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Contributor ⭐
August 8, 2024

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

  • August 8, 2024
  • 38 replies
  • 15102 views

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.

    38 replies

    Contributor ⭐
    August 19, 2024

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

    DirkB349973
    Conversationalist ⭐
    August 19, 2024

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

    Community Champion ⭐
    August 25, 2024

    @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.

     

     

    Contributor ⭐⭐
    August 29, 2024

    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.

    Contributor ⭐⭐
    September 14, 2024

    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!

    Contributor ⭐
    February 28, 2025

    If you vote not to have taxes on social security, understand that you will be drying up social security because social security is funded by taxes. If you have not axes on it, it is estimated that the fund will run out of money in 5-6 years.

    GailL1
    Community Champion ⭐⭐⭐
    February 28, 2025

    @MichelleS55732 

    Yes, your are right about the taxes but I don’t know about the timing of insolvency.

    In 2023, taxes on benefits added $ 51 BILLION to the Trust Funds and the WEP/GPO elimination passed at the end of last year is gonna cost the Trust Fund a minimum of $ 200 BILLION and that is low - so yes, the Trust Funds are bleeding money all because Congress wants to look good.

     

    Think, folks, Think !!!  

    IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna
    roachme
    Contributor ⭐⭐⭐
    March 1, 2025

    @GailL1  Everything I've read bases the $200 Billion on the additional benefits paid to people who applied for benefits that were reduced by WEP or GPO.  I don't think it includes the people who never applied because they were told they wouldn't receive anything, or people, like my wife, who never applied for spousal because we knew the benefit would be zeroed out by the GPO.  Personally, I believe WEP/GPO were both valid reductions in SS benefits.  The people who are eligible for their own SS mostly paid less than half of the SS FICA taxes a person who worked 35-50 years paid.  My wife paid a little over $3500 in SS FICA taxes in her lifetime for her first 9 years working and military service before government service.  Her FRA amount, without WEP applied, would be about $650/mo so she would've collected all taxes back in 5 months and over $125K more over her lifetime.  WEP would've made that payment about $150/mo or less.  Now with WEP/GPO gone she can collect spousal on my record, which is substantially more. GPO zeroed out any spousal and survivor benefits because her pension is twice the amount of my SS.   Now when I die, she gets my full benefit plus her own pension which could grow to 2.5 times my SS by the time I die.  By 85, she could collect over $400,000 in spousal support alone without any COLA, and over double that if I died tomorrow because I have a 9% DRC.  I don't think the GAO figured people like her into their cost factor for the WEP/GPO elimination.  All I can do is shake my head at Congress' utter ignorance on what they were doing.