Wednesday, February 21, 2024

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Democratic congressmen have proposed exempting Social Security benefits from federal taxes, but experts aren’t optimistic

Democratic Party of MinnesotaRepresentativeAngie Craig launched a proposal in late January called the “You Earned It, You Keep It Act”, calling for a complete end to all payments starting in 2025.company security moneyA federal income tax is imposed to allow retirees to keep money in their pockets. The bill also includes raising the payroll tax threshold to allow higher income earners to contribute more to the Social Security fund. Social Security Works, a Social Security benefits advocacy organization, supported the proposal.

In a press release, Clegg described the proposal as a “win-win” policy that would lower taxes for seniors while maintaining tax responsibilities. He said the purpose of promoting the proposal in Congress is to put money back in the pockets of middle class people and this bill will help achieve that goal.

According to current rules, up to 50% of social security benefits may be subject to tax for individuals who file taxes alone and whose comprehensive income is between NT$25,000 and NT$34,000. Couples who file taxes jointly have a comprehensive income between NT$32,000 and NT$44,000. Between now and then, up to 85% of Social Security benefits may be taxable.

7.65% of labor income is subject to red and blue card and Social Security taxes, which are federal payroll taxes. The source of the law comes from the Federal Insurance Contributions Act (FICA). 1.45% of them provide what are commonly known as the red and blue cards.Treatmentprogram (Medicare), and another 6.2% is provided for Social Security benefits. In 2024, the maximum taxable salary limit for Social Security benefits is $168,600.

The “Keep What You Earn” proposal adjusts the taxable threshold for social security benefits, so that wages of more than 250,000 yuan will also have to be taxed on social security benefits.

The proposal to exempt Social Security benefits from federal taxes was first announced in August 2022. Clegg’s reintroduction of the resolution was co-signed by several colleagues in the House of Representatives, including Representative Ro Khanna of California and Representative Yadira Caraveo of Colorado. Donald Davis of North Carolina, Representative Mary Peltola of Alaska, Representative Andrea Salinas of Oregon Salinas, Representative Hillary Scholten of Michigan.

However, David Blanchett, director of retirement research at PGIM DC Solutions, disagrees, describing the proposal as a “win-win” because a certain group of people will ultimately bear the burden of taxes due to insufficient money to fund Social Security. He also said that given the opposition between the two parties, it is uncertain whether the proposal will be passed in the House of Representatives.

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