TAXATION PUTS SOCIAL SECURITY IN A MESS
Taxation puts social security in a mess, There’s little argument that Social Security is a financial pillar for most seniors. Each month, more than 43 million retired workers receive a benefit check, with more than 60% of these retirees leaning on the program to account for at least half of their income. There’s also little disagreement that Social Security is in trouble and needs Congress to fix it. Yes, taxation puts social security in a mess.
According to the latest annual report from the Board of Trustees, Social Security is set to hit an inflection point this year that sees more money spent than is collected for the first time since 1982. Although the amount of money flowing out of the Trust’s asset reserves is estimated to be relatively small ($1.7 billion) compared to the nearly $2.9 trillion currently in asset reserves, this net cash outflow is expected to accelerate in the years to come. By 2034, ongoing demographic and economic changes are forecast to have completely exhausted Social Security’s almost $2.9 trillion in excess cash. Should this happen and if Congress fails to act, an across the board benefits cut of up to 21% may be needed to sustain payouts through the year 2092.
To be certain, there are solutions that have been proposed by Democrats and Republicans to resolve the estimated $13.2 trillion cash shortfall between 2034 and 2092. but ask the average retired American what he or she wants, and they’re liable to retort that they’d like to see the taxation of Social Security benefits done away with. Some 91% of retired Americans favored an end to the taxation of benefits in a survey conducted by The Seniors Center, a Washington D.C. based non-profit organization that looks out for some senior interests last year. So why doesn’t the federal government abide by the will of the people ? Frankly, it’s because the taxation of benefits has put Social Security between a rock and a hard place. And many of those same people also owe the IRS taxes and face a IRS Wage Garnishment. Some cannot even afford a Tax Resolution Company to ask about a IRS Fresh Start Program for help.