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Re: Social Security Taxability

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Message 1 of 7

@CriticalThinking wrote:

Gail said, "if I am not mistaken this conditions of taxation originates in the Social Security law not the tax law - For sure, ALL of these taxes collected on Social Security go back into the Social Security Trust Fund and are helping to keep that program funded just like payroll taxes."

 

She is wrong on both points.

 

1. Per a promise from FDR, Social Security was intended to always be tax free. And it was tax free until 1983, when President Reagan signed a law taxing SS for the first time.

 

I believe, but I'm not sure, the Clinton administration raised the SS tax limit a 2nd time in the early 1990s. It went from taxing 50% of annuity benefits, to 85% of their benefits.

 

2. Yes, the taxes go into the SS Trust Fund. That was the original intent, to allegedly help fund SS. Unfortunately, Congress has repeatedly raided the Trust Fund for decades to pay for everything imaginable, and all of it, unrelated to Social Security.


You mean....you mean?  And just when I was starting to 'feel good' about 'things'.  

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Re: Social Security Taxability

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@GailL1 wrote:

@CriticalThinking wrote:

Gail said, "if I am not mistaken this conditions of taxation originates in the Social Security law not the tax law - For sure, ALL of these taxes collected on Social Security go back into the Social Security Trust Fund and are helping to keep that program funded just like payroll taxes."

 

She is wrong on both points.

 

1. Per a promise from FDR, Social Security was intended to be, and was tax free until 1983, when President Reagan signed a law taxing SS for the first time. I believe, but I'm not sure, the Clinton administration raised the SS tax limit a 2nd time in the early 1990s, from taxing 50% of annuity benefits, to 85%.

 

2. Yes, the taxes go into the SS Trust Fund. That was the original intent, to allegedly help fund SS. Unfortunately, Congress has repeatedly raided the Trust Fund for decades to pay for everything imaginable, and all of it, unrelated to Social Securty.


The Social Security law can be changed just like any other law.

 

Yes, when President Reagan changed it, the tax applied to only 50% of the benefit IF your benefit was over a specific amount (defined in both ways as either single or MFJ).  This was because this was SS money that had never been taxed - the employer portion.  It was also a way in which to increase the Trust Funds income and it is extremely important today since this taxation does go into the Trust Fund.

 

For higher income social security beneficiaries - single over $34,000 per year or $44,000 for a couple, 50% + 35% = 85% of their benefit is taxable.  This is just a tax surcharge to help the Trust Fund out a bit more - since it is needed.  Just like the higher premiums on Medicare Part B on higher income folks, just like the Medicare surcharge on higher capital gains - 

 

We evidently have found taxing those with higher incomes for this and that calms the outrage of cutting benefits for everybody.  But how far can we continue to go with this?

 

I am sure no legislator in our history ever though a law which they began would stay the very same as time march on -

 

The Trust Fund has never been actually raided - the numbers are there for all to see in the balance sheets.  Those "special treasuries" are still there, earning interest which also goes to the Trust Fund.  They are redeemed as necessary by the Treasury to pay benefits when there are shortfalls.

 

I believe what you are talking about is when President Johnson began a unified budget and used the Trust Fund balance to offset other deficiencies.

 

So taking our balance sheet as a whole - we are broke but many don't see it that way and continue to buy our debt.  

 


They can try and change it in other laws just like they are trying to kill the ACA in the senate tax bill. That is true of just about anything. Now speaking of debt. If you want to cut it then do not pass the current tax cut plan.

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Re: Social Security Taxability

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Message 3 of 7

@CriticalThinking wrote:

Gail said, "if I am not mistaken this conditions of taxation originates in the Social Security law not the tax law - For sure, ALL of these taxes collected on Social Security go back into the Social Security Trust Fund and are helping to keep that program funded just like payroll taxes."

 

She is wrong on both points.

 

1. Per a promise from FDR, Social Security was intended to be, and was tax free until 1983, when President Reagan signed a law taxing SS for the first time. I believe, but I'm not sure, the Clinton administration raised the SS tax limit a 2nd time in the early 1990s, from taxing 50% of annuity benefits, to 85%.

 

2. Yes, the taxes go into the SS Trust Fund. That was the original intent, to allegedly help fund SS. Unfortunately, Congress has repeatedly raided the Trust Fund for decades to pay for everything imaginable, and all of it, unrelated to Social Securty.


The Social Security law can be changed just like any other law.

 

Yes, when President Reagan changed it, the tax applied to only 50% of the benefit IF your benefit was over a specific amount (defined in both ways as either single or MFJ).  This was because this was SS money that had never been taxed - the employer portion.  It was also a way in which to increase the Trust Funds income and it is extremely important today since this taxation does go into the Trust Fund.

 

For higher income social security beneficiaries - single over $34,000 per year or $44,000 for a couple, 50% + 35% = 85% of their benefit is taxable.  This is just a tax surcharge to help the Trust Fund out a bit more - since it is needed.  Just like the higher premiums on Medicare Part B on higher income folks, just like the Medicare surcharge on higher capital gains - 

 

We evidently have found taxing those with higher incomes for this and that calms the outrage of cutting benefits for everybody.  But how far can we continue to go with this?

 

I am sure no legislator in our history ever though a law which they began would stay the very same as time march on -

 

The Trust Fund has never been actually raided - the numbers are there for all to see in the balance sheets.  Those "special treasuries" are still there, earning interest which also goes to the Trust Fund.  They are redeemed as necessary by the Treasury to pay benefits when there are shortfalls.

 

I believe what you are talking about is when President Johnson began a unified budget and used the Trust Fund balance to offset other deficiencies.

 

So taking our balance sheet as a whole - we are broke but many don't see it that way and continue to buy our debt.  

 

* * * * It's Always Something . . . Roseanne Roseannadanna
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Re: Social Security Taxability

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Message 4 of 7

@CriticalThinking wrote:

Gail said, "if I am not mistaken this conditions of taxation originates in the Social Security law not the tax law - For sure, ALL of these taxes collected on Social Security go back into the Social Security Trust Fund and are helping to keep that program funded just like payroll taxes."

 

She is wrong on both points.

 

1. Social Security was intended to be, and was tax free until 1983, when President Reagan signed a law taxing SS for the first time. I believe, but I'm not sure, the Clinton administration raised the SS tax a 2nd time in the early 1990s.

 

2. Yes, the taxes go into the SS Trust Fund. That was the original intent, to allegedly help fund SS. Unfortunately, Congress has repeatedly raided the Trust Fund for decades to pay for everything imaginable, and all of it, unrelated to Social Securty.


According to opinions by the Treasury Department Social Security benefits were considered a 'gratuity' and therefore not taxable until the 1983 Amendments to the Social Security Law. Under the Omnibus Budget Reconciliation Act the amount of tax for high income earners was increased but the threshhold for the tax was not changed.

 

The Social Security Trust Fund is still invested in US Treasury Bills as it has been since the beginning. No Congress has raided the SS Trust Fund they have simply used the invested funds just like they do for every other investment in US Treasury Bills. The only change made regarding the SS Trust Fund was including the SS Trust Fund on the combined balance sheet in the 1970s to make the overall health of the federal government look better.

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Social Security Taxability

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Message 5 of 7

Gail said, "if I am not mistaken this conditions of taxation originates in the Social Security law not the tax law - For sure, ALL of these taxes collected on Social Security go back into the Social Security Trust Fund and are helping to keep that program funded just like payroll taxes."

 

She is wrong on both points.

 

1. Per a promise from FDR, Social Security was intended to always be tax free. And it was tax free until 1983, when President Reagan signed a law taxing SS for the first time.

 

I believe, but I'm not sure, the Clinton administration raised the SS tax limit a 2nd time in the early 1990s. It went from taxing 50% of annuity benefits, to 85% of their benefits.

 

2. Yes, the taxes go into the SS Trust Fund. That was the original intent, to allegedly help fund SS. Unfortunately, Congress has repeatedly raided the Trust Fund for decades to pay for everything imaginable, and all of it, unrelated to Social Security.

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Re: Social Security Taxability

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@ch40109522 wrote:

I haven't heard anything in either tax modification proposal about taxability of SSA. Curently up to 85% can be taxed depending upon other income. Does either the House bill or Senate proposal change that?


No, nothing is being changed in the proposed tax reform packages from the House nor the Senate that changes the tax on social security benefits.

 

if I am not mistaken this conditions of taxation originates in the Social Security law not the tax law - For sure, ALL of these taxes collected on Social Security go back into the Social Security Trust Fund and are helping to keep that program funded just like payroll taxes.

* * * * It's Always Something . . . Roseanne Roseannadanna
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Social Security Taxability

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I haven't heard anything in either tax modification proposal about taxability of SSA. Curently up to 85% can be taxed depending upon other income. Does either the House bill or Senate proposal change that?

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