near or in poverty, and boosting the minimum benefit and expanding eligibility would give the most vulnerable a more secure floor of income.
• Applying the payroll tax to high wages and investment income — which are currently exempt — is a fair way to keep Social Security solvent without cutting benefits that working people have paid into their whole careers.

Arguments opponents make

• Removing the cap on wages subject to the payroll tax significantly raises taxes on higher-earning workers and small-business owners, which critics say could reduce hiring, wages, or economic activity.
• The across-the-board benefit increase and expanded eligibility add spending that only lasts through 2036 under some provisions, raising concerns that the fix is temporary while the added obligations are permanent.
• Applying Social Security taxes to investment income goes beyond the program's original design as a wage-based system, and some argue it sets a precedent for further tax expansion without a clear link to earned benefits.

Tradeoffs

Expanding and protecting benefits requires raising taxes on higher earners and investors, shifting more of the program's cost onto those groups while delivering gains mainly to lower-income and older beneficiaries; the tension is between broader benefit security for current recipients and higher costs for workers and investors who are still earning.

Current status in Congress: In committee.

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