SOCIAL SECURITY ADMINISTRATION BALTIMORE, MD 21235-0001

SOCIAL SECURITY

Office of the Chief Actuary

December 16, 2011

The Honorable Dave Camp

Chairman, Committee on Ways and Means

House of Representatives

Washington, D.C. 20515 

Dear Mr. Chairman:

We have reviewed the language in the “Middle Class Tax Relief and Job Creation Act of 2011” 

(H.R. 3630), which you introduced on December 9, 2011. We estimate that the enactment of this 

bill would reduce (improve) the long-range actuarial deficit of the Old Age and Survivors 

Insurance and Disability Insurance (OASDI) program by a negligible amount (less than 0.005

percent of taxable payroll). All estimates are based on the intermediate assumptions of the 2011 

Trustees Report. Sections 2001 and 5101 would have direct effects on the OASDI program, as 

described below.

Section 2001 of the bill, “Extension of Temporary Employee Payroll Tax Reduction through End 

of 2012” would extend through 2012 the provisions of subsection (c) of section 601 of the “Tax 

Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.” Enactment of 

section 2001 would have a negligible effect on the financial status of the program in both the 

near term and the long term. We estimate that the projected level of the OASI and DI Trust 

Funds would be unaffected by enactment of this provision.

Specifically, this provision would make the following changes for payroll tax rates and OASDI 

financing in 2012: (1) for wages and salaries paid in calendar year 2012 and self-employment 

earnings in calendar year 2012, reduce the OASDI payroll tax rate by 2.0 percentage points, (2) 

transfer revenue from the General Fund of the Treasury to the OASI and DI Trust Funds so that 

total revenue for the trust funds would be unaffected by this provision, and (3) credit earnings to 

the records of workers for the purpose of determining future benefits payable from the trust 

funds so that such benefits would be unaffected by this provision. For wage and salary earnings, 

the 2.0-percent rate reduction would apply to the employee share of the payroll tax rate. For

self-employment earnings, the personal income tax deduction for the OASDI payroll tax would 

be 59.6 percent of the portion of such taxes attributable to self-employment earnings for 2012. 

Section 5101 of the bill, “Information for Administration of Social Security Provisions Related 

to Noncovered Employment,” would require that forms submitted to the Secretary of the 

Treasury regarding distributions from any employer deferred compensation plan made after 

December 31, 2012 indicate whether the plan and distribution reflect earnings from employment 

of any State or political subdivision of a State. This required reporting by plan administrators 

(form 1099) would refine the data available to the Social Security Administration that can be 

utilized in determinations of the application of the windfall elimination provision and the 

government pension offset provision for OASDI benefits. Enactment of section 5101 of the bill 
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would reduce (improve) the long-range OASDI actuarial deficit. Based on reasonable 

expectation of available administrative resources, we estimate that the improvement in the 

OASDI actuarial deficit would be negligible (i.e., less than 0.005 percent of taxable payroll). 

However, if enactment of this Section 5101 was accompanied with sufficient administrative 

resources to make full use of the available data for making determinations of the applicability of 

the windfall elimination provision and the government pension offset provision for OASDI 

benefits, then we estimate that the net effect on the estimated long-range OASDI actuarial deficit 

would be a reduction (improvement) in the deficit of about 0.01 percent of payroll. 

We estimate that other sections of the bill would have no direct effects on the OASDI program. 

Please let me know if we may be of any further assistance.

Sincerely,

Stephen C. Goss

Chief Actuary