Now comes the news that about half of Social Security beneficiaries expect to be taxed on their benefits this year. So reports The Senior Citizens League. The number expecting to pay the tax is 49%, it reports. Last year it was 47%.
Now comes the news that about half of Social Security beneficiaries expect to be taxed on their benefits this year. So reports The Senior Citizens League, a group that represents seniors. The number expecting to pay the tax is 49%, it reports. Last year 47% of beneficiaries said they paid the tax.
The critical thing to understand about the taxation of Social Security benefits is that it was introduced only in 1984, courtesy of a commission chaired by Alan Greenspan, and the tax thresholds were never indexed for inflation.This year, your benefits will be taxed if your income tops $25,000 a year .During the intervening 38 years, wages and consumer prices have tripled. And the thresholds haven’t moved at all.
“Unlike other federal income taxes, Congress has never adjusted the income thresholds that subject Social Security benefits to taxation since the tax became effective in 1984,” says Senior Citizen’s League analyst Mary Johnson. One of the dirty secrets of Social Security is that the government is counting on inflation to bail out the system, and a major reason for that is that it pushes people into higher tax brackets, both for payroll taxes when you’re working and this tax on benefits when you retire.
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