Fair Raises for Seniors Act

Summary: Fair Raises for Seniors Act - Directs the Bureau of Labor Statistics (BLS) of the Department of Labor to publish for each calendar month a Consumer Price Index for Elderly Consumers (CPI-E) that indicates the average change over time in the prices paid by individuals in the United States who are age 62 and older for a market basket of consumer goods and services. Amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act to make the CPI-E the applicable Consumer Price Index (CPI) for computation of cost-of-living increases in OASDI benefits for such individuals.  Amends the Internal Revenue Code to exclude from wages for purposes of employment and self-employment taxes (under the Federal Insurance Contributions Act [FICA] for OASDI insurance): (1) any remuneration up to $250,000 of the amount of the contribution and benefit base, and (2) only so much of that remuneration that is less than $250,000. Amends SSA title II to include 1% or $1,000 (whichever is less) of surplus average indexed monthly earnings in the determination of primary OASDI amounts.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fair Raises for Seniors Act''.

SEC. 2. CONSUMER PRICE INDEX FOR ELDERLY CONSUMERS.

    (a) 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'' or 
``CPI-E'' that indicates the average change over time in the prices 
paid by individuals in the United States who are 62 years of age and 
older for a market basket of consumer goods and services.
    (b) Requirements.--In carrying out subsection (a), the Bureau of 
Labor Statistics shall--
            (1) increase the number of individuals in the United States 
        who are 62 years of age and older sampled in the consumer 
        expenditure survey used to establish the CPI-E above the number 
        of such individuals sampled for purposes of determining the 
        Consumer Price Index for Urban Wage Earners and Clerical 
        Workers (CPI-W);
            (2) establish samples of market-based items, stores, and 
        prices to represent the purchasing patterns of older adults; 
        and
            (3) examine the medical care component, including the cost 
        and usage of prescription drugs, of the CPI-E taking into 
        account that older adults have different illnesses and health 
        care expenses, including dental expenses, than individuals in 
        the United States who are under 62 years of age.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out the provisions of 
this section.
    (d) Effective Date.--The section 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.

SEC. 3. COMPUTATION OF COST-OF-LIVING INCREASES.

    (a) In General.--Section 215(i) of the Social Security Act (42 
U.S.C. 415(i)) is amended--
            (1) in paragraph (1)(G), by inserting before the period the 
        following: ``, and, solely with respect to any monthly 
        insurance benefit payable under this title to an individual who 
        has attained age 62, effective for adjustments under this 
        subsection to the primary insurance amount on which such 
        benefit is based (or to any such benefit under section 227 or 
        228) occurring after such individual attains such age, the 
        applicable Consumer Price Index shall be deemed to be the 
        Consumer Price Index for Elderly Consumers and such primary 
        insurance amount shall be deemed adjusted under this subsection 
        using such Index''; and
            (2) in paragraph (4), by striking ``and by section 9001'' 
        and inserting ``, by section 9001'', and by inserting after 
        ``1986,'' the following: ``and by section 3 of the Fair Raises 
        for Seniors Act,''.
    (b) Conforming Amendments in Applicable Former Law.--Section 
215(i)(1)(C) of such Act, as in effect in December 1978 and applied in 
certain cases under the provisions of such Act in effect after December 
1978, is amended by inserting before the period the following: ``, and, 
solely with respect to any monthly insurance benefit payable under this 
title to an individual who has attained age 62, effective for 
adjustments under this subsection to the primary insurance amount on 
which such benefit is based (or to any such benefit under section 227 
or 228) occurring after such individual attains such age, the 
applicable Consumer Price Index shall be deemed to be the Consumer 
Price Index for Elderly Consumers and such primary insurance amount 
shall be deemed adjusted under this subsection using such Index''.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to determinations made with respect to cost-of-living computation 
quarters (as defined in section 215(i)(1)(B) of the Social Security Act 
(42 U.S.C. 415(i)(1)(B))) ending on or after September 30 of the second 
calendar year following the calendar year in which this Act is enacted.

SEC. 4. PAYROLL TAX ON REMUNERATION UP TO CONTRIBUTION AND BENEFIT BASE 
              AND MORE THAN $250,000.

    (a) In General.--Paragraph (1) of section 3121(a) of the Internal 
Revenue Code of 1986 is amended by inserting after ``such calendar 
year.'' the following: ``The preceding sentence shall apply only to 
calendar years for which the contribution and benefit base (as so 
determined) is less than $250,000, and, for such calendar years, only 
to so much of the remuneration paid to such employee by such employer 
with respect to employment as does not exceed $250,000.''.
    (b) Conforming Amendment.--Paragraph (1) of section 3121(a) of the 
Internal Revenue Code of 1986 is amended by striking ``Act) to'' and 
inserting ``Act), or in excess of $250,000, to''.
    (c) Effective Date.--The amendments made by this section shall 
apply to remuneration paid after December 31, 2014.

SEC. 5. TAX ON NET EARNINGS FROM SELF-EMPLOYMENT UP TO CONTRIBUTION AND 
              BENEFIT BASE AND MORE THAN $250,000.

    (a) In General.--Paragraph (1) of section 1402(b) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) in the case of the tax imposed by section 1401(a), 
        the excess of--
                    ``(A) that part of the net earnings from self-
                employment which is in excess of--
                            ``(i) an amount equal to the contribution 
                        and benefit base (as determined under section 
                        230 of the Social Security Act) which is 
                        effective for the calendar year in which such 
                        taxable year begins, minus
                            ``(ii) the amount of the wages paid to such 
                        individual during such taxable years; over
                    ``(B) that part of the net earnings from self-
                employment which is in excess of the sum of--
                            ``(i) the excess of--
                                    ``(I) the net earning from self-
                                employment reduced by the excess (if 
                                any) of subparagraph (A)(i) over 
                                subparagraph (A)(ii), over
                                    ``(II) $250,000, reduced by such 
                                contribution and benefit base, plus
                            ``(ii) the amount of the wages paid to such 
                        individual during such taxable year in excess 
                        of such contribution and benefit base and not 
                        in excess of $250,000; or''.
    (b) Phaseout.--Subsection (b) of section 1402 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following: 
``Paragraph (1) shall apply only to taxable years beginning in calendar 
years for which the contribution and benefit base (as determined under 
section 230 of the Social Security Act) is less than $250,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to net earnings from self-employment derived, and remuneration 
paid, after December 31, 2014.

SEC. 6. INCLUSION OF SURPLUS EARNINGS FOR BENEFIT DETERMINATIONS.

    (a) Inclusion of Surplus Average Indexed Monthly Earnings in 
Determination of Primary Insurance Amounts.--Section 215(a)(1)(A) of 
the Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
            (1) in clauses (i), (ii), and (iii), by inserting ``basic'' 
        before ``average indexed monthly earnings'' each place it 
        appears;
            (2) in clause (ii), by striking ``and'' at the end;
            (3) in clause (iii), by adding ``and'' at the end; and
            (4) by inserting after clause (iii) the following new 
        clause:
            ``(iv) 1 percent or $1000 (whichever is less) of the 
        individual's surplus average indexed monthly earnings 
        (determined under subsection (b)(1)(B)),''.
    (b) Basic AIME and Surplus AIME.--
            (1) Basic aime.--Section 215(b)(1) of such Act (42 U.S.C. 
        415(b)(1)) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                inserting ``basic'' before ``average''; and
                    (B) in subparagraph (A), by striking ``paragraph 
                (3)'' and inserting ``paragraph (3)(A)'' and by 
                inserting before the comma the following: ``to the 
                extent such total does not exceed the contribution and 
                benefit base for the applicable year''.
            (2) Surplus aime.--
                    (A) In general.--Section 215(b)(1) of such Act (as 
                amended by paragraph (1)) is amended--
                            (i) by redesignating subparagraphs (A) and 
                        (B) as clauses (i) and (ii), respectively;
                            (ii) by inserting ``(A)'' after ``(b)(1)''; 
                        and
                            (iii) by adding at the end the following 
                        new subparagraph:
    ``(B)(i) An individual's surplus average indexed monthly earnings 
shall be equal to the quotient obtained by dividing--
            ``(I) the total (after adjustment under paragraph (3)(B)) 
        of such individual's surplus earnings (determined under clause 
        (ii)) for such individual's benefit computation years 
        (determined under paragraph (2)), by
            ``(II) the number of months in those years.
    ``(ii) For purposes of clause (i) and paragraph (3)(B), an 
individual's surplus earnings for a benefit computation year are the 
total of such individual's wages paid in and self-employment income 
credited to such benefit computation year, to the extent such total 
(before adjustment under paragraph (3)(B)) exceeds the contribution and 
benefit base for such year.''.
                    (B) Conforming amendment.--The heading for section 
                215(b) of such Act is amended by striking ``Average 
                Indexed Monthly Earnings'' and inserting ``Basic 
                Average Indexed Monthly Earnings; Surplus Average 
                Indexed Monthly Earnings''.
            (3) Adjustment of surplus earnings for purposes of 
        determining surplus aime.--Section 215(b)(3) of such Act (42 
        U.S.C. 415(b)(3)) is amended--
                    (A) in subparagraph (A), by striking ``subparagraph 
                (B)'' and inserting ``subparagraph (C)'' and by 
                inserting ``and determination of basic average indexed 
                monthly income'' after ``paragraph (2)'';
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following new subparagraph:
    ``(B) For purposes of determining under paragraph (1)(B) an 
individual's surplus average indexed monthly earnings, the individual's 
surplus earnings for a benefit computation year shall be deemed to be 
equal to the product of--
            ``(i) the individual's surplus earnings for such year (as 
        determined under clause (ii) of paragraph (1)(B) without regard 
        to this subparagraph), and
            ``(ii) the quotient described in subparagraph (A)(ii).''.
    (c) Conforming Amendments.--
            (1) Paragraphs (3)(A)(ii) and (6)(A) of section 203(a) of 
        such Act (42 U.S.C. 403(a)) are each amended by inserting 
        ``basic'' before ``average indexed monthly earnings''.
            (2) Subsections (b) and (c) of section 212 of such Act (42 
        U.S.C. 412) are each amended by striking ``average indexed 
        monthly earnings'' and inserting ``basic average indexed 
        monthly earnings, surplus average indexed monthly earnings''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to individuals who initially become eligible (within 
the meaning of section 215(a)(3)(B) of the Social Security Act (42 
U.S.C. 415(a)(3)(B)) for old-age or disability insurance benefits under 
title II of the Social Security Act, or who die (before becoming 
eligible for such benefits), in any calendar year after 2014.