Former President Donald Trump’s proposal to eliminate taxes on Social Security income has sparked a renewed debate about the benefits that millions of Americans rely on and could be a major factor in deciding the all-important senior vote this election.
In a Truth Social post on July 31, Trump wrote, “SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!” He has since followed that up with a specific pledge to work to eliminate taxes on Social Security income if he is re-elected in November.
The news has sent the corporate media into a panicked frenzy, as an army of liberal “economic experts” quickly declared that Trump’s proposal was unrealistic to the point of being absurd and would surely bankrupt the program. CNBC has worriedly repeated Democrat claims that such a move would be a “fatal mistake,” Forbes asserted that “experts say funds could run out quicker if [Trump is] elected,” and CBS’s own “experts” insisted that cutting taxes “would ultimately harm the program.”
But the liberal establishment’s real worry is, of course, that eliminating taxes on Social Security income would be immensely popular with high-propensity senior voters. It would also necessitate the federal government cutting wasteful spending elsewhere – likely starting with Democrats’ slush funds for fomenting a “green revolution,” which would be on the chopping block if Trump becomes the next president.
Trump’s proposal has created an ironic role reversal of sorts when it comes to the traditional political positions on Social Security. While Republicans have long warned about the looming insolvency of the problem and the need for reform, it is now Democrats who are insisting that eliminating taxes on Social Security income – in effect handing beneficiaries bigger checks every month – will put the program in greater financial jeopardy.
According to official government figures, at its current pace Social Security will be insolvent by 2033. The Committee for a Responsible Federal Budget estimates that eliminating taxes on benefits would speed up that timeline by one year, to 2032.
Either way, Social Security is barreling toward a fiscal cliff.
But what the liberal doomsayers conveniently ignore is that Congress will never allow a benefits cut to actually happen. As Nancy Altman, the president of Social Security Works, an openly anti-Trump interest group, has herself admitted, “The funding shortfall is an action-forcing event… There is absolutely zero chance that Congress is not going to act and let that go into effect.”
Leaders on both sides of the aisle recognize that allowing benefits to lapse would be political suicide. As dysfunctional and gridlocked as Congress has become, politicians still have an astonishing capacity for compromise and action when their grip on power is threatened.
Politics aside, Trump’s proposal just makes good sense and is a simple way to help a group that has been disproportionately hard hit by the 20 percent inflation the country has seen during the Biden-Harris administration.
According to a recent analysis from The Senior Citizens League, Social Security checks have lost 20 percent of their buying power since 2010 – the vast majority of which has come over the past four years. Although beneficiaries do receive cost of living increases, those have lagged behind inflation.
Unsurprisingly, as many seniors rely on Social Security as their sole income source, poverty among seniors is on the rise. 17 million adults over the age of 65 now fall into the category of “economically insecure.” Many Americans approaching retirement age are also being forced to delay their plans amid the rising cost of living.
Notably, the Social Security tax itself is a relatively recent invention. From passage of the Social Security Act in 1935 until 1984, Social Security income was not taxed – meaning that the program and the country can function just fine without the tax.
Even when the tax was put in place, it only applied to a relatively small number of recipients – those for whom their annual adjusted gross income and half of their benefit amount exceeded $25,000. But that threshold remains exactly the same today. As a result, while only about 10 percent of Social Security recipients had their benefits taxed in 1984, that figure is now about 50 percent.
In total this year, the 67 million households that receive checks will pay about $94 billion in taxes on them. Putting that money back in the pockets of beneficiaries would be a huge relief.
Moreover, some economists believe that eliminating the tax on Social Security income might actually be a net positive for government revenue. There is good reason to believe that many beneficiaries avoid employment in order to remain below the income threshold to avoid having their benefits taxed. But if this barrier were removed, many seniors would likely seek other outside employment to supplement their income, and would pay taxes on that income worth more than what the government would lose by not taxing Social Security income.
Trump’s proposal might even have a chance of garnering some bipartisan support in Congress. Earlier this year, Democrat Representative Angie Craig of Minnesota introduced the “You Earn It, You Keep It Act,” which would eliminate taxes on Social Security. Although Craig’s bill would pay for those tax cuts through the unsavory means of increasing tax rates on current workers, it at least signals that some Democrats are open to the idea.
Along with being good policy, Trump’s plan would be a political winner with a demographic he needs to perform well with this fall. While Trump won voters aged 65 or older by nine points in 2016, he won that same group by just four points in 2020 – the biggest swing toward Democrats of any age group. Given that seniors are far more likely to show up at the polls than younger voters, reversing this trend is crucial for the 45th president to win back the White House.
Shane Harris is a writer and political consultant from Southwest Ohio. You can follow him on X @shaneharris513.
