Social Security’s Future: Proposed Bill Paves Way for Fund Extension to 2054 Alongside Federal Tax Reductions

A proposed Congressional bill, dubbed the You Earned, You Keep It Act, seeks to alleviate the tax burden on Social Security beneficiaries while shoring up the program’s finances. 

Introduced by US Reps. Angie Craig (D-Minn.) and Yadira Caraveo (D-Colo), the bill aims to repeal federal taxes on Social Security benefits and extend the solvency of the program’s Old Age and Survivors Insurance (OASI) Trust Fund by two decades to 2054.

Currently, the OASI Trust Fund is projected to run out of money by 2033 or 2034, relying solely on payroll taxes to cover benefits, which currently only cover 77% of the total. To address this, the proposed legislation would expand Social Security payroll taxes to wages exceeding $250,000, gradually increasing the cap from the current $168,600.

As stated by the Office of the Chief Actuary of the Social Security Administration, the proposed measures outlined in the bill are projected to prolong the sustainability of the Old Age and Survivors Insurance (OASI) Trust Fund, allowing it to continue disbursing scheduled benefits for an additional two decades beyond its current forecasted timeline.

Advocacy Backing Social Security Reform

Additionally, the bill would eliminate federal income taxes on Social Security benefits, potentially reducing the federal debt by $8.9 trillion over 75 years.

Rep. Craig emphasized the bill’s benefits, calling it a win-win that provides tax cuts for seniors while ensuring the sustainability of Social Security benefits for future generations.

Despite its potential advantages, the bill faces significant hurdles in Congress. Originally introduced in 2022, it stalled due to lack of support, and with the current political divide, its prospects for passage remain uncertain.

However, the bill has garnered support from Social Security advocates, including organizations like Social Security Works, which aims to protect and expand Social Security programs. 

Despite the challenges, proponents continue to push for reforms to ensure the long-term viability and fairness of the Social Security system.