The presidential campaign is finally over, and with President-Elect Donald Trump’s triumph, it’s time to look at some of the initiatives that propelled him to victory this time.
One of the most popular proposals he made was the abolition of Social Security taxes, which appeared to resonate with the people, according to a new Monmouth University poll.
This isn’t the only tax change he proposed; he also wanted to eliminate income taxes on tips and overtime pay, but they all affect the same organization: the Social Security Administration.
A Monmouth University poll conducted from December 5 to 10, polling 1,006 respondents aged 18 and over, indicated that 66% of Americans support plans to remove income taxes on Social Security payments, tips, and overtime, while 21% oppose the notion.
Similarly, an ABC News/Ipsos survey from October found that 85% of respondents supported this proposal, making it the most popular economic policy of the 2024 presidential campaign, with 55% expressing strong approval.
Patrick Murray, director of the independent Monmouth University Polling Institute, claimed, “Republicans are even more enthusiastic about a second Trump term than they were the first time around.” They are particularly looking forward to him carrying out the initiatives he promised.”
However, this may not be the excellent idea that many believe it is, as it will have certain unintended repercussions that could impede the way Social Security operates in the short and long term.
Taxes on Social Security benefits
Contrary to popular belief, Social Security benefits are not subject to federal taxes, and few states tax them, so this policy will not affect those who rely solely on them and have no other sources of income (a large portion of the American population receiving benefits).
Taxes are based on “combined income,” which is computed by adding your adjusted gross income, nontaxable interest, and half of your Social Security payments. Even then, there are various thresholds that determine how much (if any) of your combined income is taxed.
According to the SSA:
You will pay tax on your Social Security benefits depending on the Internal Revenue Service (IRS) standards if:
- File a federal tax return as an “individual” and your combined income is
- Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
- More than $34,000, up to 85% of your benefits may be taxable.
- File a joint fedral tax return, and you and your spouse have a combined income that is
- Between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits.
- More than $44,000, up to 85% of your benefits may be taxable.
- Are married and file a separate tax return, you probably will pay taxes on your benefits.
When these laws were implemented, only roughly 10% of beneficiaries were supposed to be taxed on their combined income; nevertheless, nearly 50 years later, the thresholds have not been revised for inflation, bringing the number of beneficiaries who must pay taxes closer to 40% of all beneficiaries.
If these policies were followed, the consequences would be disastrous for both beneficiaries and the Social Security Administration (SSA) as a whole.
The Tax Foundation estimates that the measures would cut tax income by $1.4 trillion between 2025 and 2034, as well as “likely accelerate” the insolvency of the Social Security trust funds, which are expected to deplete in 2034. Indeed, it would assure that all income categories enjoy “a slight increase in after-tax incomes, averaging about 0.9 percent.”