Bill Introduced To Eliminate Federal Taxation Of Social Security Benefits?

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I might have missed another thread on this, but apparently the House has introduced H.R. 1040 to eliminate federal taxation of Social Security. Very early in the process so will be interested to see how this progresses this year.
 
I suppose anything is possible but I'm not counting on ANY changes. I'm honestly more interested in how "we" will deal with the looming shortfall in SS in the 2030s.

Thanks for sharing this info. I'll be looking for details as an "interested" observer.
 
Representative Thomas Massie Reintroduces Bill to Eliminate Social Security Double Tax. Washington, D.C.

Representative Thomas Massie (R-KY) announces reintroduction of the Senior Citizens Tax Elimination Act, H.R. 1040.

Now there's a Bill I can really get behind......I approve this Legislation.
 
I don't expect anything on this. I also didn't expect the Hill to eliminate the SS WEP and GPO provisions, but I just got a lump sum payment for the last six months of spousal benefits and am approved for monthly benefits going forward.
 
donheff said:
I don't expect anything on this. I also didn't expect the Hill to eliminate the SS WEP and GPO provisions, but I just got a lump sum payment for the last six months of spousal benefits and am approved for monthly benefits going forward.
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Congratulations! Glad it's w*rking out for you.
 
Eliminating income tax on SS would be wonderful. But as a compromise, I'd be happy if they changed the 85% of SS being taxable to a smaller amount, like 40%-50%. Does anyone know why it's 85% now? And those income brackets that they use are very outdated. Maybe change those to be inflation adjusted.
 
Sue J said:
Eliminating income tax on SS would be wonderful. But as a compromise, I'd be happy if they changed the 85% of SS being taxable to a smaller amount, like 40%-50%. Does anyone know why it's 85% now? And those income brackets that they use are very outdated. Maybe change those to be inflation adjusted.
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It's 85% now because every monthly social security check you get represents about 15% return of your original contribution, which was already taxed. About 85% of your monthly check represents earnings on the money contributed. Those earnings have never been taxed prior to your starting social security. Ideally, everyone would be taxed on 85% of their benefit. The sliding scale for lower income recipients was a political salve to get the 1983 changes enacted. And the non-indexing was intentional, so that eventually everyone would be paying the taxes on 85% as they should.
 
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Any stats on how many SS recipients already pay $0 taxes on SS because of their low income?
 
badatmath said:
Goody, we can run SS out of money even sooner than otherwise. . .

I do think they should update the income levels. . . but as it is not up to me in any case it hardly matters what I think about it!
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I think I'll take the tax break now and worry about a haircut later, but YMMV.
 
Gumby said:
It's 85% now because every monthly social security check you get represents about 15% return of your original contribution, which was already taxed. About 85% of your monthly check represents earnings on the money contributed. Those earnings have never been taxed prior to your starting social security. Ideally, everyone would be taxed on 85% of their benefit. The sliding scale for lower income recipients was a political salve to get the 1983 changes enacted. And the non-indexing was intentional, so that eventually everyone would be paying the taxes on 85% as they should.
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Are you absolutely positive this is correct and does it included my employers contributions too?
 
Here is a research report regarding the history of the imposition of taxes on social security. The 1979 Advisory Council said the numbers were actually 17% and 83%. The 17% represented the worker's contributions. The 83% represented the employer's contributions (which were not not taxed to the worker when contributed), and the earnings on both the employee and employer contributions. They concluded that if social security were treated like private pensions, 83% would therefore be taxable. So I'm 2% off.

 
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Thanks for the info, I'll read it.
 
I would rather they left the taxation in place but just index the income thresholds for inflation since 1983 and continue yearly adjustments from there so it doesn't keep getting more and more low income seniors hit with higher amounts of taxation of their benefits.
 
Car-Guy said:
Are you absolutely positive this is correct and does it included my employers contributions too?
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Your employer's contribution is your contribution too. You really paid it and didn't know it. Every employer builds that cost into your wages when they hire you. Their match was really your contribution, you just didn't get it to begin with. Its built into your contribution package and you don't see it.
 
Stormy Kromer said:
Your employer's contribution is your contribution too. You really paid it and didn't know it. Every employer builds that cost into your wages when they hire you. Their match was really your contribution, you just didn't get it to begin with. Its built into your contribution package and you don't see it.
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The important thing for the discussion is that you didn't get taxed on the employer contribution.
 
Stormy Kromer said:
Your employer's contribution is your contribution too. You really paid it and didn't know it. Every employer builds that cost into your wages when they hire you. Their match was really your contribution, you just didn't get it to begin with. Its built into your contribution package and you don't see it.
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Yes, this is so obvious to the self employed as they pay both sides of it! Ghhhaaaacccckkk!
 
Gumby said:
The important thing for the discussion is that you didn't get taxed on the employer contribution.
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I was self employed. I paid the employer's side of the contribution. It wasn't deductible either like it would be to an outside employer. How does that figure into the contribution part being taxable ?
 
Stormy Kromer said:
I was self employed. I paid the employer's side of the contribution. It wasn't deductible either like it would be to an outside employer.
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I don't think that's right.

You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income.
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Self-employment tax (Social Security and Medicare taxes) | Internal Revenue Service

Self-employment tax rates, deductions, who pays and how to pay.
www.irs.gov www.irs.gov
 
Stormy Kromer said:
Yup. 15.6% of your income please. I did it for 35 years.
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Parents too. Never had a desire for self employment. I saw how much of a hassle it was. I thought Megacorp could be a hassle, but nothing like running a small business. I feel for you Stormy Kromer - all the hassle and you have to pay even more SS taxes! I hope it paid off, SS wise.
 
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