When it comes to taxes, one area that has been gaining attention recently is the discussion around eliminating federal taxes on Social Security income for seniors. Former President and current presidential candidate Donald Trump has proposed this idea, sparking discussions among economists and senior voters.
According to economist Steve Moore, co-founder of the Committee to Unleash Prosperity, the current tax system punishes seniors who choose to remain in the workforce. Seniors are often paying taxes on their income of over 50%, including income taxes, death taxes, and taxes on their Social Security benefits. Moore believes that Trump’s proposal to eliminate Social Security taxes is a promising move that could encourage more seniors to stay employed.
Currently, Social Security benefits can be subject to federal income taxes depending on the retiree’s overall income. If the combined income falls within certain thresholds, individuals may have to pay income tax on up to 50% or 85% of their benefit. Spouses filing a joint return have slightly different thresholds.
However, not everyone agrees that eliminating Social Security taxes is a sound policy. Garret Watson, a senior policy analyst at the Tax Foundation, argues that this move could increase the budget deficit, jeopardize the Social Security and Medicare trust funds, and create a new hole in the income tax system without a sound policy rationale.
As the 2024 presidential race approaches, Trump’s proposal is likely to be a significant talking point, especially among senior voters. While the prospect of reduced taxes may be appealing, voters must carefully consider the long-term implications of such a policy change.
At Extreme Investor Network, we understand the importance of staying informed about financial policies that could impact your financial situation. Consider discussing with a financial advisor to gain a better understanding of how certain policy changes could affect you.
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