Former President and current Republican presidential candidate Donald Trump has said his administration will eliminate taxes on social security if he is elected President of the United States when Americans vote in November. The promise to make this happen was made at a campaign rally in Harrisburg, Pennsylvania.
The promise to cut taxes on Social Security represents a bold move by Trump, as this will affect over 67 million Americans who are beneficiaries of monthly benefit checks from the retirement and disability programs. More than this, the plan can also impact trust funds earmarked for Medicare.
Who will be affected by the tax?
Cutting taxes on Social Security will not be without its effect, as those who will be primarily affected are senior citizens. This is because the plan could be designed to appeal to senior citizens of the United States.
This might represent a better plan for them after the Republican Study Committee proposed raising the retirement age to 70 years for Social Security and Medicare. Trump’s move to remove the taxes on Social Security will then be a plan better suited to the needs of the elderly. This is because 4 out of 5 recipients of Social Security are senior citizens, and any plan that affects Social Security directly affects them.
However, looking closely at the plan by Donald Trump, Howard Gleckman says that the plan to cut taxes will ”primarily benefit high-income earners” who, according to him, ”do not need it.” More than this, the plan to cut taxes on Social Security could also add a further strain on the funding available for Social Security. This will ultimately see over $950 billion removed from funding for social security, which negatively impacts it for the next decade. Also, the plan will affect Medicare, as there will be a need to move the potential insolvency forward from 2036 to 2030. This move will result in Medicare losing over $650 billion in revenue over the next decade.
Are Social Security benefits taxed?
Social Security benefits have been taxed since 1984 when former President Ronald Reagan’s administration allowed for a certain threshold of Social Security income to be taxed. The threshold has not been adjusted since the law was signed in 1984; therefore, most of the senior citizens who are beneficiaries of Social Security benefits are taxed. This means that yearly, 40% of senior citizens pay taxes on their benefits, a figure that has risen from the 26% it was as of 1998, according to a report by the Congressional Budget Office.
What next for Trump?
With Trump laying out another plan to reduce taxes for a specific group of people after first making a promise to put an end to taxation on tips to individuals who are service workers in June, it remains to be seen if his promises will get him into the White House for a second time. He comes up against Vice President Kamala Harris in the race to become president in November.
Americans will have a decision to make on who becomes the next leader of their country, and from the campaign promises currently being released from both candidates, this will be a decision that impacts their future.
