Clinton, Sanders agree: Expand Social Security taxes beyond wages to investment income

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( – “We both believe there has to be more money going into the Social Security system,” Hillary Clinton said at Thursday’s Democrat debate in Milwaukee.

“I’m interested in making sure we get the maximum amount of revenue from those who can well afford to provide it. So I’m going to come up with the best way forward. We’re going to end up in the same place,” she told Sen. Bernie Sanders. “We’re going to get more revenue.”

Clinton said she would use the money she gets from wealthy people to “prioritize those recipients who need the most help first.” Women, she said.

Sanders said he would use the money he gets from wealthy people to expand Social Security by $1,300 a year for everyone making under $16,000.

And how would they get more money?

Clinton said she’s looking at “a couple of different ways” to tax the wealthy, including raising the cap on income that is subject to Social Security taxes. Right now, the Social Security tax is phased out on wages above $118,500.

Clinton said she also wants to “expand the existing tax to passive income that wealthy people have so that we do get more revenue into the Social Security Trust Fund.” In other words, she would apply Social Security taxes not just to wages, but also to unearned income generated by investments.

Sanders wants to do the same thing, but he challenged Clinton on that point:

“In all due respect, Secretary Clinton, a lot of the progressive groups, the online groups, have really asked you a simple question. Are you coming onboard a proposal? And what is that proposal?

“Now, the proposal that I have outlined, you know, should be familiar to you, because it is what essentially Barack Obama campaigned on in 2008. You opposed him then.

“I would hope that you would come onboard and say that this is the simple and straightforward thing to do. We’re asking the top 1.5 percent, including passive income, to start paying a little bit more so that the elderly and disabled vets in this country can live with security and dignity. I hope you will make a decision soon on this.”

“Well, Senator, look, I think we’re in vigorous agreement here,” Clinton said. “We both want to get more revenue in. I have yet to see a proposal that you’re describing that…raising the cap would apply to passive income. That has not been–”

“That’s my bill. Check it out,” Sanders interrupted.

“Well, that has not been a part of most of the proposals that I’ve seen,” Clinton responded. “I’m interested in making sure we get the maximum amount of revenue from those who can well afford to provide it. So I’m going to come up with the best way forward. We’re going to end up in the same place. We’re going to get more revenue. I’m going to prioritize those recipients who need the most help first.”

Clinton said rather than expand Social Security benefits for all low-income people, she would put women first:

“I do want to take care of low-income seniors who worked at low-wage jobs. I want to take care of women,” she said.

“When the Social Security program was started in the 1930s, not very many women worked. And women have been disadvantaged ever since. They do not get any credit for their care-taking responsibilities. And the people who are often the most hard-hit are widows, because when their spouse dies, they can lose up to one-half of their Social Security monthly payment.

“So we have no disagreement about the need to buttress Social Security, get more revenue into the program. But I want to start by helping those people who are most at risk, the ones who, yes, are cutting their pills in half, who don’t believe they can make the rent, who are worried about what comes next for them.”

Sanders said if he’s elected president, “I will do everything I can to expand Social Security benefits, not just for seniors, but for disabled veterans, as well.”

In 2016, wages up to $118,500 are subject to a 12.4 percent FICA (Federal Insurance Contributions Act) tax. Employer and employee each pay 6.2 percent.
The FICA tax is a mandatory payroll deduction that is used to fund Social Security retirement and Medicare benefits.

For comparison purposes, most Republicans say they would not change Social Security benefits for the current crop of seniors.

Some Republicans suggest gradually increasing the retirement age for younger workers; some advocate allowing younger workers to keep part of their money in personal retirement accounts; and some have suggested means-testing, where big earners would pay into the system, but get less out of it.

— Written by Susan Jones