
On Point | Podcast
Trump promised tax-free Social Security. Is it too good to be true?
Nov 26, 2024
Alicia Munnell, Director of the Center for Retirement Research at Boston College, dives into the complexities of Social Security and its historical evolution. She discusses the implications of tax-free benefits promised by Trump – more money for individuals but potential risks for the Social Security fund. The conversation highlights the program's origins during the Great Depression and the challenges it faces today, emphasizing the need for sustainable solutions to protect future retirees.
47:19
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Quick takeaways
- Eliminating taxes on Social Security benefits could decrease program funding, leading to potential insolvency and significant benefit cuts by 2033.
- The need for bipartisan cooperation is critical to reform Social Security, ensuring long-term stability amidst rising retiree-to-worker ratios.
Deep dives
Understanding Social Security Taxation
The federal government taxes Social Security benefits based on income thresholds established in 1983, with $25,000 for individuals and $32,000 for couples. These thresholds have not adjusted for inflation, resulting in an increasing proportion of retirees, who largely depend on Social Security, paying taxes on their benefits. Approximately 40 to 50 percent of Social Security recipients are currently subject to this tax, generating around 5 percent of total Social Security revenues. This system aims to create a progressive tax structure, allowing lower earners to receive benefits without taxation, while providing revenue to support the program.
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