In the movie, Julia Roberts has one of her escargots slip out of her hand and run across a fancy restaurant yelling, “Slippery little sucker!” Beautiful woman.
When I think about Congress, I think of that scene.
Latest information on slippery little suction cups.
As a legal title, this one attracts attention. The “You Earned It, You Keep It Act” makes a second attempt to eliminate taxes on Social Security benefits. The bill, reintroduced in late January by Colorado Rep. Angie Craig (D), would eliminate taxes on Social Security benefits for all retirees.
This is one of many bills in a long history of efforts that have come to nothing.
The bill includes an assessment of the fiscal impact on Social Security by Chief Accountant Stephen C. Goss. He points out that one change in the bill would eliminate taxes on benefits, but another change – increasing taxes – would extend the fiscal health of retirement systems through 2054.
This is a significant improvement compared to the current estimated date of death from a fall. If nothing changes, Social Security benefits will have to be cut by about 23% in 2034.
I should be excited about this bill.
I’ve always hated taxing Social Security benefits. The reason is simple: it was created in a bipartisan but dishonest and cowardly way. When the tax was enacted into law with Social Security reform in 1983, very few Social Security recipients were required to pay the tax.
Nothing happened.
why? The income threshold for taxes was high. Very few people pay for it.
But unlike almost every other part of the tax code, the income threshold was fixed. Inflation was not indexed. That never changed.
But inflation skyrocketed.
Today, taxes are a middle-income issue. There was a time when tea was thrown into Boston Harbor in protest of “taxation without representation.” Parliament, not King George, passed taxes that would become important decades later. It was the end of a generation for representation.
Today, the Burns family takes their dogs on this hunt. That wasn’t the case back then. We were in our early 40s at the time. Social Security benefits were not a top priority. Today, we all receive Social Security benefits. We pay taxes on 85% of our Social Security income.Many retirees found their federal income tax bills It doubled.
We’re not talking peanuts here.Eliminating tax on Social Security benefits is trivialized if you have income from pensions, savings, investments, or retirement accounts Any Other tax reform proposals — unless your income is in the top 1% or 2% of all taxpayers.
But I don’t want my taxes cut if it’s achieved by imposing large tax increases on others. That is the purpose of this proposal. This is truly a major tax increase that sells itself as a tax cut for retirees.
A proud press release touts the abolition of benefit taxation. The press release says little about how the system could generate enough revenue to improve fundraising. Retirees receive prize money. But high-income workers pay much more in taxes.
The situation is as follows.
In 2023, employment taxes that go toward retirement and disability income will stop at incomes of $160,200. Under “you keep what you earn”, taxes also apply if: all Income of $250,000 or more.
That would leave you with a donut hole of untaxed profits between $160,200 and $250,000. That goes away when the maximum wage base increases to $250,000. An actuary project to be realized by 2035.
after that, all Earned income is subject to employment tax. That’s a lot of money. It would easily cover the loss of income from taxing Social Security benefits. At the same time, Social Security’s funding crisis will continue into the next 20 years.
High income earners will pay more taxes. Will they get anything for their burden?
yes. A stick is stuck in your eye. All earned income above the wage base limit is deducted on your Social Security earnings record at the rate of his 2%. Virtually nothing.
What most people don’t realize is that the top effective tax rate is hidden within Social Security’s benefit deduction system. This is not a crime.it’s a social thing insurance program. It’s not a pension system.
Current law provides a 90% deduction for workers whose indexed monthly income is less than $1,174. Workers whose indexed monthly income is more than $1,174 but less than $7,078 are deducted at a rate of 32%. A 15% rate is added to workers whose indexed monthly income exceeds $7,078 and is below the wage base cap.
The bill would create an additional step to deduct all indexed income that is 2% above the wage base maximum.
As Pretty Woman said, “slippery little suckers.”