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CBO Examines Impact of Social Security Tax Policy
Growing numbers of Social Security beneficiaries have to pay taxes on those benefits but even that burden falls far below what is assessed against typical employer-sponsored annuities, according to the Congressional Budget Office….“Less than 30 percent of all Social Security benefits paid out in 2014 were subject to income tax. By contrast, distributions from defined benefit pension plans were entirely taxable, except for the part of each distribution that represented the recovery of an employee’s “basis”—that is, his or her after-tax contributions to the plan,” a report said. “If benefits paid by the Social Security program were treated the same way—by taxing all benefits that exceeded the basis—federal revenues would be more than $400 billion higher over the next 10 years, the staff of the Joint Committee on Taxation estimates.” Read more…
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