To paraphrase Ronald Reagans famous response in the 1980 presidential debates, There they go again!
U.S. Congressman Thomas Massie (R-KY) was the most recent public figure to step up to the plate and take a big swing on behalf of Social Security misinformation and obfuscation.
The congressman, together with Reps. Jim Bridenstine (R- Okla) and Ron DeSantis (R-Fla.), introduced a bill last week to eliminate income taxes on Social Security benefits. He was quoted as saying, Taxing these benefits is an accounting sleight of hand that redistributes portions of the Social Security trust fund to other areas of the government.
The only problem is, once again, the hype does not square with reality and merely serves to reinforce the anti-government shibboleth that the feds are somehow raiding Social Security.
The facts: Beginning in 1984, with large bipartisan support, a federal law was passed which subjected a percentage of OASDI benefits to federal income tax. According to The Social Security Administrations annual trustees report: Treasury allocates the revenue derived from this provision to the OASI and DI trust funds. In other words, any income tax collected on Social Security is plowed right back into the Social Security trust funds which support the system to begin with. No sleight of hand in sight.
Rep. Massie further said ending these taxes would restore the integrity of the program. Its rather hard to understand how putting less revenue into the trust fund restores integrity. Its like saying that saving less in my 401(k) gives me more pocket change and also helps shore up my retirement savings. Sure, in my dreams.
Paul Norr is a financial planner in Thousand Oaks, California and writes about planning and retirement. His website is www.paulnorr.com.
- Social Security: Thinking Long-Term Will Avoid Common Pitfalls
- Social Security: Maximizing Spousal Benefits