The latest proposal to be analyzed by SSA’s office of the chief actuary is Angie Craig’s (D-MN) “You Earned It, You Keep It” proposal (H.R. 8717).
Under this bill, starting in 2023 Social Security benefits would no longer be taxed. (Hence the name, “you earned it, you keep it.”) To make up for the lost revenue, transfers from the general fund of the U.S. Treasury would be made to the OASI, DI, and HI trust funds. In addition, payroll taxes—the 6.2% of wages each paid by the employee and employer—would be assessed on earnings over $250,000. This would leave a “donut hole” between the maximum taxable wage base, currently $147,000, and $250,000, of earnings that would not be taxed. Over time, as the average wage index rises, the maximum taxable wage base would eventually exceed $250,000 causing all earnings to be subject to payroll taxes.