If the Democratic proposal to strengthen Social Security and Medicare is passed, it is likely that those with high income will encounter a significant increase in taxes. However, it would be advantageous to consult a financial advisor to navigate potential changes to tax laws and regulations effectively.
Social Security longevity can be achieved with Sen. Whitehouse’s proposed law (Photo: CNBC)
New Proposed Law Focuses on Social Security Longevity
There is a proposed legislation named the “Medicare and Social Security Fair Share Act,” which aims to make taxpayers with a yearly income over $400,000 pay more into Social Security and Medicare.
At present, employees are required to pay Social Security taxes on their entire income, but any earnings and investment income above the $160,200 cap is not taken into account.
The proposed legislation aims to address this discrepancy by ensuring that high-income earners pay their fair share towards these vital programs.
This move comes as a strategy to tackle the anticipated depletion of the Old-Age & Survivors Insurance (OASI) trust fund, which is responsible for providing funds for Social Security payments. According to the experts, it is predicted that the OASI fund may run out by the year 2033, leading to a reduction in the coverage of Social Security benefits to only 77% unless Congress steps in to provide further funding for the program.
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Possible Increase in Taxes
Sen. Sheldon Whitehouse, D-RI, put forth a bill (S.1174) that strives to enhance the monetary security of Social Security and Medicare.
The suggested approach involves raising the amount of taxes paid by taxpayers who earn more than $400,000 by imposing heavier taxes on wages, self-employment, and investment income. On top of that, the bill aims to put an end to a tax loophole that allows pass-through businesses to avoid paying Medicare and other taxes.
Finally, to secure your financial future, it’s wise to consider consulting with a financial advisor. A professional advisor can offer invaluable insights and guidance to help you optimize your tax strategy and potentially save money in the long run. You can make informed decisions and take steps forward toward achieving your financial goals.
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