Trump: No taxes on Social Security

Honestly... stop paying SS to people with a net wealth of greater than 10 million. What you propose will make SS insolvent even quicker.

 

I think we have another thread on this.

Prior to 1983, SS payments used to not be taxed, along with unemployment insurance. However, that changed in 1983 when up to 50% of the payment could be cosidered taxable income if certain conditaiotns were met. It was further codified in the 1986 Tax Reform Act where 25k for singles/head of households, 32k for MFJ, and O for MFS was the threshhold. That number has remained the same since 1986. Likewise, the credit for elderly and disabled also remains the same with its requirements and no one qualifies for that credit now.

The biggest problem with Trump's no tax on SS payments is that the Republican National Committee came up with its budget proposal that would severely cut SS payments for pretty much everyone. Trump is desperately trying to get ahead of the game because that is going to be a major issue. Trump will deny, play stupid, etc of course, but the reality is that the GOP Study Committee's budget is very devestating towards those with SS as a source, sometimes the primary source, of income. And most of them usually don't pay tax anyway.

 

How much tax does the IRS collect on social security benefits. Can't be all that much, can it?

 

Good idea. Smart politics.
The RP establishment will never let him get away with it.

 

Can you please provide source for this information. Thank you.

 

that won't work either.

What will make SS solvent is increasing the number of workers to retiree ratio. We have an older population now. We are living longer. We can play games such as unlimited SS wages subject to the FICA and SECA taxes, but eventually, that will not solve the problem. Or we could euthanize anyone above the age of 80, or 90, but that would make everyone upset, right? We could increase the retirement age, but that again kicks the can down the bucket.

There are very few people who have a net wealth of over $10 million. And most of them don't pay that much into SS anyway compared to their total income. Even with a wage of $1 million per annum, only a portion of that is subject to SS up to the wage limit, set by law and adjusted for inflation every year. With SS, there is a maximum and minimum benefit if you work 40 quarters in your life. Furthermore, not everyone who is paying to SS receives the benefit. So, we have that.

The other problem is the SS trust fund, set up in 1983 when it became taxable, is only allowed to invest in government securities, which means the rate of return is very low. If we allow the SS trust fund to invest in a diversified portfolio, say a life cycle fund at TSP to the year 2035, then that could increase the rate of return and save off the earlier prediction of insolvency with the SS trust fund. And if congress is not allowed to "borrow" against that trust fund, then maybe that would help too.

 

Saw a headline that the RP opposes an increase in the child tax credit, did not read the article, but The Stupid Party is probably stupid enough to call for cuts to SS.

“We have two parties here, and only two. One is the evil party, and the other is the stupid party. Occasionally, the two parties get together to do something that's both evil and stupid. That's called bipartisanship.”
Everett Dirksen

 

I agree with nearly everything you said. However, I still think the retirement age, along with your suggestion, should be increased. That standard is so outdated, as life expectancy continues to increase.

Or... Like you mentioned... we could always go the Logan's Run way

 

It did it in another thread on the same subject.

But here is the Republican National Committee FY 2025 Budget Proposal:

It says, "Spending on Social Security will grow tremendously between FY 2023 and 2034, from nearly from $1.5 trillion to $2.5 trillion The RSC Budget is committed to preventing 23 percent across the board cuts in benefits that will hit every Social Security recipient in 2033. Unlike the Biden budget, which does nothing to prevent these cuts, the RSC Budget would phase in common-sense, bipartisan reforms that have been narrowly tailored to affect no senior in or near retirement. These reforms would collectively stave off Biden’s 23 percent cuts to Social Security benefits and eventually make the retirement trust fund sustainably solvent. These include modest and delayed changes to the Primary Insurance Amount (PIA) benefit formula, the retirement age, auxiliary benefits for high income earners, and gradually moving towards a flat benefit. President Biden supported similar reforms during his tenure as Senator and none of these changes would affect anyone in or near retirement."

The proposals laid out in the plan would cut SS benefits up to $1.5 trillion over ten years, eliminate those who are receiving SSI and SSDI, and eliminate those rich people from not only paying into the SS trust fund, but they don't get the benefit either unless they take the path like the former crypto fraudster, Sam Beckman-Fried.

Another analysis of the GOP budget proposal, which wants a 23% reduction on all federal spending EXCEPT the DoD, and to replace the tax code from the current system into an NRST that was proposed last year and got nowhere.

And a more detailed analysis is here.

 

Well I am for it.

 

Both parties are stupid, but that's a different topic for a different day.

However, trump claimed that VP Harris is proposing cuts to the Child tax Credit. that is a false statement by Trump. I don't think she has made any specific statement, but did vote against Trump's 2018 Tax Cut bill which increased the child tax credit for one year to $2400 per child. But there were taxpayers creating fake income to get that credit. Luckily, the IRS stopped most of them from getting the credit to begin with under the TPP program they have set up.

 

Oh I'm sure they would be.

 

Heh! Oh I'm sure!

 

How about people at the low income actually start contributing to the system from which they will receive a benefit?

 

Then stop making them contribute to the system. What if you workplace 401-k administrator came to you tomorrow and informed you you would not be getting anything from it when your retire because you make too much but you still have to keep putting into it?

 

Since Trump isn't running on the Republican Study Committe's budget I'm not sure what relevance that has to his proposal. What is the connection you are seeing?

 

That would be a radical change, and though it sounds attractive, there are pitfalls in the idea which kinda defeat the entire purpose of SS.

Switching from Social Security to government-held, interest-bearing savings accounts has its fair share of pros and cons that we need to think about.

On the plus side is that the government managing these accounts could mean lower administrative costs. With everything centralized, the government can save money and, hopefully, pass those savings on to account holders. This setup would also simplify things, making it easier for everyone to understand and manage their retirement savings.

But, there are some serious challenges, too. The biggest one is that interest-bearing accounts usually offer lower returns compared to the stock market. Over time, these lower returns might not be enough to ensure a comfortable retirement (but, of course, the counter argument is that they really don't, anyway, at least or many folks). This problem becomes even bigger if interest rates are low because the savings might not grow fast enough to keep up with inflation, reducing retirees' purchasing power.

Income inequality is another issue. Even if everyone is required to save a portion of their income, higher-income individuals will still have more resources and options to invest elsewhere. This could widen the gap, as lower-income individuals might only have their interest-bearing accounts, which might not be enough for a secure retirement. In my opinion, rich people don't need SS. SS is a tax. Social Security taxes are a collective approach to funding retirement, spreading the financial responsibility across the entire workforce. Interest-bearing savings accounts shift this to an individual responsibility. This change eliminates the redistributive aspect of the current system, where wealthier individuals contribute more and lower-income individuals still receive benefits. In essence, your idea is a 'conservative' idea, not a 'liberal' one.

Plus, Social Security isn't just about retirement benefits. It also includes disability and survivors benefits. Any new system would need to provide these safety nets to ensure everyone is covered. Adding these components could make the system more complex and potentially more expensive to run.

One of the best things about Social Security is that it provides a guaranteed monthly income for life. This predictable income is crucial for retirees to manage their expenses. Without this guarantee, there's a risk that people could outlive their savings, especially if they don't manage their withdrawals carefully. While annuities could be a solution, they add another layer of complexity and cost.

Inflation protection is another key feature of Social Security. Benefits are adjusted to keep up with inflation, which helps retirees maintain their purchasing power. Ensuring that interest-bearing accounts offer similar protection would be tricky and require careful planning.

Transitioning from Social Security to government-held, interest-bearing savings accounts would be a huge undertaking. Workers who have been paying into Social Security expecting future benefits would need to be compensated, and setting up the new system would likely be expensive. This could place a heavy financial burden on the government and taxpayers.

So, while interest-bearing savings accounts managed by the government offer some stability and lower risk compared to the stock market, they also come with significant challenges. We need to ensure they provide enough returns, include comprehensive benefits, maintain guaranteed income, protect against inflation, and handle the transition smoothly. Without addressing these issues, the new system might not measure up to the security and fairness that Social Security aims to provide. The darn system is too massive, really, to change into something like that. I doubt dems in congress would vote for such legislation, if it were ever found it's way to a bill, and if so, it would be mostly likely offered by a Republican moderate, or someone like Joe Manchin.

 

Sure has, these bastards stole it from me.

 

Thank you for your response but I already found it. Although you are wrong about it being the Republican National Committee, as it is The Republican Study Committee (RSC), a group of more than 170 House Republicans.

 

Wrong:
The Republican Study Committee (RSC), a group of more than 170 House Republicans, recently proposed a budget that includes changes to Social Security and Medicare. While these proposals are unlikely to become law this year, they provide insight into the party’s priorities. Here are the key points from their budget:


Raising Retirement Age: The RSC suggests raising the Social Security retirement age for future retirees. This adjustment accounts for increases in life expectancy but does not cut or delay retirement benefits for current seniors1.

Lowering Benefits for High Earners: The budget endorses modest adjustments to Social Security benefits for the highest-earning beneficiaries. However, it emphasizes that these changes would not affect current retirees1.

Medicare Transformation: The RSC proposes converting Medicare to a “premium support model”. Under this plan, traditional Medicare would compete with private plans, and beneficiaries would receive subsidies to choose their preferred policies1.

Keep in mind that these proposals are part of a broader budget plan and may not necessarily become law.

 

It was Ronald Reagan’s idea.

 

Well, given that Kamala Harris is going to win in November, I wonder if she has any plans to correct this egregious practice of taxing Social Security benefits! The money that everyone was forced to 'contribute' to their Social Security accounts all their lives was already taxed -- so how can it be fair to tax it again when it is distributed back to people when they retire? (and can probably afford the taxation even LESS!)

 

You should ask Ronald Reagan. It was his idea.

 

That's an interesting question and it deserves its own thread topic, but it's off topic here. We're talking about current SS benefits being paid out now potentially becoming not-taxed.

Well, that's good or bad for them. As they say: Que Sera Sera. Whatever will be, will be.
Que Sera Sera ~~~~~ Doris Day ~~~~ Whatever Will Be, Will Be (youtube.com)

 

If Trump is elected to the WH and the GOP controls both the House and Senate, most, if not all, on the Republican Study Committee will become law. That is why 80% of all House Republicans signed off on it, knowing full well that Trump will endorse this in one form or another.