GObanking article on proposed 'no tax on Soc Sec' idea

L

Lethe200

Senior Member
Location
San Francisco Bay Area
Personally, this works great for us as we are taxed on 85% of our SocSec. But for lower income folks, not so great as it affects the overall financial stability of SocSec. Much depends on how necessary your SocSec check is necessary for your budget.

What a Trump Tax Cut for Seniors Would Really Mean, According to an Expert
GOBanking/MSN News 01Sept2024

Presidential hopeful Donald Trump wants to give seniors a major tax break. On July 31, Trump wrote on Truth Social that “seniors should not pay tax on Social Security.” While this might sound like music to the ears of beneficiaries, the implementation and effects of this policy change are not so clear-cut.

GOBankingRates spoke with Chris Orestis, founder of Retirement Genius and an expert in retirement planning and financial health, about what this proposed tax policy would look like in reality.

Who Would Really Benefit From This?
According to Orestis, not everyone would benefit from Trump’s proposed tax break.

“This would benefit only higher-income seniors, cost workers and the middle class higher taxes, and have no impact on lower-income seniors that need the relief the most,” he said. “In the short term, this tax break penalizes workers not yet on the programs and does nothing for lower-income beneficiaries. In the long run, it hurts future beneficiaries of all stripes, but particularly lower income, as both Social Security and Medicare are undermined.”

Social Security taxes pay into the solvency of programs that benefit many Americans, so eliminating them for an entire group of taxpayers could have dire consequences, according to Orestis.

“I would be very concerned about eliminating a tax that immediately undermines the solvency of both Social Security and Medicare to score political points today,” he said. “In essence, this is a tax break for the rich paid for by workers. There is absolutely no benefit for lower-income beneficiaries, but this quickly begins to do great harm to the essential programs they rely on for income and healthcare.

“If this were passed, the current and immediate future solvency of both programs would be immediately jeopardized, requiring action to address this with higher taxes and reduced benefits.”

Trump Likely Will Not Be Able To Implement This Tax Cut
While Orestis is concerned about the possible consequences of the elimination of Social Security taxes for seniors, in reality, he does not believe that Trump will be able to enact this proposal. “The political will for either party to enact a tax cut like this does not exist,” he said. “This is really not much more than political fodder. [It’s] not a serious tax cut proposal for seniors with any chance of being enacted.”

Alternatives to Eliminating Social Security Taxes for Seniors
Orestis believes there are better ways to financially help seniors through tax cuts.

“Other approaches to giving tax cuts to seniors that are more realistic would be in the form of reduced capital gains or earned income tax levels past a certain age, increasing the tax exemption level for the sale of a residence, and giving 100% tax deduction for premiums spent on long-term care insurance policies,” he said.
 

The article sounds politically motivated to me.

The article’s alternatives appear to focus on helping upper middle class and wealthy tax payers who have homes to sell, capital gains, and tax exemptions on long term care insurance are of little or no help to millions.

I believe that taxing Social Security is a form of means testing and should be eliminated.

I am in favor of eliminating the Social Security wage cap, the possibility of increasing the Social Security contribution for workers and employers and as a last resort the elimination of COLAs and the reduction of benefits.

Someone needs to balance the cash in versus the cash out.

If the government isn’t capable of managing Social Security in an honest straightforward way maybe it should be phased out in favor of a government mandated private annuity scheme of some sort that is funded by workers and managed by private insurers.
 
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No on the annuity Scheme, but yes the article appears to be political.
Once the new arrivals start to pay their fair share there should be enough contributions to keep SS solvent.
 

If thinking about this without names & only the positives or negative then it's not political.

I think Aunt Beas approach to posting an opinion is excellent.

For me at the tail end of drawing soc. sec. but paying 85% tax on what I get would work great. I do see the point that a portion of that tax feeds back into funding soc. sec.
 
I would be happy if they simply indexed the limits on how much SS is taxed to inflation. That number has not gone up in years and is forcing even lower income people to pay taxes on their SS.
 
Politically motivated manipulative hit piece. The vast majority of lower income, monthly benefit SS seniors, without other income sources don't pay any tax. Only those at highest SS benefit levels like this person or those with other supplemental income at levels over thresholds.

Notice the article didn't even mention the above in order to make it read like lower SS benefits are already being taxed. It will indeed help higher benefit seniors that ought be done. The tax on SS benefits is a double tax that never should have been enacted. How people are taxed on higher supplemental income has logic above thresholds but that ought not include SS benefits beyond income calculations, that were added in 1984 by greedy for more tax revenue politicians.

What the article author is actually stating is some a whole other TBD change to SS taxes could help lower income seniors that are more in need, so why are we discussing bills to help those at the upper income level? And corporations of course realize if revenue ain't coming from workers, it will then come from them and Wall Street. Well it ought be zapped because the 1984 tax was and still is wrong. It is also an easy fix.
 
IMHO, it was a huge mistake to place disability benefits under the umbrella of the SSA. I know it wouldn't have been a popular decision, but if disabilities, particularly birth-to-death disabilities, had been a separate tax or payroll deduction from the get-go, and managed by a separate agency, I think both agencies would be financially robust today.
 
David777 said:
Politically motivated manipulative hit piece. The vast majority of lower income, monthly benefit SS seniors, without other income sources don't pay any tax. Only those at highest SS benefit levels like this person or those with other supplemental income at levels over thresholds.
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The removal of such tax would also bring forward the date for OAS reduction in payments. Which would also reduce the expected payments even further.

Nice article on a tax reduction, intended to grab clicks, imho. The idea is not going to pass muster, when evaluated.
 
Murrmurr said:
IMHO, it was a huge mistake to place disability benefits under the umbrella of the SSA. I know it wouldn't have been a popular decision, but if disabilities, particularly birth-to-death disabilities, had been a separate tax or payroll deduction from the get-go, and managed by a separate agency, I think both agencies would be financially robust today.
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Are you thinking of SSI, with regard to birth to death disabilities?
 
Murrmurr said:
IMHO, it was a huge mistake to place disability benefits under the umbrella of the SSA. I know it wouldn't have been a popular decision, but if disabilities, particularly birth-to-death disabilities, had been a separate tax or payroll deduction from the get-go, and managed by a separate agency, I think both agencies would be financially robust today.
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Our differences make the world go round!
😉🤭😂

I’ve always thought the reverse.

IMHO we should have one program, from the cradle to the grave, that covers all health and human services.

One program that would have one set of administrators and bureaucrats to cover unemployment, disability, old age, healthcare, etc…

We all contribute when times are good and we all draw when times are bad, no shame no blame.
 
Aunt Bea said:
Our differences make the world go round!
😉🤭😂

I’ve always thought the reverse.

IMHO we should have one program, from the cradle to the grave, that covers all health and human services.

One program that would have one set of administrators and bureaucrats to cover unemployment, disability, old age, healthcare, etc…

We all contribute when times are good and we all draw when times are bad, no shame no blame.
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That's basically what we did with (or to) the SSA. IMO, disability benefits and basic healthcare should come under Social Services, and Social Services should be one federal program instead of a myriad of state and county programs. Though I don't think there's any reason each state shouldn't manage and account for those services (aside from corruption).

Social Security was designed to ensure every worker a retirement income. That should be its only purpose, imo. I think it would be reasonable and fair to transfer unclaimed SS benefits to my imagined Federal Social Services program, though. I mean, I don't suppose that would cause problems, but it only occurred to me just now.
 
Murrmurr said:
Such as Down's Syndrome, devastating deformities, and other birth defects.
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Those are generally not under the OASDI, but rather such programs as SSI, TANF,SNAP, etc. Granted the latter being part of SSA (Social Security Administration), they are still separate programs not attached to the trust funds, but general funding.
 
Taxes on SS are low these days because the tax rates in the USA are low. This will end for individuals after 2025 when rates for individuals go up. Suddenly, rates will be higher. It’s baked into the cake under existing law.
Good luck with that.
 
Harry Le Hermit said:
Those are generally not under the OASDI, but rather such programs as SSI, TANF,SNAP, etc. Granted the latter being part of SSA (Social Security Administration), they are still separate programs not attached to the trust funds, but general funding.
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For just under a decade (late 80s to late-mid 90s), I worked at several facilities that permanently housed adults and children with Developmental Disabilities, mental retardation, as a psych nurse, then activities director and staff advisor, and lastly, as administrator of three DD group homes.

The majority of our resident clients were born with their disability. Causes of acquired DD included childhood abuse, environmental deprivation, and medical accidents and malpractice, in that order.

All of them received a monthly check for about $1800 from the Social Security Admin. That isn't something I heard; I know it because, in my last 2 positions, I was responsible for clients records, including their financial accounting.
 
Murrmurr said:
All of them received a monthly check for about $1800 from the Social Security Admin. That isn't something I heard; I know it because, in my last 2 positions, I was responsible for clients records, including their financial accounting.
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Receiving a check from the Social Security Administration does not necessarily mean from the trust funds. Supplemental Security Income would be one example. A partial list of SSA programs... Social Security Programs in the United States - Assistance Programs
 
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Murrmurr said:
You know the FICA deduction is fairly recent, right? I'm pretty sure it's only a couple decades old.
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The Federal Insurance Contributions Act (FICA) was established in 1935. That was the OA or Old Age. The S for survivors was added circa 1939, and the DI (disability) in the mid 50s, becoming OASDI, which both have established trusts. In 1965 the Medicare A was added, also with a trust, to the FICA.
 
Harry Le Hermit said:
The Federal Insurance Contributions Act (FICA) was established in 1935. That was the OA or Old Age. The S for survivors was added circa 1939, and the DI (disability) in the mid 50s, becoming OASDI, which both have established trusts. In 1965 the Medicare A was added, also with a trust, to the FICA.
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I can tell you that certain states fiddled with these funds at least from 1988 to 1997. Programs changed names and purposes, and social security funds did a lot of shifting and bouncing around during that time. I will never be convinced that SS and FICA funds weren't treated like federal bank accounts for the purpose of votes with no regard for problems that were likely to crop up in the future.

And they have.
 
Harry Le Hermit said:
The you should have no problem, citing specific examples, where states messed with OASDI trust funds or even the Medicare trust fund.
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I'm reasonably certain the examples I saw aren't archived anywhere. And it's amusing to me that they're called trusts, but I never underestimate the cleverness of gov't agencies. Also, I'm not saying they are all bad ideas. I'm saying they're corruptible and they can be manipulated and abused, and they are.
 
Murrmurr said:
I'm reasonably certain the examples I saw aren't archived anywhere. And it's amusing to me that they're called trusts, but I never underestimate the cleverness of gov't agencies. Also, I'm not saying they are all bad ideas. I'm saying they're corruptible and they can be manipulated and abused, and they are.
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So no tangible evidence of malfeasance regarding the Federal OASDI and Medicare Trusts, by states. Got it.
 
Harry Le Hermit said:
So no tangible evidence of malfeasance regarding the Federal OASDI and Medicare Trusts, by states. Got it.
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Really? I cited my experience back in the late 80s to mid 90s of opening social security checks for as many as 300 developmentally disabled people every month that looked no different from the social security checks I receive now, and recorded their acct numbers and amounts on documents made of paper, since desk computers were not in common use at private, not-for-profit, state-funded DD facilities and group homes at the time, and you're rolling your eyes.

Cheers!
 
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