The Likely Permanence of Tax on Social Security Benefits
It’s an irritant to more than half of today’s Social Security beneficiaries, but all indications are that taxation of the benefits they’ve earned through a lifetime of participation in America’s workforce is here to stay. In fact, with Social Security facing deficit financing from 2018 forward, any move to reduce revenue flowing into the system would only serve to worsen the situation, no matter how politically palatable it would be. The Motley Fool’s Sean Williams, in a post of their website, discusses this dichotomy, noting that Social Security’s nearly $38 billion income tax inflow in 2017 is likely to more than double in less than 10 years, making it a formidable–if not indispensable–piece of the program’s financial equation.
As Williams notes in his article, a variety of proposals are under consideration to address the long-term solvency issue, but the removal of taxation of benefits isn’t likely because it has placed Social Security “between a rock and a hard place.” The loss of a significant chunk of revenue would aggravate the program’s deficit situation and hasten the arrival of insolvency. The Association of Mature American Citizens (AMAC), a leading voice in advocacy for a solution through it’s proposed “Social Security Guarantee” legislative framework, has given consideration to the senior-preferred removal or lessening of this tax, but has elected to table the recommendation until further work can be done on other adjustments that would offset the loss in revenue.
As the 2019 congressional agenda unfolds, AMAC and others will continue to advocate for Social Security reform and modernization, with the argument that insolvency is clearly not a self-correcting problem, and that inaction is in fact a decision to allow the program to fall into the major cuts projected in just 15 years–or sooner.
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