Per Senator Sanders, the majority of this new tax revenue will come from the rich. He cites a study that shows that these years will affect about 1.6 percent of the work force.
This statistic is unfortunately misleading for two reasons. First, the taxes on investments are based on a fixed threshold of income, when income generally increases. If wage growth over the next 30 years mirrors that of the past 30 years, the impact on Americans will jump from 1.6 percent of workers to more than 10 percent.
The investment tax is likely also to extend beyond workers. It will affect some retirees particularly those who depend upon tax-deferred assets. It will affect people who are longtime middle class workers and one-time capital gain collectors. This policy change will reinforce the value of tax shelters such as homeownership which are exempt from capital gains taxes.
In terms of your existing retired clients, there will be almost no change in income for them. These people are exempted from the changes to the benefit formula. They will only benefit from the legislation provided that the new measure of CPI generates a higher COLA. That change is apt to be very small because it is not retroactive.
Brenton Smith (A.K.A. Joe The Economist) writes nationally on the issue of Social Security reform with work appearing in Forbes, FedSmith.com, MarketWatch, TheHill.com, and regional media like The Denver Post.