1.) The “cap” on W-2 and Self Employment earnings that can be taxed, by Social Security, WILL BE REMOVED.
What on Earth would you expect from a Marxist President who PROMISED to “spread the wealth around”???
2.) The age for normal retirement, or full retirement benefits, will be increased. Yes, that has happened already, but it is going to happen again.
3.) The benefit itself will be subject to higher taxation levels, if not made 100% taxable. As stated earlier, just because the benefit would become fully taxable, does NOT mean that everyone will owe taxes on that benefit. The Standard Deductions are still there. The Exemptions are still there.
Also, keep in mind, that the formula, now, for taxation of SS benefits has “floors” of close to $25,000.00, which triggers a mathematical formula which dictates that 50% of your SS benefit, over $25,000 should be added to your taxable income.
Also, at about $34,000, 85% of your benefit, over $34,000 should be added to your taxable income, under current law.
(The above is for SINGLE individuals, the levels are about $32K and about $44K for married filing jointly)
Well, this does not tell the whole story.
The “taxation” formula ALREADY includes ALL forms of taxable income, pensions, IRA or retirement distributions, W-2 earnings, capital gains etc.
Also, the “taxation of SS benefits” formula also includes the municipal bond interest.
So, the current tax provisions are complicated, concerning the taxation of SS benefits, but let me put this to you another way:
THE RICH ALREADY PAY TAXES ON 85% OF THEIR BENEFITS!!
It would get rid of a complicated formula to simply make them pay taxes on 100% of the benefit.
Single taxpayer formula:
PENSION $26,000.00
IRA 8,000.00
SS 4,000.00 (half of 8,000, per formula)
Muni bond 2,000.00
In this case, 50% of the excess over $25K is taxable.
That would be $15k/2 or $7,500 even without the second table. We must adjust this figure, however, to show that only the amount between $25K and $34K is included in this figure. That would be $9K/2 or $4,500.
in this case, 85% of the excess over $34K is taxable.
That would be $6k X .85 = $5,100.
Over $25k but under $34K $4,500.00
Over $34K $6,000.00
The formula, in this case would indicate several things. First, up to $10,500 of SS can be “taxed”, from this calculation, but that is $2,500.00 more than was actually earned, in SS benefits. So the figure must be adjusted to the actual benefit amount. Then it must be adjusted again, since this person is allowed to have 15% of SS benefits “tax free” or not included in the formula.
So, this person, receiving a very SMALL SS benefit, would be taxed on roughly:
$8,000
85%
there is only a true “cap” on the 85% figure. Even if the formula dictates that 100% of SS is “taxable” the law currently states that only 85% of your benefit, as a maximum, can be added to your income for tax purposes.
I might have some minor errors in the calculations. My point is only that it is very easy for most everyone with any earnings at all to find themselves paying taxes on their SS benefits.
I firmly believe that the taxes on SS benefits will go up.
Talk to your insurance agent, lol.
Buy annuities. Deferred annuities avoid the tax.
Also, the “exclusion allowance” in an immediate annuity also helps avoid taxation.
IT WON'T BE REMOVED. Obama has never proposed removing the cap complete no would Congress ever approve it. It would be DOA.
2.) The age for normal retirement, or full retirement benefits, will be increased. Yes, that has happened already, but it is going to happen again.
I agree. It just won't be 70 like you stated.
3.) The benefit itself will be subject to higher taxation levels, if not made 100% taxable. As stated earlier, just because the benefit would become fully taxable, does NOT mean that everyone will owe taxes on that benefit. The Standard Deductions are still there. The Exemptions are still there.
Just is not going to happen. Obama and the Dems are not going to approve any increased taxation for those at the lower end of the economic spectrum. THERE WILL BE NO 100% TAXATION OF BENEFITS.
SS IS BROKEN AND UNSUSTAINABLE. MOREOVER, MEDICARE AND MEDICAID ARE ABOUT THREE TIMES WORSE OFF THAN SS. WE CAN'T TAX OUR WAY OUT OF THE PROBLEM.