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The stealth tax on retiree income
Business
Published in 4-3-2014
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When Social Security was created, one of the fundamental promises was that benefits would never be taxed. The taxation of Social Security benefits is entirely a tax on middle-class people who happen to be retirees. [...] let's see how a tax bill changes by comparing taxes for normal taxable income - such as pensions, retirement account distributions, and interest. According to the Social Security website, the average benefits received by a retired worker and his nonworking spouse now total some $23,343 a year. 1 At an income of $18,000, our couple pays no taxes, with or without the addition of $23,343 in Social Security benefits. 1 Add still another $6,000, so their other income is $48,000, and their tax bill, without considering Social Security benefits, would be $3,004. 1 Finally, if we add yet another $6,000, making their other income $54,000, their tax bill excluding Social Security benefits would be $3,920. Next time someone running for national office wants to strengthen the middle class, ask what the candidate's position is on HR 3894, the Senior Citizens Tax Elimination Act, and the latest effort to repeal this nasty tax.