The Social Security Administration found last week that Minnesota Rep. Angie Craig’s proposed tax legislation may indeed extend the lifespan of the retirement program.
Craig originally introduced the You Earned It, You Keep It Act in August 2022 with the goal of eliminating federal taxes on Social Security benefits for retirees nationwide. Craig called the double tax on those payments “unjust” at the time and posited that her legislation would put money directly into the pockets of middle-class retirees suffering from the severe impact of inflation.
Under current law, Social Security beneficiaries are taxed on up to 85 percent of their Social Security benefits, based on measures of their total income.
According to Craig, the bill, which was reintroduced in the House of Representatives last week, would have no effect on the monthly benefits that enrollees receive each month.
Furthermore, she said the measure would be “fully paid for" by taxing individuals who earn more than $250,000 a year; currently, the income subject to FICA taxes is capped at $168,600.
Craig also cited a “nonpartisan analysis” that said the legislation would also improve the “long-term solvency of Social Security compared to current law” and would ensure the program would be able to support waves of future American retirees for years.
"Taxing the very benefits American workers have earned after decades on the job diminishes our promise and threatens to undermine the financial security of retirees already struggling with rising prices," Craig said. "Eliminating this tax will help Social Security benefits go further and ensure that American retirees have all the resources they need after a lifetime of hard work."
Last week, Stephen Goss, chief actuary for the Social Security Administration, responded with his own estimates. In a letter to Craig, Goss said the provisions of the You Earned It, You Keep It Act would indeed extend the ability of the Old Age, Survivors, and Disability Insurance program to pay scheduled benefits in full and on time for an additional 20 years.
“The date of projected depletion of the combined OASI and DI Trust Fund reserves would be moved from 2034 under current law to 2054 assuming enactment of the proposal, under the intermediate assumptions of the 2023 Trustees Report,” Goss said.
The bill has been referred to both the Committee on Ways and Means and the Committee on Energy and Commerce.
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