Legislation intended to “correct mistakes made by Congress and restore full benefits to America’s senior citizens” was introduced last week by Congressman Paul Gosar. Gosar’s No Tax on Social Security Act of 2021 would change current tax policies by excluding Social Security benefits from being counted as annual gross income and subject to taxation.
“The decision by Congress to tax Social Security benefits in 1983 has been a public policy disaster from the beginning. Not only has it deprived America’s senior citizens of benefits which they rightfully earned after a lifetime of hard work and paying into Social Security, but its failure to account for inflation means senior citizens are subject to an annual tax hike,” said Gosar after introducing the bill. “It makes no sense for the federal government to punish senior citizens who saved for retirement or who continue to work. All this does is increase the scope of the federal government and deprive Americans of what they are rightfully entitled to.”
In 1983, Congress amended the Internal Revenue Code to include Social Security benefits as part of an American’s annual gross income for the purposes of taxation. Beneficiaries earning more than $25,000 or joint filers making more than $32,000 are subject to taxation and according to Gosar, “could see their benefits taxed up to 50%or 85%, respectively.”
Gosar argues that Congress also “failed to account for inflation on the tax threshold.” As he explains, originally, only 1 in 10 recipients paid taxes on benefits, but the failure to account for inflation has subjected more and more Americans to taxable benefits, equating to an annual tax increase on senior citizens.
The Social Security Administration now estimates that 56% of recipients pay income taxes on their benefits.