Don't you think the relatively comfortable geezers should pay tax on their half of their benefits, if they otherwise have more than 35K or so in taxable income? (The half bit is a good approximation of what their tax basis is of what they paid in, and what represents the interest factor over time of what they paid in.) I don't know about the annuity thing for those who never paid in. It sounds bogus to me, but I could be wrong.
The income test for taxability of social security benefits is not limited to taxable income; recipients must include certain non-taxable income - tax-exempt interest [line 8b on Form 1040].
Look at it this way. Two twins work their entire careers in the same job. Same pay same everything. One puts away money in an IRA, 401K and invests in the financial markets. The other buys a boat, a second home and vacations in Hawaii every year.
At retirement the individual who squandered his money gets SS tax free (he has little income other than SS). The frugal one meanwhile pays tax on his social security benefits.
Is that fair?
We should not be taxed when receiving it. We have already paid taxes on it when it taken from our paychecks. I for one do not support being taxed twice on the same income.
As for the "earnings", I have ran the numbers on my 30 years of contributing.......even if I was a moron, I would have beat the so-called governments return on my and my employer's investment.