topic Re: Does AARP support the idea of no taxes on Social Security benefits? in Social Security

Does AARP support the idea of no taxes on Social Security benefits?

RichardV792104 — Thu, 08 Aug 2024 00:45:31 GMT

I'm interested in the idea of no taxes on Social Security benefits. I understand that this is a campaign promise by a presidential candidate but feel it is something that AARP should support.

Re: Does AARP support the idea of no taxes on Social Security benefits?

DanL873126 — Mon, 19 Aug 2024 16:21:54 GMT

I agree. As an advocate for retired people, AARP should support this irrespective of partisan politics.

Re: Does AARP support the idea of no taxes on Social Security benefits?

DirkB349973 — Mon, 19 Aug 2024 23:09:32 GMT

Since taxes go back into the fund, collecting no taxes would exhaust the fund more quickly. Just something to consider.

Re: Does AARP support the idea of no taxes on Social Security benefits?

DanL873126 — Tue, 20 Aug 2024 12:12:55 GMT

Thanks, but that is not factually correct. Income taxes do not fund the Social Security Trust Fund. Social Security is funded by FICA taxes, not income tax, and Social Security benefits are already exempt from FICA taxes. So freeing Social Security benefits from income taxes will have no effect on funding Social Security.

Re: Does AARP support the idea of no taxes on Social Security benefits?

GailL1 — Tue, 20 Aug 2024 13:16:32 GMT

@DanL873126 wrote:
Thanks, but that is not factually correct. Income taxes do not fund the Social Security Trust Fund. Social Security is funded by FICA taxes, not income tax, and Social Security benefits are already exempt from FICA taxes. So freeing Social Security benefits from income taxes will have no effect on funding Social Security.

Just a correction for clarity -

We aren’t talking about “Income Taxes” - we are talking about taxes on BENEFIT.

SSA.gov - Taxation of Benefits

The Social Security Trust Funds get their income from (3) sources -

1. The FICA or payroll taxes while one is working

2. Interest from the Special Treasuries where any excess, if any, (difference between what’s coming in and what’s going out), are parked

3. taxation of benefits

Here are (3) historic charts on the Social Security (combined) Trust Funds

- the 1st one is a total one - income and outgo

- the 2nd one - is just income - Notice the column entitled: INCOME FROM TAXATION OF BENEFITS- which started being collected in tax year 1984 -

- the 3rd one is expenses or outgo

SSA.gov- TRUST FUND DATA

Taxes have names which differentiate them - so best to be speaking about the right one and how they work

Hope this helps your clarity on the subject.

Re: Does AARP support the idea of no taxes on Social Security benefits?

DirkB349973 — Tue, 20 Aug 2024 13:22:59 GMT

This is one source that supports my comment.

https://www.cbsnews.com/news/trump-social-security-income-tax-cut-here-is-the-impact-on-benefits/

[Excerpts from the article...]

"Payroll taxes, the FICA taxes taken out of workers' paychecks, fund the bulk of Social Security. But about 4% of its financing stems from the income taxes that recipients pay on their benefits, providing about $50 billion in annual revenue to the program, according to the latest annual report from Social Security's board of trustees."

"It really is, in some ways, Trump advocating defunding Social Security," Nancy Altman, president of Social Security Works, an advocacy group for the program, told CBS MoneyWatch. "It's a sleight of hand — it's giving with one hand and taking with another."

Re: Does AARP support the idea of no taxes on Social Security benefits?

GailL1 — Tue, 20 Aug 2024 14:03:00 GMT

@DirkB349973

And now that BOTH Presidential candidates are advocating for the removal of taxes on benefits - they are both taking that proposed action to defund Social Security”.

I have no idea what is in their heads when thinking along this line except maybe vote buying. GOOD GRIEF!

Sometimes people want something changed when they don’t really even understand the concept of the matter or how it works to begin with.

Maybe if we worded it in a different way like - OK, we are going to do away with taxes on your Social Security benefits and to pay for this, your benefits will be reduced by X%. I bet we would hear a completely different reasoning.

Re: Does AARP support the idea of no taxes on Social Security benefits?

RichardV792104 — Tue, 20 Aug 2024 18:39:30 GMT

My point is living on a fixed income is difficult. Both political parties have indicated that they support this and not having to pay income tax on my SS would go a long way to paying groceries, gas and Morgage.

Re: Does AARP support the idea of no taxes on Social Security benefits?

RichardV792104 — Tue, 20 Aug 2024 18:43:11 GMT

I live on a fixed income and reducing taxes I pay would go a long way to help pay for gas, groceries, and my morgage.

Re: Does AARP support the idea of no taxes on Social Security benefits?

Tonster521 — Wed, 21 Aug 2024 15:21:11 GMT

@DanL873126 In 1982, President Reagan addressed the depletion of the SS Trust by forming a National Commission (aka Greenspan Commission) to develop solutions. You can find the results/details at the SS website (ssa.gov/history). It is lengthy and will take time to read. I am linking Appendix C - Findings and Recommendations https://www.ssa.gov/history/reports/gspan5.html and Chapter 4- Additional Statements https://www.ssa.gov/history/reports/gspan7.html#c10 wherein individual members of the National Commission provided individual statements. Appendix C indicates the initial recommendation that 50% of SS Benefits should be taxable income if folks exceed certain thresholds based on a new concept called "combined income:. Those initial thresholds were $20,000 single and $25,000 married. The threshold were subsequently increased to $25,000 single and $32,000 married. Only 50% of one's SS Benefits were used to determine whether one's combined income exceeded the thresholds. DirkB is correct. I believe President Reagan signed the Amendments in April 1983. SS Benefits for certain folks that exceed the thresholds will be taxable income in 1984. It has been this way for 40 years. I agree with Gail 1 that both Presidential Candidates appear to be trying to buy votes by their initial positions for tax free SS Benefits. So far, I have not seen any detailed analysis from either candidate regarding the math behind such mismanagement. The SS Program needs revenue. As DirkB indicated, cutting $50 Billion or more of revenue will hurt the SS Program. So, do you reduce SS Benefits to cover the shortfall? Will the reduction be shared equally? Do you pick and choose? Do you increase current FICA taxes? I do not think there is a good answer/solution. If someone must pay taxes on SS Benefits, it means they have other income. When that income combined with 50% of their SS Benefits lifts them above the thresholds, SS Benefits become taxable. In other words, they are not at or near poverty level. Approximately, 40% to 45% of folks report SS Benefits as taxable income. The other 55% to 60% do not report SS Benefits as taxable income. These are the folks that are near poverty level or slightly above. They need the help more so than the wealthy.

Re: Does AARP support the idea of no taxes on Social Security benefits?

BillWhitmire — Sat, 24 Aug 2024 17:12:56 GMT

https://www.nasdaq.com/articles/how-much-money-has-congress-taken-social-security-2019-02-04 Many would like to blame ss recipients for what they say will result in the end of the the system completely. The SS program is not failing there is plenty of money in the fund, nearly $3Trillion. If there is a possibility of failure the problem is not retirees receiving too much in benefits, it is gross mismanagement by congress using the fund for other purposes than those for which it is intended to be used. The link above is worth reading i you're worried about it. There will always be those who oppose the system. One man I was talking to called it welfare program before realizing I was a retiree. I believe that the social security system is what saves the country from a total collapse of our economy. Those benefts we recieve are money that goes straight back into economy. I can't imagine the number of businesses that would fail or jobs that would be lost if not for the money we spend. AARP definitely should take a stand for preserving SS!. If we are concerned, we should cast our ballots for senators and representatives who will increase our benefits and eliminate tax breaks for people who have money left in their bank account at the end of the month.

Re: Does AARP support the idea of no taxes on Social Security benefits?

Tonster521 — Sun, 25 Aug 2024 16:51:46 GMT

@BillWhitmire I have read the article that you linked from Motley Fool and it appears to support Congress. It indicates that Congress has not mismanaged FICA revenue. In fact, the FICA tax money is allocated to Special Issue Treasury securities exactly how the SS procedures require. The procedures were created in 1960; and, in my opinion, follow more of a short investment strategy. The short versus long strategy probably could have provided more interest income for the SS Trusts. However, that additional interest income would not have solved the depletion of the SS Trusts in 1983 and the projected depletion fpr 2034/2035. I am providing a link to info from the SSA website that informs us of the Special Issue Treasury Securities used exclusively for the SS Trusts. https://www.ssa.gov/oact/progdata/specialissues.html I suggest to click on the sub topics that appear on the left side of the screen; namely, Investment Holdings (drill down further via Time Series Request) and Investment Transactions (both OASI and DI).

The best examples that I can relate the Special Issue Securities to are Treasury Bills may be considered Special Issue Certificates of Indebtedness and Treasury Notes (of various duration) may be considered Special Issue Treasury Bonds. If you buy/invest in Treasury Bills and/or Notes are you concerned what the Treasury does with the money? Probably not, your concern is the interest rate and risk free guarantee backed by the "full faith and credit" of the U.S. Government.

There are many issues that need to be addressed by Congress regarding the projected depletion of the remaining assets ( approx. $2.8 Trillion) of the SS Trusts in 2034/2035. IMO, the SS (FICA) tax base has eroded since 1983 which was the last time Congress addressed the SS Trusts. The Labor Participation Rate (LPR) is a dismal 62%. In the early 2000s the LPR reached about 65%. and has declined since then. Many folks are focused on the Unemployment Rate ( approx.4% per government accounting) and feel that is outstanding

. That rate only tracks the folks currently in the workforce (approx. 168 million). However, there are approx. 271 million folks eligible to work out of approx. 331 million in the USA. I think there are at least two questions that need to be answered. First, why are there over 100 million not working or not being counted as eligible for the workforce? Second, why is the federal government not supporting job creation in the USA?

Lastly, I would not encourage folks to spend all their money and deplete their bank accounts to receive a tax break. There should be incentives for folks to save and invest their money. Moreover, there should be incentives for folks who create good paying jobs ( not fake jobs created by the government) and plenty of them.

Re: Does AARP support the idea of no taxes on Social Security benefits?

JohnC728129 — Thu, 29 Aug 2024 01:25:46 GMT

The president can’t dismiss taxes on social security it must go through Congress. I feel if they can’t agree to end taxes on our benefits then they should at least consider increasing the tax table for inflation. It’s been 40 years for the 50% and 30 years for the 85% since the laws was past with no adjustments.

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 15:57:14 GMT

AARP would never support anything President Trump supports even if it benefits the elderly! Very sad that AARP is so politicized!

Im curious to see how they will spin it though!

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 15:58:52 GMT

They should but they won’t! Very Sad!

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 16:00:55 GMT

We are 36 Trillion dollars in debt, Social Security is already exhausted! The interest payment is more than a trillion dollars a year now!

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 16:05:07 GMT

America is 36 trillion dollars in debt and currently its costing more than a trillion dollars each year to service this huge debt burden.

Im pretty sure not taxing social security isn’t going to break the country financially! It’s already broken!

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 16:07:30 GMT

Richard can you point me to a link that shows the Democrats want to end taxing social security? I’m not saying that you are wrong I just want to see it.

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 16:13:39 GMT

I live on a fixed income too and would save about $3000 if my SS wasn’t taxed! Let’s hope whoever is elected ends taxing our entitlement!

Re: Does AARP support the idea of no taxes on Social Security benefits?

CaptainObvious60 — Sat, 14 Sep 2024 16:17:23 GMT

What does it matter? We are more than 36 trillion dollars in debt and it’s costing more than a trillion dollars a year to service this burden.

I really don’t think not taxing social security is going to break the system. ITS ALREADY BROKEN!