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Mike Honda’s ‘scrap the cap’ bill introduced

By Josh Richman
Wednesday, September 18th, 2013 at 5:41 pm in 2014 primary, Mike Honda, U.S. House.

Rep. Mike Honda on Wednesday announced he has helped introduce the Social Security legislation he promised earlier this summer, to remove the cap on payroll taxes and expand benefits for current and future retirees.

H.R. 3118, the Strengthening Social Security Act of 2013, was introduced Tuesday by Rep. Linda Sanchez, D-Cerritos, along with Honda and U.S. Sen. Tom Harkin, D-Iowa.

“This legislation will ensure that benefits keep up with today’s rising costs, and that current and future retirees regain the security of aging with dignity,” Honda, D-San Jose, said in a news release. “There is no doubt that the program needs structural improvements, and the fairest, simplest way to keep it solvent is to require all Americans – regardless of income level – to contribute equally.”

The bill eliminates the cap on taxable income paying into Social Security; right now, people are only taxed on the first $113,700 of income. Honda says that means someone earning $1 million per year is taxed at a significantly lower percentage than a worker making $50,000, the national average.

The bill also makes formula adjustments to increase benefits by about $800 per year to better reflect rising healthcare costs.

The bill is backed by a plethora of unions, retiree interest groups and liberal organizations. Honda is making it a centerpiece of his re-election campaign, in which he’s being challenged by fellow Democrat Ro Khanna, a former Obama administration official.

Khanna last month said he favors immediate action to ensure Social Security’s solvency at current benefit levels “without making empty promises that could ultimately threaten the system overall.” He said he’s “in principle open to expanding benefits after the solvency is ensured.”

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  • RRSenileColumnist

    Ro keeps popping up in Honda stories as if he’s the Prince of Wales.

  • Elwood

    Khanna will say anything, anywhere, anytime, that he thinks people want to hear and might improve his slim chances.

  • AmusedToDeath14

    Honda will say anything to get elected, himself. He’s already flip-flopped on raising the retirement age and is on record as doing so.

    Here’s a little something to jog everyone’s memory.
    http://blog.sfgate.com/nov05election/2013/08/07/rep-honda-says-its-time-to-scrap-the-cap-on-social-security-payroll-tax/
    “The Congressman said he will introduce the Strengthening Social Security Act of 2013, which calls for lifting the payroll tax cap, with Rep. Linda Sanchez (D-Calif.) in the fall.

    But Honda also distanced himself from a past statement in which he suggested raising the retirement age for Social Security.

    Honda meets supporters in Fremont

    Honda told reporters he didn’t recall his statements in 2012 to a Mercury News editorial board, in which he said he supported raising the retirement age “in proportion to life expectancies.”

    Reminded the interview was on videotape, Honda said, “We can withhold that for the time being….I don’t think we need to do that right now.”

  • JohnW

    “Scrap the cap” is crap. So, somebody who makes $213,700 ($100k over the 2013 cap) should pay an extra $12,400 (including employer share) in payroll tax without any additional SS benefit? That means the extra amount is really a 12.4% income tax under a different name. If that person is in, say the 28% marginal income tax bracket already, the 12.4% would raise that to 40.4%, or 34.2% if you don’t count the employer share.

    SS needs to be fixed through some combination of benefit reduction and payroll tax adjustment. But if the latter is part of the fix, it should be something that everybody pays, not just people above the cap. The cap goes up automatically every year anyway. In the past ten years, it has automatically increased from about $87k to the current amount and is projected to increase to $115,500 in 2014.

  • Elwood

    “That means the extra amount is really a 12.4% income tax under a different name.”

    Congratulations, John! You’ve mastered Obamathink!

  • JohnW

    Eliminating cap is not something Obama has proposed. In fact, he has proposed reducing benefits using “chained CPI.”

  • billcostley

    Now what?

  • DanvilleDemocrat

    Raising the cap to keep pace with inflation/cost-of-living makes perfect sense — preserves Social Security and keeps funding relatively constant in good times and bad times.

    However, #ScrapTheCap makes absolutely no sense — especially when investment income (e.g., capital gains) continues to remain un-taxed to benefit Social Security, Medicare, etc.

  • JohnW

    I agree that it would make more sense to apply both SS and Medicare payroll taxes to forms of income not currently taxed — at least up to the point where the taxpayer’s total payroll taxes on combined ordinary and other income hits the cap. Provided, of course, that the taxpayer gets credit for the taxes on investment income in calculating his or her SS benefit amount.