CPA Discusses New Bill to Make Social Security TAX FREE
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- čas přidán 25. 03. 2024
- This video discusses the "You Earned it You Keep it Act," currently being reviewed in Congress. The Act, if passes will make all Social Security payments tax free to the recipients. It does face quite a few hurdles, the most difficult of which is getting support in an election year.
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Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.
This would be a good time for the government to pay back the loans they took from SS without our permission.
they are paying it back right now, as intended. your permission came from your elected representatives. it was a good deal both for SS and for the country.
@@user-os1tm3te3f how do you figure that?
The government is never borrow money - it prints it. Study MMT. The "debt" is a myth.
With what? The government is broke, that’s why they are borrowing or printing $2T a year.
The government is you. We have elections to send your chosen representative to congress.
And all money borrowed will be payed back with interest from your tax dollars
There should never be a tax on a tax.
the tax is not on a tax. it is tax on "profits" from a tax that is not really a tax: its a savings account.
You know you only paid half the tax your employer paid the other half. Your employer wrote that off on his taxes and now you're paying the tax on it when you retire
And yet your tax return (over payment) is added to your income for the following year. Always trying to stick it to you at ther drive-thru
@@hanko5750 please explain what you are talking about?
Tax refunds are not income
@@user-os1tm3te3fBy now everyone should be aware Social Security is NOT a savings account. There is no government pot of money set aside with your name on it. SS is best described as a Ponzi scheme as it relies on new workers and population growth to pay for current recipients. Most of us will be lucky if we get out what we paid in.
I have seen 2 billionaires on CNBC, who both said they shouldn't get Social Security with their wealth. One of them went on to complain that he and his wife were taking in over $4000 in Social Security(not sure if he meant each or just one), and he thought it was ridiculous. I guess he forgot that he didn't have to file for it in the first place.
And he also conveniently forgot that he can STOP it at any time. He's a billionaire. He should be smart enough to figure that out.
They paid into SS they need to get it
@richardc488 I think the point was they were implying despite paying in they shouldn't get it because of their wealth. I get they paid in, and not my statements, it is theirs.
They ALWAYS take the money!
@@bobl6329that’s just a stupid reason. Unbelievable.
So per you because somebody is wealthy they simply don’t deserve to get what is owed. 😂🤣
Instead per you, reward bad behavior. Give to the lazy who never earned enough. If you had two sons, this is what you would do?
If Congress hadn’t dragged their feet on this for decades, this wouldn’t be a crisis now.
I think it's fair indeed to forego taxation on SSA benefits. That's because the money we "contribute" to SSA while working is ALREADY taxed as ordinary income.
warren, yes your odinary income is taxed as ordinary income. then if you choose to save some of your ordinary income, the interest you get from your savings is taxed as ordinary income. this is exactly what happens with your SS. most of your SS benefit is from "interest." it was originally not taxed because the government thought it made no sense to tax income intended to prevent poverty. then they realized that a lot of people collecting benefits were in no danger of poverty, so they decided to tax part of SS for people with sufficient outside income to not "need' to be protected from poverty. This is really quite reasonable and fair, but it's a balancing act. And unfortunately the enemies of SS have taught you to believe it's a tax on a tax which sounds like you are being cheated. you are not. quite the opposite. but a lot of people like to believe they are being cheated by the government. it seems to be human nature.
@@user-os1tm3te3fFor those at the low end the SS tax is zero. For those a little above the low end like me the tax amount is inconsequentially small. Like less than 500 dollars. In some years mine is less than 100 dollars.
@@davidgerwin7885david, i think you are agreeing with me. a long time ago i learned not to worry about "unfair" taxes. you can drive yourself crazy feeling cheated. in the grand scheme of things you (we) are getting a very good deal. from a lot of years writing about SS and trying to answer questions i get the feeling that most people are imagining they are being cheated when they are not. but even when you are really being cheated it is far better to just walk away, forget about it and get on with real life.
at the risk of repeating myself, i think the big problem people have with having their SS taxed is that they think they are being taxed twice, they are not. they have been told that they are being taxed twice by people who are paid a lot of money to make SS look like a bad deal. even if you were being taxed twice---you are not---you come out way ahead with SS.
aansolutly!
@@rosemarywhitney4680 i don't know if you read the other replies to warren, or if you are replying to one of those replies. but in case you didn't and aren't, SS is not taxed as ordinary income. ordinary income is taxed as ordinary income. then if you put some of your after tax income into a ordinary savings account, the interest you get is taxed as ordinary income. the same thing is true of SS, only SS is much safer than ordinary bank and your benfits which have earned the equivalent of about 5% interest is 1) not taxed at all because at first it seemed silly to tax "anti poverty" income (like if you are in the zero tax bracket on your ordinary income). or2) taxed on part of your SS income because together with your other income you make too much to be in danger of serious poverty. or 3) if you make even more outside income you are taxed (at your ordinary tax rate) on 85% of your SS income. it really is quite fair and reasonable if you look at it stright and not while the devil is whispering in your ear "it's a tax on a tax, no fair!".
The cap on social security tax at 160k needs to be taken off. It's crazy that the government is taxing low income people, but the wealthiest people pay nothing for social security tax over 160k.
you are probably paying something like 5000 per year counting your employer's contribution. This adds up to something like 200 thousand over forty years. This may sound lke a lot, but it is what it costs to pay for your needs for twenty years after you can no longer work. By your "scrap the cap" theory a "rich" person making something like 500,000 per year would pay something like50,000 per year, or 2 million dollars over 40 years. but he would get essentially the same benefits you are...about 200 thousand over twenty years. You are asking him to pay two million dollars for 200,000 in return. He won't do it, and he has more power than you do. But do you really think he should be paying for your groceries just because he has more money than you? how do you feel about paying for the groceries of someone who has less money thnan you. note the figures i used above are not corrected for interest so use them only to illustrate a point not to prove it without looking at all the complication.
@@user-os1tm3te3f 100% of my income is taxed for social security. There should not be a cap period.
@@user-os1tm3te3f sadly, there are many people in this country that see no problem taking someone else's money with the reason being "they can afford it"
Everyone pays all the way up to 160000
Sorry, that doesn't make sense. Social Security has a maximum amount it can pay out when you retire. So it doesn't make sense to take social security tax from you with the promise to pay it back to you in your old age, if the rules (maximum amount that can be paid to a retiree) won't allow the government to pay you back.
If congress can fund foreign countries and illegal immigration, they could just help fund Social Security instead. Why is our government so adverse to putting Americans first?
Kickbacks
Because they hate us...?
That's easy...the Demwits are in charge. It's like the inmates running the asylum...
Taxing social security is disrespectful of us seniors and a disgrace to this country!
The big problem with taxing SS is, your original SS payment was already taxed so that money is getting taxed at least twice....
I did not know those historical facts about Social Security. I found them interesting - thanks for sharing 👍
You already paid taxes on Social Security. They tax it twice and never adjusted the $25,000 - $35,000 stuff for inflation in about 40 years. The government does not have a revenue problem. They have a SPENDING problem. It does not matter what the government collects. They always have and will spend more to buy lots from the sheeple.
They could collect 1 quadrillion $$ next year and they still would not pay off the debt - they'd simply start new federal programs.
Social Security would already be "Shored up" if they did not mix it into the general fund and spend it. It should be SEGREGATED $, invested and for, and only for, paying SS benefits.
Easy fix: any shortfall of the federal budget can be clawed out of the pockets of Congress critters by the IRS. Result: federal budget miraculously balanced overnight.
@@brandyraccoon1473 Yup. And the money they make from "investing" in the market (like there's no insider trading going on)... Lol.
schmidt needs to chck me on this. retirement income is normally taxed fully. this is because most of your retirement money comes from interest or profits from stock. SS was not taxed at all because it does not seem reasonable to give people money to keep them out of poverty and then take it away with a tax. but people who are doing very well in retirement with extra income are now taxed on part of their SS. this helps keep your SS contribution smaller.
Social Security benefits are not double-taxed any more than withdrawals from your IRA/401k are.
@@ItsEverythingElseExcept they were not taxed at all for the first 40 years till Reagan wanted to tax SS and did.
.
The way our government has been operating these days, I don't think that Bill has a chance. If our representatives really wanted to cut spending, they should reduce gov't bloat.
When you’re spending someone else’s money, government is like who cares..
These days? Since the beginning of time! :) An interesting book was written, the authors starting with the premise of bloat and mismanagement, to the authors(2) surprise, we actually get good bang for the buck.
Get rid of 25% of government workers, stop sending so much money overseas, stop paying off student loans, secure the border no more build-back-better bills and anything else you can imagine would be hard medicine for a few years, but would leave us with a stronger economy.
There are lots of ways to put our fiscal house in order, but everybody will have to give on at least 1 or 2 things they want. If we don't do it voluntarily now, it will be done involuntarily later.
As to this bill, it's a trojan horse. Once you get the middle and upper middle class bearing the bulk of the SS burden, popular support will wither away within 2-3 years. So be careful what you ask for, social security might be changed in a way that's very disadvantageous to retired people (e.g. no more cost of living adjustments).
Actually, the greatest cost to the government has been the huge tax breaks granted over the last 40 years to billionaires and multi-millionaires. The reagan tax cuts, the w bush tax cuts, and the trump tax cuts. It's why these people dominate our economic and political systems, and price the rest of us out of our own markets, such as their takeover of the housing market. Our economy was fairly healthy for most of us from the mid-1930s to the mid-1980s.
@@gmbenz2482just lies.
The ones who always pay less taxes are the lazy poor ones.
You don’t even know how FICA tax works and what one eventually gets back via SS/Medicare. It’s a scam against the hard working rich. Pay in more and get less back. Why don’t you study the SS income formula.
Medicare is another fraud against the hard working rich. Have to pay more in premiums based on making more.
You are probably in the 12% bracket while the rich you complain about are at the 34% bracket.
There is a reason why Jesus said 10% for all related to tithe. Let it sink in. Jesus never said the wealthy tithe 20% or 50%. Jesus doesn’t enable bad behavior.
Thank you for the calm, reasonable, and thorough analysis of a very complex problem.
One of the best things this country can do is teach finance and money management in K-12. The fact that so many people depend solely on social security is not good.
Some school districts offer some type of finance course , it is optional. Maybe families could educate their children on personal finances and leave the other areas to the teachers. They already teach health, socialization,reproductive health, advocacy etc when are they going to teach math and science to foster a competent work force. Maybe all schools could become residential facilities and then the parents wouldn’t see them at all and would have no responsibilities!
@Howdy1957 unfortunately, most adults are not financially literate. Parents can't teach their kids what they themselves don't know.
100%!! Spot on,amazing how many young people are clueless about even 401K or more importantly, Roth IRA's and how they work,and what a person can have using DCA methods!!
I have been saying this for years. The financial world makes mega bucks keeping people dumb down.
Thanks Mr Schmidt
The utilization of after-tax money and tax-free growth makes opening a Roth IRA very advantageous. Through a careful guidance of my FA, I did not pay taxes on my withdrawals of $2.86 million when I retired.
I don't regret the numerous financial mistakes I've made in the past since I've learnt from them. But the biggest one was planning my finances without consulting with a licensed financial counsel.
Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.
@@maryHenokNftKudos on the effective execution of innovative ideas and tactics that lead to significant advancement. As I seek guidance from a trustworthy advisor, would you be willing to share details about the individual assisting you?
The decision on when to pick an Adviser is a very personal one. I take guidance from *Gertrude Margaret Quinto* to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.
My needs are kind of unique and complex. I'll contact her nonetheless, and I hope I'm able to make something out of it.
Unfortunately the government taxes my military retirement pay as well.
Me too.
So sad. We need government for the people, not for the big corporations and special interests.
Mine to, after 21 years of service! So much, for thanks for your service!
And me to. I love how congress folks thanks us so much for our service but we don't mind taxing you. And now pay for tricare and prescriptions. I just love it
Oh and I pay outright for Medicare per month. I still work and Medicare is still taken out of my check. What's that all about?
Social Security income was created to support seniors in their retirement not to support government. Social Security has turned into a Ponzi scheme because person never gets to spend as they see fit. The money is taxed an goes back to the government instead of to the people that have paid into for decades. Social Security income even with raises has never kept up with inflation. As an example compared to last year my homeowners insurance increased by 170% and my car insurance increased by 23%. I have no insurance claims. The small raise in benefits did not cover these higher costs therefore my standard of living keeps going down. It is time to stop taxing Social Security income.
it always keeps up with inflation. that's a big part of how it works.
@@user-os1tm3te3f HOW? A COLA raise gets wiped out when Medicare increases. The COLA raise is meaningless when the inflation rate rises. Tell your BS story walking.
This is only if you have 2 or more incomes. There is already no taxes paid on Soc Sec if it's your only income. You do not even have to file a tax return if it's your only income.
Another great video - thanks! I consider your posts to be required continuing education for my retirement.
Our government prints money out of thin air, and yet Social Security somehow has to ballance just like my checkbook. Grr!
money only works if the books are balanced. government, and every bank, can "print" money, but if that money does not generate new wealth things go badly.
I would probably be considered lower middle class. I am single and on my $50,000 to $55,000 (depending on interest) I have always had to pay tax on 85% of my Social Security. So no, it is definitely not only the wealthy who are taxed on their Social Security. Even 14 years ago when I first retired and was making less income, I was still taxed on 85%.
It's an election year. Social Security and Medicare are the third rail for retirees and old people ALWAYS vote. Frankly, my mother was still working and collecting SS in '83 when taxing SS went into effect. Her problem was solved by her sudden "retirement" from her job - she was still working but she got paid in cash. What Uncle Sam didn't know didn't hurt him. I suspect many other working seniors did the same thing and still do.
It would be political suicide to vote against this bill.
It will never make it to the floor. This congress has taken smoke and mirrors to a new level. Never before has a session accomplished so little. 90% of them can't manage their own checkbook.
Thanks for explaining the implications in simple terms. You changed my thinking on this.
Just watched your video, and I appreciate your information. My one concern about this one is that you feel confident that Congress will fix this if it is shown to be a major problem. I'm curious if you have not seen the working in the house lately. I don't share your confidence. That said, I do want to say that I find most of your videos helpful as I get closer to retirement.
SS needs to be tax free! Actually, from a business standpoint, it's a win-win for the beneficiary and the Government if this bill goes into effect. Let me explain. The beneficiary keeps more of his payment, therefore, he/she might be inclined to take it sooner as the payout will be better. The Government wins because they WANT people to take it sooner rather than later, so the payout is a smaller amount for life to the beneficiary as opposed to the beneficiary waiting until FRA or age 70 to draw SS.
@@joejones6842 In the long run maybe, but the Government encourages people to wait to collect because the odds grow higher that people die before that tap into it for a long time or in some cases, at all. Example: My friend was planning to draw SS at FRA of 67. He died of a heart attack at 66. He didn't get a penny of the money he put into SS. If he took it at 62 or even 63, he would at least have been getting some of his money that he contributed to the program.
Just raise the 25,000 taxable threshold each year. It should be at least 50,000 now!
thanks great information.!!
Great stuff as usual Jeff, but I need more charts and numbers. It's hard to keep up with the verbal.
This is long overdue.
It isn't enough just to make SS itself non-taxable. SS qualifies as provisional income for things like IRMAA and ACA subsidies, and to the extent you pay or increase an IRMAA penalty or have your ACA subsidy reduced or eliminated you have been silently taxed on your SS benefits.
You need sufficient SS and provisional income to trigger IRMMA
What the heck are IRMAA AND ACA Subsidies?
@@sadiegirl5312 IRMMA are extra fees you get deducted from the basic Medicare charge The more income you have in addition to SS you pay extra. This year as a single filer the first IRMMA is $103,000 & $206,000 as a couple.The Medicare deduction would be around $233 instead of the $174. if your income is higher the deduction gets higher. They look back two years at your income to determine your IRMMA. The ACA is the Affordable Care Act. Not Sure how that even plays into SS.
@@Satjr35031 Social Security income is included in the calculation to determine your eligibility for ACA subsidies.
Would you be willing to cut the defense budget from $800 million back down to the $250 million we spent when Reagan was President?
The cap on wages should be removed and the tax rate should be increased from 6.2 to 6.3. SS tax on benefits should be removed. Government spending should be reduced.
Taxing a tax is pretty much taxation without representation. There should never have been a tax on SS. The only way to make SS healthy again is 1) for Congress to pay back what they have borrowed from SS and 2) pass legislation that prevents further borrowing. We all know, however, that Congress will never do this.
congress IS paying back what they borrowed right now. borrowing and lending is a normal part of the way money works, it benefits both parties.
Well, I think they should go a step further and pass legislation banning any further "loans" from SS to fund government. If that had been in place initially, SS would be awash in money and the threat of disappearing or being heavily curtailed would be non-existent.
brooks, i know a few things that make your idea improbable. the loans were what normal trust funds do and were good for both SS and the govrernment. SS would have exactly the same money it has today. th threat of disappearing is mostly a lie by the people who want to scare you into letting the destroy it. it is in no danger of disappearing. it will need a very small increase in the "tax" in order for you to pay for your needs over a longer life expectancy after you can no longer work.@@brookswilson1072
Taxing 85% of the ss benefits is no different than taxing a pension that you contributed to. You are paying tax on the portion of the benefits that are over and above the amount contributed by you and your employer.
@@faster98 that's the best way to think about it, if anyone understands it. i am not sure the math works out exactly, but worrying about the last penny is self-deception and misses the impotant point. i wish Schmidt would point this out. He is pretty good; maybe he uderstands his audience won't get it, and if he tells them something they won't believe he will lose them.
This is the first I've hear that in 2034 recipients will only receive 70 to 75%. I've always read and heard it was 80%. This number is going the wrong way!
Three actions need to happen to avoid that from happening...#1 the employee/employer contribution needs to increase incrementally from current 6.2% each to 6.25%, 6.3%, 6.35% etc. #2 the income cap where that 6.2% stops needs to increase incrementally from current $168,000 to $170,000. $175,000, $180,000 etc. And #3 the full retirement age need to increase incrementally from current 67 to 67/2 mo, 67/4 mo, 67/6 mo etc.
Any one of these will save SS for another decade past '34...do all three and we are good for a few generations. Of course we don't have anyone in D.C. (Congress) with a spine...so nothing will happen until the last minute in 2034...just like how they handle fiscal budgets on 31 Sep of every year.
I have always been for a gradual increase in employee and employer contribution. Also increasing the max income gradually with the understanding that those people will eventually get a higher benefit. Instead of increasing full retirement age I might suggest increasing the early retirement age from 62 by four months a year for four years. Too little too late?
@@jmmysms Agreed on all points. But regardless of our "excellent" ideas... something must happen to avoid what will inevitably happen in 2034.
raising the min age would be a death sentence to people already old. if they have paid for their own SS -they have] there should be no reason they can't retire. in fact the only fix SS needs is to raise the payroll tax about one dollar per week per year (while wages are going up ten dollars per week)to pay for our own longer life expectancy after we can no longer work.
@@jmmysms
It's appaling that SS is ever taxed. You are forced to pay tax to fund the useless scheme. If there's any debate about it's affordability, then that discussion should be about the infinite government spending
that useless scheme has kept old people out of poverty for the last eighty years. very much unlike what happened befor SS was invented. SS is affordable. since we are going to live longer we will need to pay in more. it's called a tax, but it's really a way to save for retirement in a very well protected savings and insurance plan. the extra needed for your longer retiremet amounts to about a dollar per week per year while wages are going up ten dollars per week per year
Thank Bill Clinton for taxing SS.
@@greglane3978 So wrong, off by 10 years. Thank *Reagan*
o.k. thans Bill, we needed that. all pensions are taxed because most of the money is "interest" that is income, not what you "paid in". SS income was not taxed because it didn't make sense to tax money intended to reduce poverty. but later it was recognized that lot of people getting SS also had other income that kept them far from poverty. by taxing this it was possible to keep the payroll tax lower than it would otherwise be.@@greglane3978
No, the discussion should be about the richest people should pay taxes.
Count me in!
This bill would represent the largest tax increase in memory for the higher earners. Thanks for the very good info.
I always thought it was interesting that one item can be taxed over and over and over again when being exchanged in ownership.
An $80,000 new vehicle/boat/etc getting a new owner every year would generate how much sales tax during each registration during the lifetime of this item.
the tax is on the transaction, not the boat. the money you pay the boat owner will be udes by him to buy something else and so on...this is called economics. when you buy the boat you know it i going to cost you the price plus the tax. you chose to buy it on that understanding.
the country needs taxes to pay for what it does for you. if you don't think it does anything for you, don't worry, you are not the only one. if they relied on you to pay for what you get no one would ever pay for anything and pretty soon we woldn't have a country anymore.
The “tax” is on registration. For example if you bought a used farm truck and used it only on your farm you would not have to register it every year unless you drove it on public roads.
@@johnnyretires So you have to have the vehicle delivered to the farm by flatbed and bring back fuel for use in a can/tank and ship the truck to the shop for repairs? It never touches public roads......
@@jimv77 if you are a farmer u may very well have a fuel tank on the farm. If you are a farmer you likely have a trailer to tow that truck
I personally know farmers that have a vehicle only used on the farm. They don’t register it.
Further sales tax is a state and local tax, not a federal tax.
@@jimv77 I do agree with you that once sales tax is collected on the sale of an item it should not be collected again if the item is resold.
I think you left out a couple of things. Like the threshold to pay the taxes on SS has never been adjusted. So a lot more people are paying the tax, just because of inflation. And none of this tax goes toward SS.
He did cover that.
Also, the threshold for paying is going up every year but the doughnut hole (i.e. $250K) does not. Eventually they will meet so it will be tax on all wages.
I think this is the real problem. Initially only the wealthy paid taxes on social security. Determine what inflation has been all these years since 1984, change the threshhold amounts, and then index it to inflation like every other government benefit.
You might want to check that. I believe taxes on SS go back to SS.
Best idea the government ever had!
There will be no repeal of income taxes on SS income. There might be a small re-do of the tax tables to subject a smaller portion of SS income to tax, but that's it.
I'm so happy I made productive decisions about my finances that changed my life forever,hoping to retire next year.. Investment should always be on any creative man's heart for success in life
You're right, with my current crpyto portfolio made from my investments with my personal financial advisor Fergus Waylen, I totally agree with you ,
He often interacts on facebook , using the user name
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That's his username / facebook
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🤔my ss IS being cut by 30%. All essentials have risen by that. Inflation is a hidden tax.
Explain how it’s being cut.?
omg, inflation isn't up 30 percent. get a friggin grip. and you get a cola every year. when inflation is high, you get a higher cola.
hyperbole only makes your point invalid. who listens, to people that spout exaggerated BS?
@@Satjr35031 he just did. Inflation makes your dollars worth less. Since you earned these dollars in previous years, they had more buying power than they do today. Social Security doesn't grow your money the way a 401K does; you never come out ahead being in the Social Security program. If more Americans understood this, they'd be storming Washington with pitchforks...
SS payments are adjusted for inflation.
SS is allegedly adjusted for Inflation. But never at the official or compounded rate and never has been.
Considering that MANY rely on Social Security for the majority of retirement income, it is reasonable to reduce or eliminate taxes on it. Most of the middle class do not have large amounts of retirement savings. Also, most pensions have been eliminated except for those in public service (the elected).
How it that our government is constantly able to dish out billions to foreign countries but neglect our seniors?
It would seem that if the federal government repaid the nearly 3 trillion dollar it borrowed from the Social Security Trust that solvency should not be an issue?
Where will this money come from?
@@nationalzero269 maybe RR should have thought of that
@@MarkMaxwell-author You don't know what you are talking about.
@@nationalzero269 so pls 'splain us mister financial wizard how it is, all I know is the system was working incredibly well for nearly half a century before RR started borrowing from the trust and taxing retirees and handicapped.
themoney was borrowed, and is now being paid back. standard business practice.
If and when you pass, the money paid in by the person does not go to spouse or children. So say a single 60 year old passes, all of the money does not get willed, it goes into uncle Sam’s coffers
it does go to spouse. it is supposed to help pay for your retirement. not to buy your grown kids a boat when you die. if you want to leave money to your kids, invest some of your after tax income in a sure thing on wall street. your after tax income is considerably more than the pre tax income of workers before SS was invented (adjusted for inflation).
I’ve been self employed for over 30 years. So I’ve always paid both halves of my FICA taxes. But when I started receiving my benefit I also have to pay income taxes on the half that was paid by my mythical employer. Has never seemed fair to me.
You didn't write them off your taxes every year?
What about the people who have died before they collect where is their money gone to?..
Scrap the CAP!
If you earn over 250-K you can afford to pay a bit more to Social Security.
@@machintelligence - this doesn't change the fact that Social Security doesn't earn what our money would earn in a private pension or 401K account - so the government is robbing ALL of us - but is robbing those who earn more even more, because of their hard work/industry/earning ability (whatever you want to call their hard work and ingenuity to earn a higher wage). BTW, I'm not one of them; my annual income has never been over $100K.
Social security is not just a retirement program. It is also disability insurance , survivors insurance and even includes a modest death benefit.
That is a bold statement. You have no idea what someone else's financial situation might be. Everyone wants someone else to pay more so they can get more. SMH @@machintelligence
So un-cap on way in and don’t tax social security payments … sounds like a great idea!
SS by itself is non taxable if that’s your only income.
@@Satjr35031 According to what I've read, if your SS is above their limits you will get taxed. I've heard this said before but have yet to find corroborating IRS evidence of this. If you have the publication or IRS site indicating this, I'd be interested in the link so I can read it. BTW, I've always thought the same as you though.
We aren’t holding our breath!
"You earned it, you keep it." should apply to all income.
Problem: Smaller work force. Solution: Tax the robots!
If in 1983 they fixed it with three months to spare, I don't believe they will provide a fix anytime soon.
Reagan did that to cover his enormous tax breaks for the wealthy. Calling him a jerk is being polite.
Good point. Tell me politicians were just f*cked up then as now...
That's only because the voters can't agree on what they want. How do you pass any legislation without making somebody mad.
The problem is us we all want something different to fix Social Security
exactly, it would be cheaper to fix it now by raising the tax one tenth of one percent per year, about one dollar per week per year. but the people are fooled into all kinds of dumb ideas about SS.@@johngill2853
The animation at 9:06 was impressive👍.
It creeped me out tho
At 6:13, she's referring to one small problem, not two.
Government does NOT need to charge more tax to fund this. Just stop the infinite spending
First of all they should stop printing money out of thin air. Second, they should stop giving ANY money or benefits to illegals crossing the border! And I disagree with Geoff; a government shut down would NOT be a disaster; they keep the necessary people working through the shutdown. It's a political ploy; smoke and mirrors.
SS is separate from the general funding.
@@ItsEverythingElse Thank you! Recall when Joe Biden was one of the voices trying to "privatise" SS in 2007? This would have been just in time to loose it all in the 2008 melt down.
@@ItsEverythingElse If you believe that I have a bridge to sell you
@@David9523it is. Stop believing conspiracy theories
The bumble heads in Washington can mess anything up…. I want all senators and congressmen to enjoy 401k…Obama care … and blind trust mandate for investment….
They already enjoy Obamacare.
Raise the cap -- it is really simple. The cap has not kept up with inflation.
Unlikely to ever pass the Senate as wealtier people would pay more into Social Security. Objectively it's not a tax on a tax because the average person draws 5X more in social security payments than an average workers and their employer contributes. The tax is graduated and capped at 85% of social security based on total income.
You miss the point, and I know because I just got hit. I am in the middle. I am 70 and I still want to work. If I work I am in the 12% bracket. For every dollar I earn it gets taxed at 12% and an additional $ .85 of my social security gets taxed at 12%. This works out to an effective tax rate of about 20%. The lower social security earners can work and they are below the threshold so for each dollar they make no additional social security gets taxed. The high income earners have to pay tax on all their social security so each dollar they make isn’t magnified by moving $.85 of their social security into their income to be taxed.
This needs to be fixed. The is a document on the irs site that covers this that actually says they cannot understand why the middle class in this country are not outraged by this.
Exactly. So those who are more productive get punished; it's almost criminal when you think about it.
i doubt the irs would say that. so you are looking at a site that tries to make you mad about the normal facts of life. we need to pay something for our country to work. i think it works out to be 12% in your case. the rich pay more taxes because the poor don't have the money.
Agree, and not to mention with the current employee shortage, there is a large group of us 'seasoned, experienced' workers that would love to keep working if we were not penalized for it.
That math doesn't sound correct. If someone were in the 12% tax bracket from earned income and they added 85%* of their SS income and stayed in the 12% bracket their actual tax rate on social security would be 10.2% ( $0.85 x 12% ). Ther real or effective tax rate would be considerably lower.
* general one doesn't hit the 85% SS reporting and stay in the 12% bracket. It is possible. Generally the mount of taxable social security is closer to 50%.
Steve
I would strongly advise the taxable social security amount be reviewed as there are 3 options and it could be lower under other options (given the 12% bracket)
*My greatest concern is how to recover from all these economic and global troubles and stay afloat🙌🏻🙌🏻🙌🏻🙌🏻 especially with the political power tussle going on in US. The government has really called things more difficult for its citizens, and we can't sit back and bear all the consequences of the bad governance. We need to take our financial life serious... I recommend stock market investment and digital currencies*
the people who own the stock market are the ones causing all the trouble.
Double taxation should never be allowed. Tax less, spend less.
You mentioned that part of the rationale for taxing S.S. is that half is paid by employers, so it's "tax free" for the employee. But what about those of us who are/were self-employed; we paid ALL of our S.S. tax (or, we paid a little over 92%, since there was some kind of reduction for the self-employed). Yet I never hear that we're in a different tax category because of this. Can you speak to this?
i think it's best to think of the SS tax as what is needed to (with interest) pay for his needs when he can no longer work. the self employed pay the whole tax. those who work for someone else pay half and the employer is required to pay the other half, because the emplyer can't be trusted to pay the worker enough for the worker to pay the whole amount.
Ironic how Ii pay taxes on the SS I contribute then I pay taxes on my withdraw even though I will never receive the amount I paid into. It's the onlt "investment" that you pay taxes on loses
After about 36 months you recoup everything you ever paid in
It's not an investment. It's a safety net started because old ppl were starving and that was unacceptable.
It’s about about 5-6 years to recoup what you paid in
@@stephenharper6638 - wrong; the founders of our country would have NEVER agreed to Social Security. They would have reminded everyone that it was their family's responsibility to care for their own - or a church or other charity. The government was NEVER supposed to be this involved in our lives. EVERYTHING the government gets involved in gets WORSE. They never FIX ANYTHING.
not ironic, just wrong. you get back about three times as much as you pay in. it's called interest in business, in ss it's called pay as you go...the interest comes from growth in the economy....and inflation in a strange sounding way. say you paid 1000 dollars in payroll tax when your income was ten thousand dollars. by the time you start collecting, the people paying the tax are making, say twenty thousand dollars and paying in two thousand dollars at the same tax rate. that two thousand dollars is what pays your two thousand dollars in benefits where you only paid one thousand dollars in tax. this is very oversimplified. hope you get the point.
I say this as a fiscal conservative…
It’s time remove the cap on earnings subject to social security taxes (currently capped at $168,600).
It needs to be EVERY SINGLE DAMN DIME!!! The poor and middle class are totally screwed because they don’t make a ton of income, you tax every dime! It should not matter that you make $168,999 it should be taxed on every single dollar if income. WE WOULD BE TOTALLY SOLVENT if this were done! OH but the problem is our illustrious politicians make nearly $250K and they sod not want to have to pay taxes on it. Typical wolf guarding the hen house. It really sucks just like TERM LIMITS, the guys would font want term limits are the ones voting for no term limits. They will never have term limits EVER.
would;t help much and the rich won't let you do it, and if they did they would own SS and cut it to death at their leisure, on the other hand you can raise your own payroll tax about one tenth of one percent per year and own your own retirement.
Removing the annual cap on earnings subject to social security taxes would go a long way to ensuring program solvency.
@@BarberBobDetecting it would go a long way to making the rich own SS...they would be paying for your lunch...and they would cut it to nothing in short order, you can insure solvency forever by raising your own contribution one tenth of one percent per year while your income is projected to grow one full percent per year. then you would own it,
A couple things. The "tax" on SS goes back into the SS fund not the general federal revenue where your regular income tax goes. I am a single semi retired person with an income that gave me a federal income tax of $3200. The portion of that from my SS was about $500. In previous years my income was half of this years and the portion of tax from SS was less than $100. So for the upper low end of income retired people the tax is inconsequencal. Also the fact that it goes back into the is helpful to the life of SS also.
The middle class now goes to 250,000. WHY DOESNT EVERYONE PAY social Security taxes up to 250,000 instead of 160,000! It is ridiculous!
Many of us were SELF EMPLOYED AND PAID THE WHOLE TAX!!
People over the cap also only get benefits up to that level. What's your problem here?
the cap is there so people only pay as much as SS is worth to them. just like private insurance, you get what you pay for. the "whole tax" is what it costs to provide you with a monthly check for twenty years (on average) when you retire. employees only pay half the tax, the government makes the employer pay the other half because they have learned that otherwise the employer will not pay the worker enough to be able to retire. also, workers being human too, they would think they were paying too much if they paid the whole cost. we could trust the self employed to pay themselves enough. well, maybe not. most people think they can do better with the money than SS. but it turns out that most of them can't.
Social security is not ment to be lived on. Some people don’t understand that
Exactly.
Yes if you like Tuna and Crackers!😂😂😂😂
not meant to be all that you have to live on. but enough. I can live on my SS and do better than tuna and crackers, but even tuna and crackers is better than nothing..which is what you risk when you rely on the stock market.
that's exactly how SS works, but it wouldn't work without the government looking after it. we are very much in danger of having a governement which will take away your ability to look after yourself, they are the people who are always hollering about the government being bad for us. this is nearly the oldest lie in the world. because it works every time.@@roadking9680
Sadly, that is not the reality for a huge number of people in this country. What something was meant to be doesn't change what it actually is.
Where in the name of sanity are they going to get the money, oh I know, print more money!
More people are working -therefore more social security tax revenue. Also minimum wage increases means the 6.2% paid is based on more earnings. When unemployment is down, more jobs created - more SS revenue. Also disability is not "easy" to get at young ages any more which was draining the SS pot for 30+ years for younger people claiming disability when there are jobs now they can do.
@@football4life034 Issue is the number of children born per year is not increasing like in previous generations. That means the ponsi scheme will fail because incoming FICA are less than the outgoing to seniors. It is a growing issue that likely won't get better.
They always seem to find the money for a new bomber. Is that sane to you?
not a ponzi scheme. raise the payroll tax 2%, one tenth of a percent at a time, and it's all paid for. the workers paying the tax will have bigger incomes than you had, and when they retire they will get all they paid in back with interest over their own longer lifetimes.@@jimselvy6157
it is not a ponzi scheme. but you do have to pay in enough to pay for your future benefits. because we are going to live longer we need to raise the tax one tenth of one percent per year. you get the money back with interest.@@jimselvy6157
Great idea. The amount Im going to get in SSA checks is not even half of what I need to live.
Interesting for sure
I'll be shocked if anything passes.
I'm making 6 figures in retirement so it would be nice to eliminate the tax on my SS. At the same time we shouldn't pretend that this proposal is helping the average SS recipient. It is aimed as helping the wealthy.
Correct, a lot of people do not know how taxation works on SS.
This proposal is not going to help the wealthy - I am an upper income earner and I stop paying SS taxes sometime in April. With this system I’ll pay on ALL of my income. The really wealthy will potentially pay much more. When I retire I am expecting my tax bracket to be much lower so my marginal rate will be much less - so avoiding taxes on the small part of income coming from SS does not at all make up for the huge increases of tax i paid.
This bill, like EVERY OTHER, is designed to protect politicians and the political class, not the rich or the poor.
@@ystebadvonschlegel3295 I think you’re missing the point. If you’re on SS and have sufficient provisional income you could have up to 85% of that taxed. If you receive say $40,000 you could have $34,000 taxed. The bill would eliminate it and treat it like a ROTH. The ones who don’t gain are the 32 million on SS and that’s there only income they would pay $0 Federal tax now. No benefit to them.
@@Satjr35031 Yes but they also aren't paying more into the system so who cares. Those of us who stop paying at the current cutoff will pay WAY more into the system (which is the only reason it's being considered, the "tax free" part is just the part they will sell on TV to stupid voters). My SS taxes will go up more than 300%.
before Ronnie Rregans 2nd term Social securityb was not taxed. and by the way your employer also paid in a matching amount.
So they have been saying the same thing for decades. The money in the fund is not used by a large portion of people who pay in, in my family my brother passed at 63 never collected my father passed at 52 and never collected. Congress needs to stop dipping into the fund and using it for other projects
I used to think this guy was pretty sharp. But then he says the bank bailout of 2008 was a good thing. So much for that.
Exactly.... glad the executives got their multi million $ bonus's for doing a crapy job
They should at least have put conditions on the banks before bailing them out.
Yes, I agree, because it was WE THE PEOPLE who bailed the banks out through taxation (and inflation). "I'm from the government and I'm here to help you." What a load of crap.
sorry, i used to think that's what happened. turns out it was necessary to revent recession. personally i still think the bankers should be jailed or at least fired, but that might be a bad idea too.
@@user-os1tm3te3f But we went into recession, anyway. Big time.
I can understand the 50% taxable SS income since it hasn't been taxed, but make it all taxed or none, not depending on additional income.
I bring in $2,200 a month from SS. $400 a month goes to tax ($4,800 a year). If anyone believes $40,000 a year is "rich" today than I must be filthy rich. Between me and my wife, we make a little more than $80,000 a year. We don't have much and it's typically a struggle to make it month to month today. I won't even start about how bad it's got in just 3 years!
More than 80k and whining? How American.
Simple math.
$40K pension + $40K SSA for wife and I, $80K combined,
$40K + $20K (taxable SSA) = $60K
Minus $30K Standard Deduction = $30K,
$2000 + $1200 = $3200 tax
If no SSA taxable>> $1000>>>
$2200/yr more 😀
@@aolvaar8792not rich, but not desperate poverty either. it looks to me like you are probably getting exactly what you earned...minus taxes, just like the rest of us. you wish it was more, and you think that without taxes it would be more, until you looked around and found out how hard it is to make money without a country
I remember Reagan's speech= The day we started SS was the day freedom died.
It's nice to be rich.
he changed hs mind in 1983...calld ss a sacred compact between generations.
@@user-os1tm3te3f The same President who signed the legislation to start taxing SS benefits while cutting taxes for corporations and the wealthy.
@@user-os1tm3te3f No, he said crap to get elected. Disingenuous. Say what you need to, after the election, continue your agenda.
Social Security. The greatest Ponzi Scheme of all time!
Ponzi's investors gave their money willingly. The government takes our money whether we want them to or not.
Except that there will always be money coming…..unless our country ceases to exist
We paid Railroad tier 1 and tier 2 tax while raising five kids. It was a painfully high tax rate. Now, as a Widow, I'm about to be taxed on receipt. It is over one months pay! i.e., and this is just an example, not my income. 28,000 a year, gets almost $4000 in income tax, does not qualify for medicaid, and if rent is tied to income, actually has less to live on. While someone who makes $168,000 a year only pays 10,000 in taxes. So the lower end gets hit much harder. I'm for the "You earned it you keep it act." I disagree that the poor are being taxed fairly. I'd love to live to see that happen:) These are general figures, and please correct me Holy Schmidt! I appreciate your advice.
Actually FICA taxes and IRS Federal Income taxes dance together. Thus if the FICA caps were totally removed the federal income tax brackets would need to be shifted to match. Simply there is no free lunch. Social security is exceptionally kind to the poor as the first "bend point" pays 90% returns.
that's 90% of adjusted for inflation average life time income...on very low incomes. it's barely enough to live on. but that's the point. as lifetime incomes go up, the payout goes up in actual dollars, but lower percent of lifetime income. by the time you get to highest income under the cap, the payout is approx equal to what you paid in taxes..about 12% of lifetime income adjusted for inflation, and paid over 20years instead of 40years.(on average)@@whatsup3270
Equity, that is fairness, tells me that if the contributions are paid with money that has been taxed, benefits should be tax-free. If contributions are deductible or excluded from taxable income, benefits should be taxed. Or if employers' contributions are deductible to the employer and workers' contributions are paid with taxed income, benefits should be half-taxed. In other words, income is taxed only once. The next step by the greedy government would be to tax withdrawals from your savings accounts.
Get rid on the cap on FICA and tax all income for purposes of SS.
Tax all income, eh? Would that include social security?
@@vinyl1Earthlink No of course not. My comment was in regards to permanently fixing SS so we can stop all these inane arguments about how it's going to go insolvent in X year.
Would that include capital gains, dividends, etc? If so that is a huge hit to seniors. If not, then highly compensated earners will take their income from stock options, dividends, etc.
HOW MUCH MONEY DID REAGAN PILFER FROM THE FUND? WHY are the Wealthiest of people and Corporations NOT Paying ANY TAXES AT ALL!?? THOSE are the Questions to be asked!
Huh? The House writes the tax laws not the president. The Democrats controlled the House. They wrote the law.
💯
Remember, then-Senator Biden voted for the bill, too.
Actually all spending bills originate in the House. Speaker of the House at the time was Tip O'Neill, a Democrat.
Now do you see the problem?
@@mikespangler98And President Reagan had the final say and said yes. Now do you see the problem?
Good !!!
great video again
Think about it, they took this money out of your paycheck for decades, they made a huge amount of interest on your money, they then give some of it back to you, and tax you on it.
think more. the interest they made on it came back to you in benefits. they only tax benefits if you have other income that keeps you out of poverty, you get back everything you paid in plus interest...about three times what you paid in. unless you are above the cap then you get back approximately what you paid in adjusted for inflation.
Lockbox what lockbox? We pay SS and Medicare taxes from every paycheck over 50 years. Apply for it and we pay taxes on SS and a monthly Medicare insurance?
excallent info. regards workplace compenstion: the employeer gets a tax break for providing 6.2% but it go to the employees acct untaxed. Lucky are employees who receive any health insurance & retirement contribution which goes untaxed until distribution. Hilarious the idea of an $80,000.00 "window" when employee pays no SS input then resumes his & and employeer too, 6.2% percent again until---"Straight to the Moon Alice".
I sure hope it passes, I wouldn't mind paying taxes on SS if it wasn't structured in such an annoying way that a person has to have a crystal ball to know what to pay for estimated tax payments (or to have to submit an extra tax form to explain the crystal ball malfunctioned). The marginal tax rates are a horrid surprise.
I don’t understand why this bill would create a donut hole in the SS withholding. Why not just continue the withholding at a flat rate for all earned incomes?
Holy Schmidt what is the way to fix in your opinion
Why not remove the the current cap of $168,900 for taxable income and tax all earned income?
Excellent topic with discussion! We do not like Reagan due to WEP and GPO. About social security, two ways to fund. One is friendly to one part and the other to the other party. 1. Delay age to receive benefits. 2. Make mandatory contributions at a higher income level to make the wealthier to continue to pay into it. Since one is favorable to just one party the proper approach is to do both. I would fully support both more than just one. In fact, I believe that the taxpayers should receive a federal dividend based upon the aggregriate earnings in our GDP. Businesses do that and their stocks are referred as value investments. Each annual increase over a GDP threshold such as 3% provides a dividend credit for every taxpayer. It could be a fixed dollar amount such as $100 for every tenth of a percent over 3% GDP annual growth to any maximum level. I would also stop January automatic pay raises to the Congress and to the Senate for any drop in GDP under a set threshold for five years.
WEP was bipartisan.
@@SandfordSmythe WEP and WPO are both sore points for us.
Removing SS from my AGI has implications for Roth conversions. Need something more definitive than maybe a no tax on SS
What about making Congress pay back all the money they have borrowed from Social Security over the years first. Of course that would mean cutting a lot of other political backroom fat thrown in the budget over time.
congress is paying back the money as intended.
I want to believe we are paying taxes on the growth and what the companies we worked for contributed. Does the last in, first out rule apply here?
SS taxes are payments on government waste.
If we are double taxed can we claim the us government as a dependent?
A complicated subject well presented, thanks. I'm not sure I yet understand all the details and implications, but I have learned a bit more than I knew before. Having said that I would suggest that Social Security wouldn't have this problem or at least as much of a problem if middle and lower class wages were higher. As a retiree myself I would also say that my generation, the boomers, clocked in on "trickle-down" economics 4 decades ago and, surprise surprise, George HW Bush was right when running against Ronald Reagan in 1980 he described it as "voodoo" economics. He was right, but like any good Republican, rolled over and stayed silent when tapped for VP later that campaign season. So from then until now we have witnessed not "trickle-down", but "trickle-up" economics that has resulted in wage and wealth inequality unmatched since the gilded age of the late 19th century. We (not me personally) voted for it again and again and pretty much wrecked the economic future for our children and grandchildren. So from that perspective I'm happy to pay taxes on my Social Security benefit, it's the least I can do.