Why only make the upper income a little upset with you? Why not “go for gold” and make ALL of the SS benefit taxable?
(Notice, I do not advocate for this solution, but it does seem the easiest, most efficient way to “means test” a program that can not continue to pay out the same benefits.)
Look at it this way, which is more likely:
1.) an actual cut in SS benefit amounts?
or
2.) Simply taxing the SS benefit?
Obviously, it is much easier to simply TAX the benefit.
As it stands today, even “tax free” municipal bond interest is added into the formula for considering the taxation level of SS benefits.
Also, the lower income folks pay NO TAXES now. It would be fairly easy to simply treat SS benefits as income, without even impacting the “poor” -— if nothing else, the “floor” for “free” SS benefits could remain the same, or rise slightly.
Another point which the libs don't like to address:
The “earned income credit” was first devised as a way to reimburse the working poor for their “payroll taxes” -— which is really awful, in practice:
The “poor” might pay virtually NOTHING into SS, yet they are often likely to receive all of their benefits tax free!
I am conceding nothing. There is a big difference in taxing all SS benefits for the 50 million people now receiving them, which would mean that two thirds of the people not paying taxes on them or abour 34 million, would be added to the rolls. I stated that some of the changes Obama might do is to increase taxes on the third who are already paying taxes on their benefits and perhaps add a few more who aren't. But there is no way Obama will commit political sucide by expanding taxes to 34 million recipients and their swelling numbers as the baby boomer cohort retires.
Why only make the upper income a little upset with you? Why not “go for gold” and make ALL of the SS benefit taxable?
Because of the numbers and econcomic status of those involved. Under current law, you will have to pay federal taxes on your benefits if you file a federal tax return as an "individual" and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income that is more than $32,000. Two-thirds of the 50 million SS recipients do not pay taxes on their benefits under the current law. The monthly SS benefit for a worker is around $1100. How do you think it would play politically if you started taxing these folks?
Look at it this way, which is more likely: 1.) an actual cut in SS benefit amounts? or 2.) Simply taxing the SS benefit? Obviously, it is much easier to simply TAX the benefit.
False choice. There are many different things you could do to fund the program in the short term, including raising the worker and employer contributions from the current $6.2% each. That has not been raised since 1990.
Also, the lower income folks pay NO TAXES now. It would be fairly easy to simply treat SS benefits as income, without even impacting the “poor” -— if nothing else, the “floor” for “free” SS benefits could remain the same, or rise slightly.
80% of Americans pay more in payroll taxes than they do income taxes. What you want to do is tax the SS benefits for those already retired or disabled or are survivors. Now you seem to be changing your mind.
The “poor” might pay virtually NOTHING into SS, yet they are often likely to receive all of their benefits tax free!
That applies to a lot of people, about two-thirds of the recipients. And then there are the spousal benefits, which a spouse can receive without ever contributing to the system.