Number:  112-7
Date:  December 14, 2011

The House Passes H.R. 3630
The “Middle Class Tax Relief and Job Creation Act of 2011”

On December 13, 2011, the House passed H.R. 3630, the “Middle Class Tax Relief and Job Creation Act of 2011,” by a vote of 234 to 193.  The bill now goes to the Senate for its action.

The bill includes the following provisions of interest to Social Security.

Payroll Tax

  • Would extend through 2012 the 2-percentage point reduction in the Social Security payroll (or self-employment) tax rate applicable to employees and the self-employed now applicable for 2011.  As with the provision that is currently in effect for 2011, the amount of revenue that is foregone to the Social Security Trust Funds because of the extension of this payroll tax reduction would be replaced with General Fund transfers of the same amount.
  • Would improve administration of the windfall elimination provision and government pension offset provision by requiring State and local government pension payers to identify on IRS form 1099R whether a worker’s pension is based on government employment.
  • Would require a child’s Social Security number in order to collect the refundable portion of the Child Tax Credit.

Provisions Affecting Federal Civilian Employees

Would extend the current salary freeze for Federal civilian employees and Members of Congress through December 31, 2013.

  • Would increase the employee contribution to the Civil Service Retirement System (CSRS) from 7 percent to 8.5 percent of salary over three years, beginning in calendar year 2013.
  • Would  increase the employee contribution to the Federal Employee Retirement System (FERS) from 0.8 percent to 2.3 percent of salary over three years, beginning in calendar 2013.
  • Would increase the employee contribution under CSRS and FERS for special occupational groups and Members of Congress by a total of 1.5 percent of salary over three years, beginning in calendar year 2013.
  • Would reduce the employer contribution by the increased employee contribution.
  • Would establish new retirement rules for Federal employees hired after December 31, 2012, with less than 5 years of credible service for retirement purposes.
  • Would eliminate the FERS minimum supplement for individuals not subject to mandatory retirement, beginning January 1, 2013.


Health Care Provisions

  • Would increase Medicare Part B and D premiums for high-income beneficiaries beginning in 2017 and revise income thresholds. 
  • Would lower the initial high-income dollar amount threshold from $85,000 for singles and $170,000 for couples to $80,000 and $160,000, respectively. 
  • Would require most affected beneficiaries to pay an additional 15 percent of the total Medicare Part B or D cost, while those with the highest income (over $200,000) would be required to pay 90% of the total cost.
  • Would freeze the income thresholds until at least 25 percent of beneficiaries are paying income-related premiums.  Inflation-related adjustments would resume once the 25 percent threshold is reached;
  • Would extend the Qualifying Individual (QI) program, which provides federal reimbursement for states to cover Part B premiums for seniors with incomes between 120 percent and 135 percent of poverty, through 2012.