Should Social Security benefits be taxed?

[BlueCheese]

In spending some holiday time with family this year, I found out that Social Security benefits can be subject to income tax. This came as a bit of a surprise to me, though maybe it shouldn't have been. I'd always thought it was like tax refunds-- it would be strange for the government to tax payments it's making to you.

Nor do you have to make a lot of money to start paying taxes-- taxes start at $25,000 for individuals and $32,000 for joint filers. At least you don't having to pay Social Security taxes on your Social Security benefits, so there's that.

From the SSA web site:

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.

file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
more than $44,000, up to 85 percent of your benefits may be taxable.

[El_Johns]

1. They weren't taxed until Reagan, & taxes were stepped up under Clinton. I don't think they

should be, because taxing them = a means test which destroys the original program design.

[SummerSnow]

2. hell no

[on point]

3. No. But otherwise all sources income (wage, dividend, capital gains, interest) should be taxed same

[madville]

4. It should be taxed based on total income

For example, someone that gets $18,000 in Social Security and has $10,000 in other income pays $0 federal income tax as it is now and that's good since they have low income.

If someone has $100,000 in income coming in they should be taxed at normal rates on all their income, including the Social Security since they can afford it.

[L0oniX]

5. People with over a million $ saved for retirement should pay 100% tax on SS.

[DrDan]

6. that makes no sense - did they not contribute?

You would take away everything from their contribution? No social security payments at all?

What a stupid idea.

[L0oniX]

7. It's not an investment fund.

What's stupid is thinking someone with that much money needs security.

[DrDan]

8. you contribute - you collect once you reach a certain age - that applies to EVERYONE

you pay tax based on other income.

There is no rational justification for what you are suggesting.

as I said - a stupid idea.

[L0oniX]

9. The Koch thieves collecting SS is a stupid idea. WTF!

All of a sudden life must be fair to the rich ...that is stupid. Letting the rich collect SS sounds like a 3rd way centrist idea.

[DrDan]

10. if they pay into the program, then they should get a check once they reach

the appropriate age - THAT is the contract.

Call it any name you like - THAT is the contract with U.S. workers.

double-stupid idea

[L0oniX]

12. Well then there should not be a cap. They get a break?

Well I guess it's not like there aren't people who love the 1%. I should expect to find them here too.

[DrDan]

13. I agree with eliminating the cap - terribly regressive

but a contract with U.S. workers should apply to EVERYONE.

It has nothing to do with "loving" anyone - it has to do with being fair.

[L0oniX]

14. Do you even know the reasons why SS was started?

It wasn't started so the rich could be secure in their old age.

The Act was an attempt to limit unforeseen and/or unprepared for dangers in the modern life: including old age, disability, poverty, unemployment, and the burdens of widow(er)s with and without children.

[DrDan]

15. if you raised the top income tax rate on their wages and income, I would have no problem with that

if you ask them to contribute to the SS program, they are entitled to a check once the reach the appropriate age.

THAT is the program.

[L0oniX]

16. The history of SS is easy to find and the intent of its use is very evident.

It is clearly not for rich people. The Act was an attempt to limit unforeseen and/or unprepared for dangers in the modern life: including old age, disability, poverty, unemployment, and the burdens of widow(er)s with and without children.

[DrDan]

18. from the beginning, social security was established to provide (among other things)

a check once a certain age was reached - the monthly amount based ON THE AMOUNT CONTRIBUTED - not on the assets one holds when that age has been reached.

That is the program - whether you like it or not.

[L0oniX]

20. No one contributed as it was first started yet they collected because it was designed for the needy.

However I do understand that rich people who have squeezed the bottom line for everyone else all they can want any and all the money they can get whether they need it or not.

[DrDan]

40. you are correct - no contributions when SS started . . . however, there were also

no monthly checks when it began. They came several years AFTER contributions were introduced.

[L0oniX]

41. I don't really care about being correct. I try to care about people who need help.

[DrDan]

43. so I am confident you realize Social Security initially paid ONLY a retirement benefit

other benefits came later - as did contributions and monthly checks.

[grasswire]

33. so when the rich reach retirement age, cut them a check for their...

.....contribution. Pay them back their full investment. End of story. It was an insurance policy against the possibility they would be poor elderly.

The same with medicare. At eligibility age, pay back their contributions in full. They have plenty of money for private insurance and don't need taxpayers to foot the bill for their scooters or dialysis.

[DrDan]

37. Social Security pays for more than a "retirement" check - contributions from the wealty are needed

to fund the other needs - they should not get off the hook for helping others - those with disabilities for example.

Treat the wealthy the same - as per the contract - you contribute based on income, you get a check when you reach a certain age. That was the way it was established decades ago - it works.

As to medicare - we should be pushing the other direction - EVERYONE should be on medicare. Why promote a 2-class system. Same benefits for all. Premiums based on income.

[El_Johns]

21. It was started as a tax on workers to fund their own retirement security program -- not as a welfare

program funded by "the rich".

[L0oniX]

31. Read up...

"The Act was an attempt to limit unforeseen and/or unprepared for dangers in the modern life: including old age, disability, poverty, unemployment, and the burdens of widow(er)s with and without children."

Check what you think are facts!

Here's only one source: http://en.wikipedia.org/wiki/Social_Security_(United_States

[El_Johns]

32. I have read a great deal. The way a program is funded is crucial to its designation as a "welfare"

program, not the fact that it creates a safety net to keep people out of poverty or assist those who become disabled.

SS was established as a program to benefit workers, funded by workers. Not funded by the upper classes to benefit "the poor".

But that's what you seem to want to turn it into. Perhaps forgetting that he who pays the piper calls the tune, shades of the Clintonian "welfare reform".

[L0oniX]

36. "SS was established as a program to benefit workers" It's not exclusive to workers.

If anything it is for those can no longer work due to age and or disability, widows and children of of one sort or another. What it is now may not be all what it was initially intended to be. Some go by the letter of the law and others go by the spirit of the law. Intent IMO is everything.

"A limited form of the Social Security program began, during President Franklin D. Roosevelt's first term, as a measure to implement "social insurance" during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50 percent. The Act was an attempt to limit unforeseen and/or unprepared for dangers in the modern life: including old age, disability, poverty, unemployment, and the burdens of widow(er)s with and without children."

That's the history I read. What it is now may not be all it was intended to be. I know many wrongly think of it as a retirement fund. It never was intended to be relied upon as a retirement fund nor was it ever intended to be only for those who have worked and paid into it.

[El_Johns]

39. It IS exclusive to workers. Only the widows/widowers & children of workers who paid into the

program can receive SS benefits, & that was true from day one. Similarly, the only disabled who can receive SS disability are workers who paid into the program.

[doc03]

47. I agree if the Koch brothers or Bill Gates paid into SS

they should get their SS same as everyone else. Hi income earners also have to pay higher premiums for their Medicare and Part D. I am just a regular single blue-collar retired steelworker and I have to pay taxes on my SS. The damn threshold for taxing SS for a single taxpayer was set back in 1983 at $25000-$34000 if it was ever adjusted for inflation it would be $58500-$79550. Eventually if you get any income outside of SS you will have your SS taxed. What is the point in working hard and saving for retirement if it is going to be taken away.

[El_Johns]

25. What makes you think the Kochs paid any significant amount of SS tax, since they inherited

their father's empire?

Did they pay themselves salaries which would be subject to SS tax?

Even if they did, the most they'd be eligible to collect would be the same $2000-plus a month a well-paid professional would get.

And given their membership in the top 1% of income earners, they'd be taxed on 85% of it.

[L0oniX]

27. It's a Metaphor ...but that may be a challenge to assume with me not actually saying so.

[El_Johns]

28. I don't understand your sentence:

"that be a challenge to assume with me out actually saying so."

?

[trof]

11. No, they shouldn't and weren't until Reagan.

[hollysmom]

17. I amlimited to how much I can take out of my 401K

without losing money to taxes. I know that 401K money gets taxed like salary, but shouldn't the interest be taxed lower like long term capital gains? Right now I take out a small amount each year to supplement my social security although my living expenses are higher so for that I rely on savings or budget cutting and not vacationing or any other perks besides sitting in my yard.
I would like to take twice as much out of my 401K but it would be taxed so much enough that i don't do it.

[doc03]

48. Same here I am single and my pension puts me over $25000 so that makes

SS taxable and if I take money out of my IRA about 40% goes for tax. For a single the threashold for the SS tax was set at $25000-$34000 back in 1983 in today's dollars it would be $58500-$79500. Eventually anyone that gets a pension or has any savings will be subject
to the tax. At least we get a break and don't have to pay the payroll tax.

[madokie]

19. I have to pay income taxes on mine

It seems I'm having to pay taxes on the full amount too as there is no where the form says only a percentage is taxable.

ETA: hell no we shouldn't have to pay taxes on our SS. If I remember correctly it was the pukies that gave us that too.

[El_Johns]

22. Bipartisan "reform"

The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.

The basic rule put in place was that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer's total income exceeded certain thresholds.

In 1993, legislation was enacted which had the effect of increasing the tax put in place under the 1983 law. It raised from 50% to 85% the portion of Social Security benefits subject to taxation...

http://www.ssa.gov/history/InternetMyths2.html

[madville]

24. Changes originate out of Congress

In both of those instances it happened to be with Democratic majorities in Congress.

[El_Johns]

26. Bipartisan Congresses signed on to both, under both R & D presidents.

The Reagan era changes were conceived in a panel led by Greenspan.

I'd bet the true guiding impetus was the financial sector.

[RebelOne]

23. I was working full time while collecting Social Security.

But I had to pay taxes at the end of the year on my salary income. I am no longer working so my only income is SS. I could not afford to be taxed on that income. After the Medicare deduction, there is not too much left to live on.

[northoftheborder]

29. Additionally, the deduction they take out for Medicare is based upon.....

.....your other income. Mine doubled this year, because one year I had a high capital gains on some real estate sales. I have to prove that my income has gone back to it's normal rate to get it reduced.

[bigwillq]

30. No (nt)

[treestar]

34. For people who make a lot, yes, but 25K is too low

[llmart]

35. Absolutely not!

So why in the hell can't we push to have this stupid law revoked? Why is it that once a law is in place (since 1983) it can't be changed - we just sit here and take the screwing we get from Congress.

I had to pay taxes on my Social Security last year and it ticked me off royally. I get $1,002 a month in Soc. Sec. and a couple of small pensions and I had to pay tax on it. I worked hard all my life and this is ridiculous. AARP is a powerful lobby. Why can't they fight to have this changed?

[beachbum bob]

38. taxing social security more? why not go after religious organization tax

exempt status or the NFL's tax exempt status?

[Packerowner740]

42. No I don't believe it should

[ananda]

44. No, absolutely not.

..

[indepat]

45. When raising taxes, WJC made a maximum of 85% of social security benefits subject to taxation,

up from 50%, but when junior lowered the highest marginal rates, he conveniently forgot address taxation of security security benefits, and BHO has been silent on this issue TTBOMK. For you see, a corporatist government would much rather have social security benefits subject to a higher marginal tax rate than der Mittens pays on his $20M annual income, to wit: a corporatist government is interested only in making the tax code even more regressive as Saint gipper would have wanted and you can forget about any change that would make the tax code more progressive. Moreover, Saint Gipper believed corporations should not pay taxes, that only people should pay taxes, hence an effective corporate income tax rate of 7%. Now all at once: all hail the mighty Saint gipper from whom all blessings flow.

[doc03]

46. I am a single retired steelworker, I get a pension that certainly isn't

extravagant but about 1/3 of it goes to income tax. You are actually taxed twice on the
extra income over $25000. You are taxed on the excess over $25000 then a percentage of your SS becomes taxable and it is taxed too. It wouldn't be so bad if the threshold for the tax was set back in 1983 was adjusted for inflation.

$25000 is $58500 in 2013 dollars
and $34000 is $79500 in 2013 dollars

[Omaha Steve]

49. Up to $100,000 other taxable joint income should be tax free

Now lets make it happen.

[indie9197]

50. That is like me taking a cut of my kid's allowance.

Imagine giving your kid $10 and then demanding $3 back. Kinda stupid.

They do it with unemployment benefits also. That is a lot worse IMO. Those people are already on the edge and should not be taxed on that.