Social Security Taxable Base - Never increased since 1984

[dm21202969]

I would like to know why AARP is not working on having the Social Security Taxable Base indexed to inflation? The excludable limits of $32,000-$44,000 for Married and $25,000-$34,000 for Single have not been increased since they were instituted in 1984. If these were increased by 3% annually they would be greater than $101,000 and $79,000 now.

These amounts were set in 1984 so that only the wealthy would pay income tax on SS. Because these have never been increased 56% of taxpayers now pay income taxes on SS. So not just the wealthy are being taxed now!

Please let me know what you think.

Des

[Tonster521]

@dm21202969 as I recall, this subject has been posted in the past in the retirement and/or social security forums. I will agree that paying a significant amount of federal tax on 85% of your SS benefits is harsh. However, as Gail pointed out, the money goes back to the SS Trust(s), OASDI and HI even though you are paying the taxes to the IRS. I will say that you have to give credit to Congress and/or their consultants for creative communications in covering up one is repaying their SS Benefits and not actual federal income taxes. This is a cut or reduction of SS Benefits if your income exceeds  the thresholds established on 1983 (50% taxable) and 1993 (up to 85% taxable). Excuse the pun, but it will take an "Act of Congress" to change this provision. 

As you may not be aware, Congress has the responsibility for administering the Social Security Act. So, it may be helpful if you read some of the Congressional records affecting Social Security. I will try to link the Congressional Records Service website https://crsreports.congress.gov/ wherein you may review reports about Social Security. If you click on search, you will receive approx. 11,000 plus records which will be interesting, but cumbersome to drill down to just social security. I searched using, social security 1983, and received 40 results. I found two reports that may be pertinent for this subject. The first is Social Security: Taxation of Benefits RL 32552 June 12, 2020. The second is Social Security: Major Decisions in the House and Senate since 1935 RL30920 June 22, 2023. The records reflect that Congress did not have any intention of indexing the income thresholds for the 50% and 85% taxable income provisions. In fact, Congress needed to implement a number of changes to increase revenue since the OASDI Trust was just about depleted in 1983. I can't talk for the AARP, but what would be a solution they may offer to replace the lost revenue if proposing indexing the income thresholds for taxing SS Benefits?  

[GailL1]

Taxes on Social Security Benefits go back into the SS Trust Fund.  

Social Security isn’t just for the rich so a wide selection of income is covered but those who make more do pay more.  

Social Security is a share and share alike type program.  So most everybody should pay into the system to get an appropriate benefit.

The income guidelines and not being indexed is working just as this sort of tax was designed to work.  That is, bringing more and more people into the realm of having to pay the tax - until of course, the lower limit gets closer to poverty.  So this tax program to help out the SS Trust Fund only eliminates people as the actual cost of living rises.  

If anybody wants to take or reduce money going into the SS Trust Fund right now - you are only hurting yourself if you are getting a benefit because it will only rush up the insolvency/depletion deadline.

SS Trustee Report 2023 

From the link ~ read it all - kind of scary

• The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of total scheduled benefits until 2033, one year earlier than reported last year. At that time, the fund's reserves will become depleted and continuing program income will be sufficient to pay 77 percent of scheduled benefits.

Social Security Trust Fund Data by year - 

The Income stats are the 2nd chart down -

As you can see from the INCOME chart here, this tax is supplying more and more funds to the program every year and it is really needed now.

[TomD857140]

I agree.  Who is responsible-congress, irs, or us-tax-paying citizens letting our government getting away with this?  Maybe it is time for a revolution, "peaceable" of course.