WASHINGTON, DC – The Chief Actuary of the U.S. Social Security Administration has reviewed U.S. Senator Bob Casey’s proposal to prevent a huge tax hike from hitting middle income families on January 1st and reaffirmed that the bill will protect Social Security.
“I am pleased to receive additional confirmation that my proposal to extend the payroll tax cut will protect Social Security,” said Senator Casey. “Congress must act now on my legislation to give working families a vital increase in take-home pay and jump start the economy. Those who would oppose my legislation now have one less excuse to block this much needed boost for the vast majority of Americans.”
“We estimate that the projected level of the OASI and DI Trust Funds would be unaffected by enactment of this provision,” Chief Actuary Stephen C. Gross wrote in a letter released today.
Senator Casey introduced the Middle Class Tax Cut Act of 2011 last week to extend and expand the payroll tax cut for workers, and this week introduced compromise legislation (S. 1944) with bipartisan ideas to try to bring Republicans on board with the proposal.
DETAILS OF CASEY COMPROMISE:
- Reduces The Size Of Package By Roughly One-Third. To address Republican concerns that the overall package was too large, the compromise legislation will no longer provide any tax break for employers. This will cut the size of the package by roughly one-third, from $265 billion to $185 billion. The Casey compromise still cuts in half (from 6.2% to 3.1%) the Social Security payroll tax paid by employees and the self-employed on their wages and salaries for 2012. Approximately 160 million workers will benefit from this tax cut, with the average family seeing nearly $1,500 in additional take-home pay.
- To Help Pay for the Bill, Adopts Bipartisan Deficit-Reducing Proposals from The Super Committee Negotiations. This proposal will increase the fees that Fannie Mae and Freddie Mac charge mortgage lenders to guarantee repayment of new mortgage loans. The amount of the increase shall be determined by the Director of the Enterprises but such amount shall not be less than an average increase of 12.5 basis points for each origination year or book year above the average fee imposed in 2011 for such guarantees. These reforms will raise $38.1 billion.
- Significantly Curtails the Surtax on the Wealthiest Few. Last week, the Senate saw a breakthrough when Senator Susan Collins voted for a version of the millionaires’ surcharge. The Casey compromise further modifies the millionaires’ surtax to appeal to even more Republicans. First, it pares down the surtax on modified adjusted gross income in excess of $1 million from 3.25% to 1.9%. The surtax is also made temporary—it would expire after 10 years—instead of permanent. The surtax—which will impact only 0.2% of taxpayers with an average annual income of nearly $3 million—is effective for taxable years beginning after December 31, 2012.
- Adopts GOP Proposal To Cut Off Millionaires From Receiving Unemployment Benefits and Food Stamps. The compromise bill includes a cost-saving reform proposed by Senate Republican Leader Mitch McConnell last week that would make millionaires ineligible for unemployment compensation and food stamps.
- Still Protects Social Security. The legislation would not affect the Social Security Trust Fund by one penny, because it requires that the Social Security Trust Fund be made whole through transfers from the General Fund.