FAIR Social Security Act

Summary: Fair Adjustment and Income Revenue for Social Security Act or the FAIR Social Security Act  This bill repeals the cap on the amount of income ($118,500 in 2015) that is subject to the employment or self-employment tax for funding social security benefits. The bill also reallocates employment and self-employment tax revenues to increase Social Security Trust Fund solvency. The Bureau of Labor Statistics of the Department of Labor must prepare and publish an index for each calendar month to be known as the Consumer Price Index for Elderly Consumers that indicates changes in expenditures for consumption that are typical for individuals who are 62 years of age or older. This Index will be used to adjust benefit amounts under the Old Age, Survivors, and Disability Insurance program and Medicare. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Adjustment and Income Revenue 
for Social Security Act'' or the ``FAIR Social Security Act''.

SEC. 2. REPEAL OF CAP ON COMPENSATION SUBJECT TO FEDERAL INSURANCE 
              CONTRIBUTIONS ACT.

    (a) Wages.--Section 3121(a) of the Internal Revenue Code of 1986 is 
amended by striking paragraph (1).
    (b) Self-Employment Income.--The first sentence of section 1402(b) 
of the Internal Revenue Code of 1986 is amended by striking ``include--
'' and all that follows and inserting ``include the net earnings from 
self-employment if such net earnings for the taxable year are less than 
$400.''.
    (c) Conforming Amendments.--
            (1) Section 6413(c) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking paragraph (1), and
                    (B) in paragraph (2)(A) by striking ``, not to 
                exceed an amount equal to the contribution and benefit 
                base (as determined under section 230 of the Social 
                Security Act) for any calendar year with respect to 
                which such contribution and benefit base is 
                effective,''.
            (2) Section 3122 of the Internal Revenue Code of 1986 is 
        amended by striking ``The person making such return may, for 
        convenience of administration, make payments of the tax imposed 
        under section 3111 with respect to such service without regard 
        to the contribution and benefit base limitation in section 
        3121(a)(1), and he shall not be required to obtain a refund of 
        the tax paid under section 3111 on that part of the 
        remuneration not included in wages by reason of section 
        3121(a)(1).''.
            (3) Section 3125 of the Internal Revenue Code of 1986 is 
        amended by striking ``without regard to the contribution and 
        benefit base limitation in section 3121(a)(1)'' each place it 
        appears.
            (4) Section 3231(e)(2)(C) of the Internal Revenue Code of 
        1986 is amended by inserting ``(as in effect on the date of the 
        enactment of the Fair Adjustment and Income Revenue for Social 
        Security Act'' after ``employers)''.
            (5) Section 3511(b) of the Internal Revenue Code of 1986 is 
        amended by striking ``3121(a)(1), 3231(e)(2)(C),'' and 
        inserting ``3231(e)(2)(C)''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to remuneration received, and taxable years 
beginning, after December 31, 2015.

SEC. 3. REALLOCATION OF PAYROLL TAX REVENUE.

    (a) Allocation of 2016 Payroll Tax Revenue.--With respect to that 
portion of wages (as defined in section 3121 of the Internal Revenue 
Code of 1986) paid during calendar year 2016 that would not be 
considered wages but for the amendment made by section 2(a), and with 
respect to that portion of self-employment income (as defined in 
section 1402 of the Internal Revenue Code of 1986) reported for any 
taxable year beginning during such calendar year that would not be 
considered self-employment income but for the amendment made by section 
2(b), paragraphs (1)(R) and (2)(R) of section 201(b) of the Social 
Security Act (42 U.S.C. 401(b)) shall each be applied by substituting 
``12.40 per centum'' for ``1.80 per centum''.
    (b) Wages.--Section 201(b)(1) of the Social Security Act (42 U.S.C. 
401(b)(1)) is amended by striking ``and (R) 1.80 per centum of the 
wages (as so defined) paid after December 31, 1999, and so reported'' 
and inserting ``(R) 1.80 per centum of the wages (as so defined) paid 
after December 31, 1999, and before January 1, 2033, and so reported, 
(S) 1.60 per centum of the wages (as so defined) paid after December 
31, 2032, and before January 1, 2050, and so reported, and (T) 1.80 per 
centum of the wages (as so defined) paid after December 31, 2049, and 
so reported''.
    (c) Self-Employment Income.--Section 201(b)(2) of such Act (42 
U.S.C. 401(b)(2)) is amended by striking ``and (R) 1.80 per centum of 
the amount of self-employment income (as so defined) so reported for 
any taxable year beginning after December 31, 1999'' and inserting 
``(R) 1.80 per centum of the amount of self-employment income (as so 
defined) so reported for any taxable year beginning after December 31, 
1999, and before January 1, 2033, (S) 1.60 per centum of the amount of 
self-employment income (as so defined) so reported for any taxable year 
beginning after December 31, 2032, and before January 1, 2050, (T) 1.80 
per centum of the amount of self-employment income (as so defined) so 
reported for any taxable year beginning after December 31, 2049''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to wages paid after December 31, 2015, and self-
employment income for taxable years beginning after such date.

SEC. 4. CONSUMER PRICE INDEX FOR ELDERLY CONSUMERS.

    (a) Publication.--
            (1) In general.--The Bureau of Labor Statistics of the 
        Department of Labor shall prepare and publish an index for each 
        calendar month to be known as the ``Consumer Price Index for 
        Elderly Consumers'' that indicates changes over time in 
        expenditures for consumption which are typical for individuals 
        in the United States who are 62 years of age or older.
            (2) Effective date.--Subsection (a) shall apply with 
        respect to calendar months ending on or after July 31 of the 
        calendar year following the calendar year in which this Act is 
        enacted.
            (3) Authorization of appropriations.--There are authorized 
        to be appropriated such sums as are necessary to carry out the 
        provisions of this section.
    (b) Computation of Cost-of-Living Increases.--
            (1) Amendments to title ii.--
                    (A) In general.--Section 215(i)(1) of the Social 
                Security Act (42 U.S.C. 415(i)(1)) is amended by adding 
                at the end the following new subparagraph:
            ``(H) the term `Consumer Price Index' means the Consumer 
        Price Index for Elderly Consumers (CPI-E, as published by the 
        Bureau of Labor Statistics of the Department of Labor).''.
                    (B) Application to pre-1979 law.--
                            (i) In general.--Section 215(i)(1) of the 
                        Social Security Act as in effect in December 
                        1978, and as applied in certain cases under the 
                        provisions of such Act as in effect after 
                        December 1978, is amended by adding at the end 
                        the following new subparagraph:
            ``(D) the term `Consumer Price Index' means the Consumer 
        Price Index for Elderly Consumers (CPI-E, as published by the 
        Bureau of Labor Statistics of the Department of Labor).''.
                            (ii) Conforming change.--Section 215(i)(4) 
                        of the Social Security Act (42 U.S.C. 
                        415(i)(4)) is amended by inserting ``and by 
                        section 4 of the Fair Adjustment and Income 
                        Revenue for Social Security Act'' after 
                        ``1986''.
                    (C) Effective date.--The amendments made by 
                subparagraphs (A) and (B) shall apply to determinations 
                made with respect to cost-of-living computation 
                quarters ending on or after September 30 of the second 
                calendar year following the calendar year in which this 
                Act is enacted.
            (2) Amendments to title xviii.--
                    (A) In general.--Title XVIII of such Act (42 U.S.C. 
                1395 et seq.) is amended--
                            (i) in section 1814(i)(2)(B) (42 U.S.C. 
                        1395f(i)(2)(B)), by inserting ``(i) for 
                        accounting years ending before October 1 of the 
                        second calendar year following the calendar 
                        year in which the Fair Adjustment and Income 
                        Revenue for Social Security Act was enacted,'' 
                        after ``for a year is'', and by inserting after 
                        ``fifth month of the accounting year'' the 
                        following: ``, and (ii) for accounting years 
                        ending after October 1 of such calendar year, 
                        the cap amount determined under clause (i) for 
                        the last accounting year referred to in such 
                        clause, increased or decreased by the same 
                        percentage as the percentage increase or 
                        decrease, respectively, in the medical care 
                        expenditure category (or corresponding 
                        category) of the Consumer Price Index for 
                        Elderly Consumers, published by the Bureau of 
                        Labor Statistics, from March of such calendar 
                        year to the fifth month of the accounting 
                        year'';
                            (ii) in section 1821(c)(2)(C)(ii)(II) (42 
                        U.S.C. 1395i-5(c)(2)(C)(ii)(II)), by striking 
                        ``consumer price index for all urban consumers 
                        (all items; United States city average)'' and 
                        inserting ``Consumer Price Index for Elderly 
                        Consumers'';
                            (iii) in section 1833(h)(2)(A)(i) (42 
                        U.S.C. 1395l(h)(2)(A)(i)) by striking 
                        ``Consumer Price Index for All Urban Consumers 
                        (United States city average)'' and inserting 
                        ``Consumer Price Index for Elderly Consumers'';
                            (iv) in section 1833(i)(2)(C)(i) (42 U.S.C. 
                        1395l(i)(2)(C)(i)), by striking ``Consumer 
                        Price Index for all urban consumers (U.S. city 
                        average)'' and inserting ``Consumer Price Index 
                        for Elderly Consumers'';
                            (v) in section 1834(a)(14)(L) (42 U.S.C. 
                        1395m(a)(14)(L)), by striking ``consumer price 
                        index for all urban consumers (U.S. urban 
                        average)'' and inserting ``applicable consumer 
                        price index'';
                            (vi) in section 1834(h)(4)(A)(xi)(I) (42 
                        U.S.C. 1395m(h)(4)(A)(xi)(I)), by striking 
                        ``consumer price index for all urban consumers 
                        (United States city average)'' and inserting 
                        ``Consumer Price Index for Elderly Consumers'';
                            (vii) in section 1834(l)(3)(B) (42 U.S.C. 
                        1395m(l)(3)(B)), by striking ``consumer price 
                        index for all urban consumers (U.S. city 
                        average)'' and inserting ``Consumer Price Index 
                        for Elderly Consumers'';
                            (viii) in section 1839(i)(5)(A)(ii) (42 
                        U.S.C. 1395r(i)(5)(A)(ii)), by striking 
                        ``Consumer Price Index (United States city 
                        average)'' and inserting ``Consumer Price Index 
                        for Elderly Consumers'';
                            (ix) in section 1842(s)(1)(B)(ii)(I) (42 
                        U.S.C. 1395u(s)(1)(B)(ii)(I)), by striking 
                        ``consumer price index for all urban consumers 
                        (United States city average)'' and inserting 
                        ``Consumer Price Index for Elderly Consumers'';
                            (x) in each of subparagraphs (D)(ii) and 
                        (E)(i)(II) of section 1860D-14(a)(3) (42 U.S.C. 
                        1395w-114(a)(3)) and in section 1860D-
                        14(a)(4)(A)(ii) (42 U.S.C. 1395w-
                        114(a)(4)(A)(ii)), by striking ``consumer price 
                        index (all items; U.S. city average)'' and 
                        inserting ``Consumer Price Index for Elderly 
                        Consumers'';
                            (xi) in section 1882(p)(11)(C)(ii) (42 
                        U.S.C. 1395ss(p)(11)(C)(ii)), by striking 
                        ``Consumer Price Index for all urban consumers 
                        (all items; U.S. city average)'' and inserting 
                        ``Consumer Price Index for Elderly Consumers'';
                            (xii) in each of clauses (iv) and (vi)(II) 
                        of section 1886(h)(2)(E) (42 U.S.C. 
                        1395ww(h)(2)(E)), by striking ``for all urban 
                        consumers''; and
                            (xiii) in section 1886(h)(5)(B) (42 U.S.C. 
                        1395ww(h)(5)(B)), by striking ``Consumer Price 
                        Index for All Urban Consumers (United States 
                        city average)'' and inserting ``Consumer Price 
                        Index for Elderly Consumers''.
                    (B) Effective date.--The amendments made by 
                subparagraph (A) shall apply with respect to 
                determinations made for periods ending after December 
                31 of the second calendar year following the calendar 
                year in which this Act was enacted.