No more taxes on SS.

IKE

IKE

Well-known Member
Location
Oklahoma....U.S.A.
They’ve also included a provision to extend the tax cuts that are set to expire.

I’m most interested in the idea being floated of a 25-30% federal sales tax to replace the IRS and traditional income tax.

That would be a hit to millions of Americans that do not pay federal income tax but an amazing benefit to me and millions of others if it meant not being taxed on draws from a traditional IRA.

It would also mean that anyone, including visitors, would be helping to directly support the operation of the government.

It’s a long hard road to get from a concept to a law but it is interesting to see and hear the possibilities, examine the potential impact, etc…

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
- Charles Dickens
 

I haven't seen an answer yet to another part of this. If SS were untaxed, does it increase your MAGI and bring on IRMAA surcharges for Medicare premiums to more people?
 
Aunt Bea said:
They’ve also included a provision to extend the tax cuts that are set to expire.

I’m most interested in the idea being floated of a 25-30% federal sales tax to replace the IRS and traditional income tax.

That would be a hit to millions of Americans that do not pay federal income tax but an amazing benefit to me and millions of others if it meant not being taxed on draws from a traditional IRA.

It would also mean that anyone, including visitors, would be helping to directly support the operation of the government.

It’s a long hard road to get from a concept to a law but it is interesting to see and hear the possibilities, examine the potential impact, etc…

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
- Charles Dickens
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Removing the tax on Soc. Sec. would give us more to spend Yay!!! We'd spend that so I think tax wise a 25-30% federal sales tax would probably put us [my wife & me] right back to where we are now. Were doing great now so as an impact no big deal.
 
When I read about the possibility of changing over to the sales tax from income tax, it seemed to me like the poorest people would be affected the most from this , in a bad way. It is already hard enough for some of us to just buy the necessary things we need, and a 25% tax on everything would make it even worse.
However, (and I don’t remember where I found the information now) what i read said that food would not be taxed, and low income people would be exempt from this tax. I am not sure how that would work, if people are just purchasing items, how the store would know, unless there was a special card, like we use the EBT card for food; but it would be a tax-exempt card.
 
IKE said:
A bill has recently been introduced to eliminate the taxing of Social Security benefits.

Granted it's only a bill that has just been introduced and it may or may not pass but it sure would be nice if it did....we'll just have to wait and see.
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I'm more worried about a bunch of twenty somethings having access to the Treasury Department systems and mucking about our Social Security and Medicare payments!
 
I don’t see the point of no tax on SS except to give the wealthy another tax break. For those people whose main source of income is SS they most probably pay little if any US income tax already.

The current standard deduction is $14,600. For Single people: The 0% bracket tops out at 11,600. The 12% bracket tops out at $47151.

That means a single person can earn over $26000 before paying one cent in US income tax. Also keep in mind that only 85% of SS taxes is taxable income. Under 25,000 social security is not taxable at all. Between 25000 and 34000 only half of the SS payment is taxable. Over 34000, 85% is taxable.

The above means that most people who main source of income is SS already don’t pay much if any US income tax on it.
 
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How are you defining "wealthy" for purposes of turning up your nose?

If somebody has income from pensions or investments totaling $34,001 then up to 85% every dollar of SS they get once they start taking it is taxable.

Maybe their SS is about the same, another $34K. Are you saying that an income of $68K is "wealthy?"
 
There wasn't always a tax on SS. That came in the 1980's. So we're just rolling backward except it was still easier for seniors to live on their SS back then. My maternal grandparents were alive back then and doing well. They'd sold their home and moved into a little senior apartment. Then SS became taxable. They both died in a couple of years. For what? It's personal. I will never forget it nor forgive it. Never.

weeping angel.jpg
 
Aunt Bea said:
They’ve also included a provision to extend the tax cuts that are set to expire.

I’m most interested in the idea being floated of a 25-30% federal sales tax to replace the IRS and traditional income tax.

That would be a hit to millions of Americans that do not pay federal income tax but an amazing benefit to me and millions of others if it meant not being taxed on draws from a traditional IRA.

It would also mean that anyone, including visitors, would be helping to directly support the operation of the government.

It’s a long hard road to get from a concept to a law but it is interesting to see and hear the possibilities, examine the potential impact, etc…

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.”
- Charles Dickens
Click to expand...
There are people and families who can barely make ends meet now. A 25 - 30% sales tax would make it even harder on them. I don't know what gets taxed in each state, or what a federal sales tax would encompass, but in N.J. most food items in grocery stores are not taxed. There is no tax on clothes but household items, including cleaning products are taxed. There's no tax on paper towels and toilet paper. It seems like such a tax might be beneficial in one way, but end up being more costly in the long run.
 
OneEyedDiva said:
There are people and families who can barely make ends meet now. A 25 - 30% sales tax would make it even harder on them. I don't know what gets taxed in each state, or what a federal sales tax would encompass, but in N.J. most food items in grocery stores are not taxed. There is no tax on clothes but household items, including cleaning products are taxed. There's no tax on paper towels and toilet paper. It seems like such a tax might be beneficial in one way, but end up being more costly in the long run.
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I’m still turning it over in my mind. 🤔

I think a targeted federal sales tax might be better than blanket tariffs.

No matter what is done, it will be tougher on consumers.

In my case, I don’t buy much stuff so a federal income tax would have little impact until I need to make a major purchase like an automobile.

I doubt that much of anything will change but it’s interesting to think about.
 
Well so much for the 2.6% COLA we got. My SS was taxed by $1,100 more for 2024 than for 2023. I did not have more capital gains, dividends or distributions from investment either. My pension stays the same, so the only change in income was that COLA.
 
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Brookswood said:
I don’t see the point of no tax on SS except to give the wealthy another tax break. For those people whose main source of income is SS they most probably pay little if any US income tax already.

The current standard deduction is $14,600. For Single people: The 0% bracket tops out at 11,600. The 12% bracket tops out at $47151.

That means a single person can earn over $26000 before paying one cent in US income tax. Also keep in mind that only 85% of SS taxes is taxable income. Under 25,000 social security is not taxable at all. Between 25000 and 34000 only half of the SS payment is taxable. Over 34000, 85% is taxable.

The above means that most people who main source of income is SS already don’t pay much if any US income tax on it.
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Don't forget, if you are over 65 and single, in 2024, your standard deduction would have been $14,600, plus an additional $1,950. That brings your total standard deduction to $16,550, and I believe it is set to increase to $17,000 for the 2025 taxes.

Also, I'm not aware of any tax bracket that tops out at $11,600, except for the 10% bracket which refers to any amount over the $25,000, so any combined income over the $25,000 gets taxed at 10%. That's my understanding anyway.
 
rgp said:
Any word on dropping the tax on pensions ?
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I haven’t seen anything directly relating to pensions.

If The Big Beautiful Tax Bill passes and Social Security is no longer a part of adjusted gross income that could reduce taxes on other forms of income including pensions.

An awful lot of ifs and mights have to be dealt with before any significant changes.
 
This reddit thread explains why my simple and obvious SS fix to the system running out of money insolvency issue for the current young generation is only rarely being discussed because those against it are wealthy and greedy with political and media power. Notice how there are some posting vague numerical information like it's a game to confuse against taxing the wealthy any more.

https://www.reddit.com/r/ask/comments/1hd9s4r

As one reddit person keenly posted:

"There is no mystery of how to stabilize social security. There are a variety of methods that just need to be applied, such as raising the retirement age or lifting or removing the income cap. The Social Security administration forecasts the economic effect of all the options and publishes this information annually.

“Fixing” social security is purely a political problem. If our leaders wanted to actually just shore up social security and be done with it, this would be a simple set of policy preferences that could be negotiated and implemented. But that’s not what they want to do. They want to dick around, cuddle up with their corporate sponsors promising big tax cuts in exchange for expensive vacations, campaign contributions, and a high paying gig once their time in office is over. They want to use Social Security as a political weapon.

So why not just remove the cap? Because Congress hates taking action. It’s always better to just keep the status quo and not hand your political opponents a possible line of attack in the next election."
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Some claim with a lame excuse only morons might buy, if the government raises the $176k cap, then wealthy people will deserve, and demand higher benefits that will not result in much additional funds. Ridiculous! No! Wealthy people don't need more SS benefits it is the rest of us and future seniors. So if the cap is raised significantly and benefits are not raised for wealthy who don't need it, there will be a huge amount available for Millenials and newer generations.

Just because the original SS program had a set policy of benefits depending on how much one pays into it, doesn't mean we MUST still keep that policy. Middle and lower income citizens aren't the one's responsible for creating the insolvency issue but greedy types will continue to insist they pay for it.

Some argue if funds increase, politicians will only borrow more from SS payments for their own purposes. Again nonsense. That is merely a matter of changing policy to prevent such. Yes politicians could borrow more leaving funds low again but again that is merely a matter of creating sensible policy citizens demand as voters that prevents that.

Instead, Wall Street, banks, and real estate financial corporations would rather allow by more back door out of public awareness deals, the disaster of "Open Borders", and having people increase birth rates to pay for SS. Yeah endless near-sighted myopic growth and development with insane levels of immigration, causing increasing overpopulation issues that is a major factor destroying society, humanity, and our fragile planetary future. What groups do you think are most responsible for the enormous increase in the wealth gap, homelessness, and insane housing inflation during our lifetimes?
 
Raising the cap just allows for some to still completely avoid paying for SS. It's still labor, even though it's highly compensated labor, to foot the bill while owners of capital still avoid paying much if anything towards SS or other necessary functions paid for by taxes.
 

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