(LibertySociety.com) – In recent campaign rallies, Republican nominee Donald Trump has promoted his proposal to eliminate income taxes on Social Security benefits.
Trump, who in July proposed eliminating taxes on tips, unveiled targeted tax relief for Social Security beneficiaries in late July.
In a Truth Social post at the time, Trump said senior citizens should not have to pay income tax on social security benefits.
Trump told Fox Business host Maria Bartiromo in early August that he would offset any lost revenue from his proposal by eliminating “fat” and “waste” in the federal government.
However, critics warned at the time that removing the tax on benefits would harm Social Security and other entitlement programs like Medicare if Trump’s plan did not include ways to offset the lost revenue.
Marc Goldwein of the Committee for a Responsible Federal Budget told CNN that while seniors may enjoy keeping more of their benefits, eliminating the tax on Social Security would hasten “the insolvency of Social Security and Medicare” while increasing the size of cuts to Social Security benefits.
Social Security Works president Nancy Altman told CBS News that Trump’s proposal amounted to a plan to defund Social Security. She described the proposal as a “sleight of hand” that would give with one hand while taking with the other.
Taxes on Social Security benefits began in 1984 as part of a federal overhaul to preserve the entitlement program.
Eliminating the tax on Social Security would largely benefit higher-income households. However, middle-class and upper-middle-class taxpayers would also see a benefit in after-tax income, according to an analysis from the Tax Policy Center. Lower-income beneficiaries would see no benefit since their Social Security is not taxed.
Seniors who earn less than $25,000 as an individual or $32,000 as a couple do not pay income taxes on Social Security benefits.
Currently, roughly 40 percent of Social Security beneficiaries pay federal income tax on benefits, according to the Social Security Administration.
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