Medicare and Social Security Fair Share Act
SB 1690, titled the Medicare and Social Security Fair Share Act, would raise additional federal payroll and investment-income taxes on very high-income individuals and direct the resulting revenue to Social Security and Medicare trust funds. The bill increases the Social Security wage base for payroll taxes to $400,000, so wages above the current contribution and benefit base would again be subject to Social Security tax up to that higher cap. It also adds a new 1.2 percent surtax on wages and self-employment income above $400,000 for single filers and $500,000 for joint filers, with special rules for married taxpayers filing separately and for coordination between wage and self-employment taxes.
The bill also expands taxation of unearned income for high-income taxpayers. It modifies the net investment income tax so that certain taxpayers above the high-income threshold would pay a higher effective rate on the greater of net investment income or specified net income, and it increases the tax rate applied to trusts and estates. The measure further clarifies what counts as net investment income, including certain foreign income items, and excludes wages and self-employment income already subject to the new payroll and self-employment surtaxes. Revenue from these changes would be transferred to the Social Security Old-Age and Survivors Insurance Trust Fund, the Disability Insurance Trust Fund, and the Medicare Hospital Insurance Trust Fund, with specified allocation percentages.
In practical terms, the bill would amend multiple sections of the Internal Revenue Code and the Social Security Act, affecting wage earners, self-employed individuals, high-income investors, trusts, and estates. It would also change withholding and collection rules for employers and create coordination rules to avoid double-counting income across payroll and self-employment tax systems. The effective dates generally begin for wages paid and taxable years starting after January 1 of the first calendar year after enactment, with the investment-income and trust/estate provisions applying to taxable years beginning after December 31, 2025.
Because the bill was only introduced and referred to the Senate Finance Committee, there is no recorded vote or committee transcript in the provided materials, so no formal legislative sentiment is available from those sources. Based on the bill’s sponsors and its title, the measure appears intended to strengthen long-term financing for Social Security and Medicare by increasing taxes on high earners. The likely policy framing is progressive and revenue-focused, emphasizing solvency and fairness, while the main point of contention would be the higher tax burden on upper-income workers, business owners, investors, and estates, along with potential concerns about complexity, withholding administration, and effects on labor and investment incentives.
The bill would substantially amend federal tax law by changing payroll taxes, self-employment taxes, and the net investment income tax in the Internal Revenue Code, while also revising Social Security Act trust-fund financing provisions. It would raise the taxable wage base to $400,000 for Social Security tax purposes, impose new surtaxes on wages and self-employment income above high-income thresholds, increase taxation of certain investment income, and direct a portion of those receipts to the Social Security and Medicare trust funds. The affected parties are primarily high-income wage earners, self-employed taxpayers, investors, trusts, estates, and employers responsible for withholding.
No committee discussion or vote data were provided, so there is no recorded legislative sentiment from debate or roll call. The bill’s framing and sponsor list suggest supportive sentiment among lawmakers seeking to bolster Social Security and Medicare financing through higher taxes on very high earners. At the same time, the proposal is likely to draw opposition from members concerned about tax increases, administrative complexity, and economic effects on high-income households and business activity.
The main points of contention are likely to be the bill’s tax increases on high-income individuals, especially the new surtaxes on wages, self-employment income, and investment income, and the expansion of the Social Security payroll tax base to $400,000. Critics may argue that the measure increases burdens on entrepreneurs, investors, and employers and adds complexity to withholding and tax administration. Supporters are likely to emphasize that the bill targets only very high incomes and is designed to improve the solvency of Social Security and Medicare by dedicating new revenue to the trust funds.