An Argument in Favor of the Senior Citizen Tax - Sun News
While efforts are underway in Congress to eliminate federal income tax on Social Security benefits, not everyone is in agreement. Amber Wallin, MPA, deputy director for New Mexico Voices for Children, takes an opposing view in a post on Las Cruces (NM) Sun News, arguing that eliminating the tax ” … would primarily benefit middle- and high-income seniors. In fact, if we exempted all Social Security income from taxes, 86% of the value of that tax break would go to those making more than $50,000 — which is higher than the income of most working families.”
Ms. Wallin’s argument is based on the supposition that ” …only 15% of the Social Security benefits you receive come from the income you earned while working.” Her reasoning, then, is based on the assumption that 85% of one’s Social Security benefit did not pass through the beneficiary’s paycheck and therefore has not been previously taxed. The 85%, she suggests, is the result of interest earned on Trust Fund reserves, and therefore has not been directly taxed.
In arguing the disparate effect of eliminating the Senior Citizen Tax, Ms. Wallin’s article also points out that ” … only the highest-income seniors pay income taxes on the whole 85%. Recent studies, however, have shown that the federal income tax on Social Security benefits today impacts about half of all seniors, a far cry from the initially intended impact of less than 10%. This, of course, is the result of a lack of indexing (inflation adjustments) on the thresholds for application of the tax.
Read Ms. Wallin’s post here…