Sen. Elizabeth Warren is calling for the wealthy to pay for an overhaul of Social Security that would boost the annual payment to retirees by $2,400 and extend the program’s solvency by two decades.
“We need to get our priorities straight,” the Massachusetts senator and White House hopeful wrote in a post published Thursday morning on Medium, in which Warren unveiled her proposal. “We should be increasing Social Security benefits and asking the richest Americans to contribute their fair share to the program.”
Warren targets individual earners making more than $250,000 per year, and families with incomes exceeding $400,000, with the bill. Each dollar they earn beyond that threshold — both salary and investment returns — would be taxed at 14.8%. On wage income, the new levy would be split evenly between employee and employer.
The Warren proposal comes as House Democrats are already pushing forward with their own proposals to expand Social Security, plans that also include a new payroll tax on the wealthy.
Warren will meet her upper-tier Democratic presidential opponents on a debate stage in Houston on Thursday night, when Social Security could be a point of contrast for the candidates. The debate stakes are particularly high for Warren, who has surged in popularity in several polls while championing an agenda that targets the rich with hefty taxes to fund big new government programs. The senator will be looking to build on the traction she has gained in the race; her rivals are eager to slow her down.
Warren will not be the only candidate on the stage proposing changes to Social Security. Vermont Sen. Bernie Sanders is pushing a similar expansion. Joe Biden, the former vice president and front-runner in the polls, advocates a far more modest shoring-up and expansion of the retirement program.
Warren declares her plan would usher in “the biggest and most progressive increase in Social Security benefits in nearly half a century.” It would raise monthly payments significantly more than even the Sanders plan would and expand eligibility to potentially millions of Americans who would not qualify for benefits under Biden’s plan, including public sector workers currently not permitted to collect Social Security and college and graduate students whose parents are disabled or have died.
The plan would also allow Americans who leave the workforce to care for a child, parent or disabled relative to continue accruing credit toward their retirement benefit.
Such a big expansion comes with a big price tag. Warren has already proposed a separate wealth tax that would force the richest Americans to divert $2.75 trillion of their assets to the federal government over 10 years to pay for free public college, forgiveness of student loans and universal childcare and preschool.
An analysis of the Warren plan that the campaign commissioned from Moody’s Analytics projects it would expand the solvency of Social Security by two decades — out to 2054 — and “immediately lift an estimated 4.9 million elderly people out of poverty.”
The plan would also create a drastic shift in the framework of Social Security, which has always been built around the idea of universal taxes and universal benefits. Her proposed expansion of the program would be funded entirely by the wealthy, who would see their benefits increase only marginally compared with the new taxes they would be required to pay.
“Calling upon high-earning people to pay substantially more into the system than they receive in benefits, as the senator’s plan envisages, could hurt its political appeal,” the Moody’s report says.
Even before Warren unveiled her Social Security plan, several economists across ideological lines had questioned whether the federal government could effectively raise all the revenue Warren envisions. Other countries that have imposed wealth taxes, for example, have found their highest-income residents were able to sidestep the tax bills by moving abroad or parking their income in places out of reach of tax authorities. Many of those countries ultimately abandoned those high-earner taxes.
Warren’s advisors say her tax plan was designed specifically to close loopholes that might enable the wealthy to evade the new taxes she proposes.