Sanders looks to expand payroll tax

Sen. Bernie Sanders (I-Vt.) said Thursday that he will introduce legislation that would expand the reach of the payroll tax, as part of an effort to give further support to Social Security.

Sanders, one of the Senate’s staunchest liberals, is proposing to make individual income higher than $250,000 per year subject to the payroll tax — an idea he says he is lifting from President Obama’s 2008 campaign for the White House.

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As it stands, the payroll tax, which funds Social Security, applies to up to $106,800 of annual income. The Sanders bill would not impose the payroll tax on income between that level and $250,000.

In a Thursday news release, the Vermont senator said he was also worried that the new supercommittee tasked with finding additional ways to reduce the deficit will try to find savings through cuts to Social Security. One method that has already been discussed would involve switching to the so-called “chained CPI,” an alternate form of inflation that would lead to a slower increase in Social Security benefits.

“Unfortunately, Republicans in Congress — and too many Democrats — have been discussing harmful cuts to Social Security as part of an overall scheme to balance the budget on the backs of the elderly, the sick, the children and working families,” Sanders said.



He and other liberals have pushed for keeping Social Security out of the deficit-reduction discussion, arguing that the entitlement program has not added to federal deficits.


Social Security is currently projected to be able to pay out full benefits for the next 25 years or so, and is considered more financially strong than either Medicare or Medicaid. But over the last two years, the Social Security Trust Fund has taken in less in payroll taxes than it has paid out in benefits.

According to Sanders’s office, the chief actuary for Social Security says the senator’s proposal to make the payroll tax applicable at higher income levels would create enough new revenue to keep the program solvent for the next 75 years.

Over in the House, Rep. Peter DeFazio (D-Ore.) in February introduced legislation very similar to the Sanders bill.

Sanders’s proposal comes as the White House is pushing to continue the current payroll tax holiday, which has temporarily allowed workers to pay 2 percentage points less in payroll taxes.

In an odd twist, President Obama has pressed for continuing the tax break, saying it would help stimulate the economy, while Republicans have been somewhat resistant toward giving the holiday another year.

For his part, Sanders has expressed skepticism about the holiday. But the senator’s new proposal does not delve into whether the holiday should be continued.