Changes (Finally) Coming to Taxable SS Calc?

stillers

Has anyone seen/heard anything more about this?

https://www.cnbc.com/2022/05/29/-your-social-security-check-might-be-taxed-how-that-could-change.html

Excerpt: (bold added)

Those thresholds are not indexed, which means they have not been updated since they were first established by Congress.

Consequently, over time more people have become subject to taxes on their benefits.

“There was the intent that it would only affect high-income earners when it was first passed in 1983, but over time, it’s reached further and further down into the middle class,” said Joe Elsasser, founder and president of Covisum, a provider of Social Security claiming software.

msf

This looks like a fluff piece - the type that comes out every year when the government releases its projections for SS and Medicare trust fund solvency, as the Trustees just did. It's a laundry list of "what ifs", or as stated in the piece, "Congress could ..."
https://www.ssa.gov/OACT/TRSUM/

Given that the income tax on SS benefits goes to shore up the SS Trust Fund (see, e.g. the original Greenspan report,recommendation (7)), it hardly seems likely or prudent that these taxes would be reduced (by post 1983 inflation adjustments).

Parts of the piece seem equally unlikely, such as the suggestion that 100% of benefits (as opposed to 85%) could be taxed. The rationale for the 85% amount is that on average this is the portion of benefits that reflect earnings as opposed to return of already taxed principal. The taxation of SS benefits brings it in line with treatment of other annuities, where return of principal is not taxed.

carew388

+1

racqueteer

FWIW, my experience with taxation bureaucracies has been 'once in - always in'. Though it may have happened, I can't personally recall an instance of an existing tax being REMOVED. Anyone?

msf

Sure. There's the federal excise tax of 3% on interstate calls originally imposed to support the Spanish American War and removed for good in 2006.
http://www.taxhistory.org/thp/readings.nsf/ArtWeb/557559440437EDBC8525718B005ACCCB?OpenDocument

More recently, in 2018 New Jersey eliminated its estate tax. For decades it had been that rare state with both an estate tax (on the property [estate] of the deceased) and an inheritance tax (on the amount of assets passed to the inheritors, taxed individually and based on who each inheritor was). It now has only an inheritance tax.
https://www.state.nj.us/treasury/taxation/inheritance-estate/inheritance.shtml

A more obscure one that I'm rather fond of is a use tax (road toll) imposed on vehicles using the Southern State Parkway on Long Island. Originally a dime, it had been imposed to fund road improvements. It was raised to a quarter two decades later, spurring such outrage that three years after the hike, and one year after the state took over the parkway maintenance, it was removed and the toll booths torn down.

https://www.liweddings.com/wedding-forum/for-newlyweds-only/long-island-history-did-you-know-there-were-toll-boths-on-the-southern-state-107508-1.html
http://www.nycroads.com/roads/southern/

BenWP

Nice links on that obscure history, @msf. I for those into minutiae and NYC public works history, no source can outdo Robert Caro’s The Power Broker. I hope he finishes his volume 5 on LBJ and the Vietnam years before age catches up with him (not to say that others of us are not so similarly affected).

MrRuffles

On the other side of the coin, there’s the Johnstown Flood Tax in PA. A 10% tax on liquor was imposed in 1936 to pay for the costs of the flood. Not only hasn’t it been repealed but has been raised twice since.

https://philly.thedrinknation.com/articles/read/174-Johnstown-Flood-Tax-Why-Are-We-Still-Paying-A-Flood-Tax-From-1936-On-Our-Booze-

stillers

Yeah, trying to stay on topic here...there's also this:

https://www.ssa.gov/oact/solvency/provisions/taxbenefit.html

msf

That page is not substantially different from the 2020 report where the Section H options were likewise numbered H2-H7, and generally the only difference was that the years for implementation were one year sooner. See p. 31 (pdf p. 32):
https://www.ssa.gov/OACT/solvency/provisions_tr2020/summary.pdf

As I wrote above, nothing new to see here, move along. Just the same "news" pieces trotted out as though they were reporting on new proposals.

I suspect that if you go back year by year, you'll see very little different in the proposals aside from the dates. Here's where you can find earlier years:
https://www.ssa.gov/OACT/solvency/provisions/