II 115th CONGRESS 1st Session S. 1600 IN THE SENATE OF THE UNITED STATES July 20, 2017 Ms. Hirono (for herself and Mr. Merkley ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title II of the Social Security Act and the Internal Revenue Code of 1986 to make improvements in the old-age, survivors, and disability insurance program, and to provide for Social Security benefit protection.

1. Short title and table of contents (a) Short title This Act may cited as the Protecting and Preserving Social Security Act . (b) Table of contents The table of contents of this Act is as follows: Sec. 1. Short title and table of contents. Title I—Cost-of-Living Increases Sec. 101. Consumer Price Index for Elderly Consumers. Sec. 102. Computation of cost-of-living increases. Title II—Contribution and benefit fairness Sec. 201. Determination of wages and self-employment income above contribution and benefit base after 2017. Sec. 202. Inclusion of surplus earnings in Social Security benefit formula. I Cost-of-Living Increases 101. 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 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. (b) 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. (c) Authorization of Appropriations There are authorized to be appropriated such sums as are necessary to carry out the provisions of this section. 102. Computation of cost-of-living increases (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 (1) 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). . (2) Conforming amendment Section 215(i)(4) of the Social Security Act ( 42 U.S.C. 415(i)(4) ) is amended by inserting and by section 102 of the Protecting and Preserving Social Security Act after 1986 . (c) No effect on adjustments under other laws Section 215(i) of the Social Security Act ( 42 U.S.C. 415(i) ) is amended by adding at the end the following: (6) Any provision of law (other than in this title or title XVI) which provides for adjustment of an amount based on a change in benefit amounts resulting from a determination made under this subsection shall be applied and administered without regard to the amendments made by section 102 of the Protecting and Preserving Social Security Act . . (d) No effect on eligibility for SSI and Medicaid Any increase to an individual’s monthly benefit amount under title II of the Social Security Act as a result of the amendments made by this section shall not be regarded as income or resources for any subsequent month, for purposes of determining the eligibility of the recipient (or the recipient's spouse or family) for benefits or assistance, or the amount or extent of benefits or assistance, under the Supplemental Security Income program or the Medicaid program. (e) Effective date The amendments made by this section 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. II Contribution and benefit fairness 201. Determination of wages and self-employment income above contribution and benefit base after 2017 (a) Determination of wages above contribution and benefit base after 2017 (1) Amendments to the Internal Revenue Code of 1986 Section 3121 of the Internal Revenue Code of 1986 is amended— (A) in subsection (a)(1), by inserting the applicable percentage (determined under subsection (c)(1)) of before that part of the remuneration ; and (B) in subsection (c), by striking (c) Included and excluded service.— For purposes of this chapter, if and inserting the following: (c) Special rules for wages and employment (1) Applicable percentage of remuneration in determining wages For purposes of paragraph (1) of subsection (a), the applicable percentage for a calendar year, in connection with any calendar year referred to in such subparagraph, shall be the percentage determined in accordance with the following table: The applicable In the case of: percentage is: Calendar year 2018 86% Calendar year 2019 71% Calendar year 2020 57% Calendar year 2021 43% Calendar year 2022 29% Calendar year 2023 14% Calendar years after 2023 0%. (2) Included and excluded service For purposes of this chapter, if . (2) Amendments to the Social Security Act Section 209 of the Social Security Act ( 42 U.S.C. 409 ) is amended— (A) in subsection (a)(1)— (i) in subparagraph (I)— (I) by inserting and before 2018 after 1974 ; and (II) by inserting and after the semicolon; and (ii) by adding at the end the following new subparagraph: (J) The applicable percentage (determined under subsection (l)) of that part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to the contribution and benefit base (determined under section 230) with respect to employment has been paid to an individual during any calendar year after 2017 with respect to which such contribution and benefit base is effective, is paid to such individual during such calendar year; ; and (B) by adding at the end the following new subsection: (l) For purposes of subparagraph (J) of subsection (a)(1), the applicable percentage for a calendar year, in connection with any calendar year referred to in such subparagraph, shall be the percentage determined in accordance with the following table: The applicable In the case of: percentage is: Calendar year 2018 86% Calendar year 2019 71% Calendar year 2020 57% Calendar year 2021 43% Calendar year 2022 29% Calendar year 2023 14% Calendar years after 2023 0%. . (3) Effective date The amendments made by this subsection shall apply with respect to remuneration paid in calendar years after 2017. (b) Determination of self-Employment income above contribution and benefit base after 2017 (1) Amendments to the Internal Revenue Code of 1986 Section 1402 of the Internal Revenue Code of 1986 is amended— (A) in subsection (b)(1), by inserting an amount equal to the applicable percentage (as determined under subsection (d)(2)) of before that part of the net earnings from self-employment ; and (B) in subsection (d)— (i) by striking (d) Employee and wages.— The term and inserting the following: (d) Rules and definitions (1) Employee and wages The term ; and (ii) by adding at the end the following: (2) Applicable percentage of net earnings from self-employment in determining self-employment income For purposes of paragraph (1) of subsection (b), the applicable percentage for a taxable year beginning in any calendar year referred to in such paragraph shall be the percentage determined in accordance with the following table: The applicable In the case of: percentage is: Calendar year 2018 86% Calendar year 2019 71% Calendar year 2020 57% Calendar year 2021 43% Calendar year 2022 29% Calendar year 2023 14% Calendar years after 2023 0%. . (2) Amendments to the Social Security Act Section 211 of the Social Security Act ( 42 U.S.C. 411 ) is amended— (A) in subsection (b)— (i) in paragraph (1)(I)— (I) by striking or after the semicolon; and (II) by inserting and before 2018 after 1974 ; (ii) by redesignating paragraph (2) as paragraph (3); and (iii) by inserting after paragraph (1) the following new paragraph: (2) For any taxable year beginning in any calendar year after 2017, an amount equal to the applicable percentage (as determined under subsection (l)) of that part of net earnings from self-employment which is in excess of (A) an amount equal to the contribution and benefit base (determined under section 230) that is effective for such calendar year, minus (B) the amount of the wages paid to such individual during such taxable year; or ; and (B) by adding at the end the following: (l) For purposes of paragraph (2) of subsection (b), the applicable percentage for a taxable year beginning in any calendar year referred to in such paragraph, shall be the percentage determined in accordance with the following table: The applicable In the case of: percentage is: Calendar year 2018 86% Calendar year 2019 71% Calendar year 2020 57% Calendar year 2021 43% Calendar year 2022 29% Calendar year 2023 14% Calendar years after 2023 0%. . (3) Effective date The amendments made by this subsection shall apply with respect to taxable years beginning during or after calendar year 2018. 202. Inclusion of surplus earnings in Social Security benefit formula (a) Inclusion of surplus average indexed monthly earnings in determination of primary insurance amounts (1) In general Section 215(a)(1)(A) of the Social Security Act ( 42 U.S.C. 415(a)(1)(A) ) is amended— (A) in clauses (i), (ii), and (iii), by inserting basic before average indexed monthly earnings each place it appears; (B) in clause (ii), by striking and at the end; and (C) by inserting after clause (iii) the following new clauses: (iv) 3 percent of the individual’s surplus average indexed monthly earnings to the extent such surplus average indexed monthly earnings do not exceed the excess of the amount established for purposes of this clause by subparagraph (B) over 1/12 of the contribution and benefit base for the last of such individual’s computation base years, and (v) 0.25 percent of the sum of the individual’s surplus average indexed monthly earnings plus 1/12 of the contribution and benefit base for the last of such individual’s computation base years, to the extent such sum exceeds the amount established for purposes of clause (iv) by subparagraph (B). . (2) Bend point for surplus earnings Section 215(a)(1)(B) of such Act ( 42 U.S.C. 415(a)(1)(B) ) is amended— (A) in clause (ii), by striking the amounts so established and inserting the amounts established for purposes of clauses (i) and (ii) of subparagraph (A) ; (B) by redesignating clause (iii) as clause (v); (C) in clause (v) (as redesignated), by inserting or (iv) after clause (ii) ; and (D) by inserting after clause (ii) the following new clauses: (iii) For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in the calendar year 2018, the amount established for purposes of clause (iv) of subparagraph (A) shall be $10,958. (iv) For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in any calendar year after 2018, the amount established for purposes of clause (iv) of subparagraph (A) shall equal the product of the amount established with respect to the calendar year 2018 under clause (iii) of this subparagraph and the quotient obtained by dividing— (I) the national average wage index (as defined in section 209(k)(1)) for the second calendar year preceding the calendar year for which the determination is made, by (II) the national average wage index (as so defined) for 2016. . (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) 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 (described in paragraph (2)(B)(ii)) 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 without regard to this subparagraph), and (ii) the quotient described in subparagraph (A)(ii). . (c) 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) 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 2017.