Income taxes on Social Security unpopular, but raise a lot
Few things about Social Security get seniors more upset than paying income tax on part of their benefits. Benefits became taxable first with a change in the law in 1983 followed by a second change in 1993. Under the taxation of benefits, single taxpayers whose modified adjusted gross income, plus one-half of their Social Security benefits, surpassed $25,000 ($32,000 for couples filing jointly) would have up to half of their benefits exposed to ordinary federal income tax. A second taxation tier was added in 1993 allowing up to 85% of an individuals’ or couples’ benefits to be taxed with thresholds of $34,000 for singles and $44,000 for couples filing jointly. While the whole concept is unpopular, the revenue generated is without question helping a program headed for partial insolvency in 2034. Many seniors would likely take a few more dollars in take home pay now, but that would come at great expense to their children’s and grandchildren’s ability to access the program. As it stands, every beneficiary’s benefits will be cut across the board by 21% in 2034 without changes by Congress before then. Read more about the revenue income tax generates in the full piece here by Sean Williams.
AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their legislative staffs over the past several years. While AMAC philosophically agrees with the removal of income tax, a compromise to raise the thresholds is a better solution to the solvency of the program. Read AMAC’s Social Security Guarantee Plan here.