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Benefits are front and center of the political debate once again after Republican-backed tax bill attracted attention for a series of cuts. So is a cut to Social Security taxes on the agenda from President Trump's politicians?
The bill is making its way through the House and will have an impact on different groups, particularly seniors, but one notable aspect is the absence of a proposed tax cut on Social Security benefits, despite promises from Trump in campaigning.
The current tax bill does not follow through with that promise, but instead, a different form of tax relief for seniors has emerged from the latest bill. So what exactly is it and how does it work?
Why Social Security is left out of the Tax Bill
Various tax cuts are included, such as reducing taxes on corporations and eliminating taxes on worker tips and overtime pay. However, one glaring omission is the provision to eliminate taxes on Social Security benefits.
The reason for this exclusion lies in the legislative process, according to Maria Freese, senior legislative representative for the National Committee to Preserve Social Security and Medicare.
The reason Social Security changes were left out of the bill is due to the Byrd Rule. This rule restricts what can be included in bills ed using the reconciliation process, a fast-track method designed to by the usual 60-vote threshold in the Senate.
Proposing changes to Social Security through reconciliation would have violated this rule, which explains why tax cuts specifically targeting Social Security benefits were left off the table.
Eliminating Social Security taxes might have been an attractive option for many seniors, it would have had significant long-term repercussions for the program's sustainability.
And according to experts, removing taxes on Social Security benefits could deplete both the Social Security and Medicare trust funds faster than currently projected. This would lead to significant budgetary shortfalls, requiring automatic cuts to benefits.
What have the Republicans done for seniors instead?
So instead of eliminating taxes on Social Security benefits, the House bill includes a different provision aimed at benefiting seniors: an additional $4000 deduction for individuals aged 65 and older.
This "enhanced deduction" would be available to both itemizers and those who take the standard deduction, potentially reducing the tax burden for around 56 million Americans over the age of 65 as well as keeping one of Trump's largest voting groups content.
The provision would benefit low- and middle-income seniors by providing an extra $4000 in tax relief, sparing about 40% of Social Security recipients (approximately 27 million people) currently pay federal income taxes on their benefits.
While the new deduction is a step toward providing immediate relief, it doesn't address the long-term stability of Social Security, so it's likely future changes will be on the horizon in the future.