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AMAC Seeks End to “The Tax on Aging”

Posted on Friday, October 2, 2020
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by AMAC, Bob Carlstrom
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56 Comments
tax

WASHINGTON, DC, Oct 2 — “No one likes to pay taxes.  But, it can be downright painful if you are elderly and your income from Social Security is not enough to support retirement.  So you try to make ends meet by taking on a job.  And then you learn that not only do you have to pay taxes on your earnings from that job but also on your Social Security income, which you funded in the first place with taxes you paid when you were working full time,” says senior activist Bob Carlstrom.

Carlstrom says it is time to put an end to what he calls: “the tax on aging.”

He notes that it is getting tougher and tougher each year for seniors to make ends meet as the cost of living continues to rise.  According to the National Institute on Retirement Security, “The burden of preparing for retirement is increasing as workers face more risk and rising costs. Escalating housing, healthcare, and long-term care costs in retirement are creating retirement obstacles for Americans.”

Carlstrom, president of AMAC Action, the advocacy affiliate of the Association of Mature American Citizens, says that he and AMAC are determined to see the law changed.  They are promoting a bill in Congress that would amend the Internal Revenue Code of 1986 to remove the inclusion of Social Security and tier I railroad retirement benefits in an individual’s taxable gross income.

Social Security benefits were initially exempt from federal income tax, but in 1983, Congress approved recommendations from the National Commission on Social Security Reform to tax the benefits of some higher-income Social Security beneficiaries.

Carlstrom notes that the definition of “higher income” has changed dramatically in the ensuing 37 years.  As he put it in a letter to Members of Congress.

“Every year, millions of seniors become eligible for either Social Security or tier I railroad retirement benefits. After working for decades, paying taxes on their hard-earned income to fund these federal programs, some seniors are forced to pay income tax on the benefits they receive from the federal government. Taxing benefits which were created from already taxed funds is nonsensical and curtails retirement benefits seniors have been promised. Seniors deserve to reap the full benefits of their hard work from career-long contributions to Social Security and the Railroad Retirement Plan.”

The Senior Citizens Tax Elimination Act would amend the Internal Revenue Code of 1986 to remove the inclusion of tier I railroad retirement benefits and Social Security benefits in an individual’s gross income.  As this legislation takes effect, seniors will notice their tax liability is significantly reduced. Seniors will no longer be burdened with the “double tax” on their federally earned benefits.

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LTC S
LTC S
3 years ago

I believe this is a very worthy cause that will not be supported by a congress that spends more than it makes. Taxing any retirement income – by the state or federal government is counter productive. We pay into retirement programs to support us while we are no longer working. We planned how to maintain a modest life using these retirement plans. And guess what, the state and federal government want part of it back. You give me money based on what I gave you And now you want back part of the money you’re giving me. As the cost of living increases I get a COLA that is less than half the increase in cost of living. So I am living in this cycle where my input is decreasing faster than my output is increasing. This may work well for congress but it doesn’t work well with those retired. I think a reasonable easy solution would be to tax me until I reach age 70 and no one gets social security until age 70. At age 70 I am tax free for the rest of my life – state, federal and sales tax all no longer apply to me and I get social security. That makes life a lot tougher for a lot of people but it’s not so great for those of us retired on 1990 retirement funding in 2020 daily living cost.

PaulE
PaulE
3 years ago

Social Security, on its own, was never intended to provide for what we would call a comfortable, but modest retirement. It was, at best, designed to provide for a bare, subsistence style living in old age. Basically just enough monthly income to provide enough food to get by on and maybe a modest form of shelter. Like a rented room in not necessarily the good part of town. Washington bureaucrats thought more along the lines of a room in a flop house.

Things like healthcare costs and a long retirement were never envisioned in the early 1930’s by FDR’s people, when the program was originally designed. The program was designed to start paying out at age 65, which was right around the age of death for most people in the United States. So benefits were generally only received by a relatively small part of the population paying into the system and then only for a few months or maybe, if they were lucky, a couple of years. Social Security was first and foremost designed as a broad-based tax to ensure there would a steady, reliable market for the federal government’s debt issuance going forward. That being Treasury Bonds and Notes to fund the government’s spending initiatives as FDR greatly expanded the role and scope of government. Why do you think despite the over-whelming data that far greater returns on investment have existed for decades beyond low yield government bonds, that the only type of investment Social Security still places 100 percent of its money in is still only U.S. Treasuries?

It was only a matter of time before the federal government stuck its hands into the SS cookie jar. They first raided it in 1967 under LBJ to help fun the so-called War on Poverty and other government initiatives. By 1983, that money was completely gone and the Democrats saw a way to still get money from the SS system in a more direct way: By imposing what they positioned as a means test on SS to ding those retirees with any real savings or investments that afforded them a more comfortable than just SS alone. A new tax. Was it fair? No of course not. Those people paid into the system just like everyone else. No one starting their working career at 18 or 21 will know exactly how they end up at age 65 from a financial perspective. Life presents choices and options every single day. What you do with them is up to you. Some folks just make some better personal investment choices than others. That is how life works, but people should NOT be penalized for it. Opportunities exist out there every single day. Some people embrace them and some people, for whatever reason, chose to ignore them. That is the nature of life in general.

So should the government end its taxation of SS benefits? Sure. It makes perfect sense from both a fairness perspective to all those that have paid into this pay-go system (Ponzi scheme) their entire working careers and from a compassionate perspective for those that end up relying solely on SS as their only source of income in retirement. Will Congress do it? No, of course not. Nice effort to rty, but ZERO chance of success. The one thing you can predict with absolute certainty is that the federal government will never have enough money to spend. You could triple the amount of money flowing into government coffers tomorrow and I can guarantee you, that within 18 months or less, they would be crying about runaway deficits again. The federal government has no clue how to effectively manage money on any level, because there is that is NOT their skillset .

Remember 30 years ago in Washington, talking about spending bills involving tens of millions of dollars and that was a big deal. Then flash forward to 20 years go and millions became meaningless, as spending was measured in billions of dollars on a routine basis. Now flash forward to today, where Democrats in Congress want to spend trillions of dollars every few months like its nothing. They load up their spending bills packed with hundreds of billions of dollars of pure pork to either bail out the blue states or fund new programs that have nothing to do with Covid-19. Is this the Congress you think is going to eliminate a tax of any size, no matter how well justified? I don’t think so.

Jean Barnes
Jean Barnes
3 years ago

I have been complaining about taxes for years. God help us if the Dems get the White House again. It does sound like President Trump plans to do more on cutting taxes and has mentioned getting rid of the IRS. Now that would be great! Go AMAC…

Wylie Babb
Wylie Babb
3 years ago

This would be a terrific help

Norman Blowers
Norman Blowers
3 years ago

This taxing of retirement income again, after taxing the initial earnings, is deplorable. We spent years earning a retirement and paying into a system that was to be returned with after tax dollars. Then we found that greedy politicians decided to double tax us and lie to us, breaking their word and their contract with America. My wife & I were average professionals, never reaching a combined total of 6 figures. Yet we are taxed on 1/3 to 1/2 of our SS income. Meanwhile, the fat cats that passed the changes get to retire at home for the REST OF THEIR LIVES on full congressional salaries.

Bill Williams
Bill Williams
3 years ago

How I do appreciate AMACs effort, but I fear it ain’t ever gonna happen. Feds have been overtaxing seniors for so many years it now just seems the ‘politically correct’ thing to do. It’s always, tax those on the fixed income, example, the federal retiree, offsets the retirement with Social Security with the WEP offset where the SS is about one third of normal and COLAs are are at impossible lows to live normal lives. One has to be in a certain ‘not working’ class for a free ride. Folks, that’s the way it works to buy the votes.

DaveR
DaveR
3 years ago

you lose your spouse and her income makes it harder.

Starr
Starr
3 years ago

Appreciate your focus on federal taxes, but my state is taxing both my Social Security income and regular pension. So if we are going to fix this, please find a way to stop the states as well at least for the SS part since it is a federal program. Thanks

Heather
Heather
3 years ago

Talk, talk, talk, talk, talk, that is ALL congress does. The law can’t even prosecute the liers and corruptness on the hill and the FBI. How in the world will they ever help us seniors???? The democ rats just want their power and MONEY.

Ann
Ann
3 years ago

I SO APPRECIATE this effort… every dollar counts and better for seniors than government already greedy and power grabbing mantra!

Jl
Jl
3 years ago

Yes agreed.
Also, many couples live together unmarried because their social security benefits will be penalized and reduced.
The funds are being robbed/stolen by congress. Funds should be transparent where they are spent and audited by 3rd party to protect the money.
Medicaid funds should be seperate from medicare if it isn’t already.
Thank you for your deligence and caring. God bless

Connie
Connie
3 years ago

This has been a long time coming and is much needed. Now if we could just get localities to stop taxing our homes after a certain age, we wouldn’t be facing the loss of a roof over our heads (even after our mortgage is paid off) simply because we can no longer afford the taxes on our homes.

Ginger Lymbery
Ginger Lymbery
3 years ago

Okay, add this to your list. My husband and I retired at 62 and began receiving SS payments. He decided to run as county judge, won and now is employed. Did any of you know that if you go back to work and are receiving social security, that ALL the SS payments and FICA taken out of your check do not go back to you….in other words, SS refuses to refigure your income….your money that you are making is shared into the system? This is just another way to steal from the elderly…..if you do not get credit for the money you worked for, then ss and fica should NOT be taken out of your check. You didn’t sign on to SHARE your income with everyone else.

DonHyneman
DonHyneman
3 years ago

The original thought was to tax high-income retirees on the employer-match input that was likely written off as a business expense. However, it was not indexed for inflation and it can tax not only the employer portion, but also most of the portion that was already taxed Thus instead of 7% of all recipients being hit with the “tax torpedo”, 60% are. Even if my employer portion was taxed as regular income (at 12%), that would be an improvement of the effective 50% rate the torpedo forces me to pay now. In otherwords, I lose 25% of my entire Social Security every year that contributed for 45 years. not right!

Randal Vidal
Randal Vidal
3 years ago

I think this taxing should go away on both incomes S.S and if you must take a job to make ends meet

And After 69 years of age there should be no School taxes, No property Taxes, no Sales Taxes
Let the elderly coast to the finish line and be happy

Brenda
Brenda
3 years ago

I am 76 years old and working full time. Medicare, and Social Security taxes are taken out of my paycheck. Medicare and a supplemental insurance are taken out of my Social Security check. Leaving me with very little to live on. Not much is fair about the SS system. Our representatives to Congress have been duly elected to protect us, as far as I can see, they are getting richer and have great retirement benefits which are provided by the tax payers. Term Limits would be a great way to limit all the fraud and benefits to them.

Myrna
Myrna
3 years ago

it is time to stop congress from searching everywhere for more money. The “Affordable Healthcare Act” was suppose to provide some insurance for people with no way to be insured. Instead it was used as an excuse to impose a requirement to be insured and pile penalties on top of insurance premiums as a punishment for citizens who earn more than congress’ cutoff thereby sending a message that people should earn just enough to survive or be penalized. What kind of message does that send to younger people who find out what is happening to their grandparents? I can see why more than one in congress has decided not to scramble to be re-elected and to opt instead to go home and earn honest money. I so hope some honest people will stay.

John Cousineau
John Cousineau
3 years ago

Simple question what about military retirement pay that is from tax dollars.

Nick Ponzio
Nick Ponzio
3 years ago

You don’t mention anything about eliminating the “IRMA” Rule, but I would suppose that if you eliminate taxing social security most retirees would not come under this rule.

JohnH
JohnH
3 years ago

Thanks to AMAC for working on this problem. I would like to see a little bit more data on total dollar taxes per year that are paid to IRS for the SS wages before I decide. I personally am aware of many retired people that are struggling to make ends meet with SS checks only, but on the other side there are retirees with over $100 thousand yearly income that receive monthly check also ( which is fair as they have paid into FICA their working life like others).

Faith Rose
Faith Rose
3 years ago

Thankyou for your efforts our behalf. One reason one sees so many elderly working is that their benefits are not adequate. In addition, before they even get their pay, close to, or more than $300 is deducted for part B and supplemental insurance. Then a separate amount has to be paid for a totally inadequate drug policy. This last three months we have had to expend cloe to $1500 for medicines AFTER DEDUCTIBLE was applied.

SUE BRIETZKE WALKER
SUE BRIETZKE WALKER
3 years ago

I am so glad AMAC is addressing this issue and really hope you are successful in getting the tax on SS repealed.

Misty
Misty
3 years ago

Social Security and Medicare are socialist programs devised by that great commie FDR. End them now and put that money toward paying down the deficit!

Gordon
Gordon
3 years ago

As the US Federal & each State governments gobble more & more of OUR money to spend on strange & useless-to-us boondoggles we need to demonstrate that the power they hold derives from the consent of the governed… US. VOTE like your life depends on it, because *IT DOES*!

DougM
DougM
3 years ago

I agree, the tax should be eliminated. Very much needed with healthcare costs escalating and out of control. I also agree with term limits for Congress.

Jack Davis
Jack Davis
3 years ago

My s doesn’t pay the rent if our kids weren’t living with us we couldn’t make it.living in Calif.
Our gas tax is outrageous And Gov. Nuisance is looking for more hopefully someday California will get there act together and realize who are enemies are.

Richard
Richard
3 years ago

STOP PEOPLE! There will always be taxes on things that we pretend ought not be taxed. Yes, pretend. We can’t say out of one side of our mouths “the government oughta…….(build roads, help with health insurance, give everybody old a minimal income, blah blah)” and not expect to have taxes. Curb your appetite, people. Only then will there be a low tax rate. As they say, “Do the math.”

Donald Davenport
Donald Davenport
3 years ago

When you are working, your Payroll Tax is 6.2% for Social Security; when you retire your taxed for Social Security Benefits at a 12% Rate Bracket, this is an 85% increase in tax rates.  When you are working your Payroll tax is 1.45% for Medicare; when you retire your taxed for Medicare Benefits at a 12% Rate Bracket, this causes a 275% increase in tax rates. How can this be Constitutional?

Shirley Franklin-Simons
Shirley Franklin-Simons
3 years ago

It is a shame that the Politian’s have the power to play with our SS money and think that retired people can live on it. Many retired folks must think SS will help them when they retire and they don’t plan any further. I am thankful that my parents taught me to “put some away for a rainy day”. Inflation eats away at our SS, Savings, and additional cost of living. We do need a COLA every year no matter the economy. If the Politian’s would not be able to take from this fund, it probably would help retirees with the COLA each year. I don’t appreciate Pelosi’s hand in our SS fund for her pet projects as she has personally made millions while in Congress, and not on her salary but “on the take”. Once retired, we should not pay tax unless retirement comes before 65 for some lucky ones, or it could be a certain “cap” on income. My SS helps but I could not live on it. When my husband died, all I got from his SS was $330/mo. The law should be changed so that the spouses’ SS can go to the widow/widower. Thank you for helping retirees.

Jack Thomas
Jack Thomas
3 years ago

The Senior Citizen Tax Elimination Act H.R. 3971 originally sponsored by Rep. Tom Massie, R-KY is a bill that should have been passed and signed into law by President Trump long ago. Congressional approval is way overdue; it’s time this initiative stops floating around in various committees and gets to the Senate floor for a vote.

There’s no compelling reason why SS benefits should be taxed a second time (for Federal income tax purposes) years after American seniors paid into the system all their working lives. From a compassionate standpoint (and I’ve been saying this for years now) there’s also no compelling reason why any American senior citizen should face the cruel choice each month of buying either food or needed medicine. Not here, not in the richest nation in the world. It’s simply unacceptable and inexcusable.

Jeanette Fenton
Jeanette Fenton
3 years ago

Fantastic. it is crazy we get charged twice on this money! Even though it is a pitance of a benefit, it certainly helps. And we already paid the taxes on it when earned.

Dan B
Dan B
3 years ago

I’m 56 work very hard and this is very scary. At this rate ( life as a senior in America}, ill be homeless and on the streets before, during, and after taxes. Come on Government do YOUR jobs. Help the ones who help you. Take care of the people, who takes care of you. Talk about hand outs? Maybe I should get into government.

Kathleen C Dambra
Kathleen C Dambra
3 years ago

I agree with others here that many older couples cannot get married as it will reduce their income. I was widowed at 41…my husband made good money and was only 48 when he died. I was never able to match the income he made…i worked until I was disabled at age 60. I did remarry at age 43….i was not going to live in sin in front of my husbands three daughters. But I bet I’m losing out on at least $500/month.

Nancy
Nancy
3 years ago

How about doing away with the marriage penalty on ss income. A couple would pay less taxes if not married filing as individuals, versus filing as a married couple.

Larry Trammell
Larry Trammell
3 years ago

I am all for eliminating the tax on Social Security but I do not understand the logic behind the argument. I thought that social security was paid from employee and employer tax on earnings (split evenly between employee and employer). This would mean that the social security payments were taken from ordinary income prior to other taxes being applied. Is this not true?

Shirley Marvin
Shirley Marvin
3 years ago

Well, if all FICA was again in it’s own fund and not the general fund and not accessed by anyone to help out the downtrodden-illegals and so forth then those of us that put in would be better off

Phil B
Phil B
3 years ago

18 million us are getting killed by SS tax. This should never have happened. Also even if you keep the tax there is no cola. The deductiion remains the same

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