Here’s what senior citizens should know.
In a recent interview on Fox & Friends, former President Donald Trump unveiled his plan to overhaul Social Security taxes, aiming to offer immediate relief to millions of American seniors. Trump, who is the Republican presidential nominee, argued that Social Security benefits should not be taxed, particularly for those living on fixed incomes.
Under the current system, Social Security benefits become taxable for individuals with a combined income exceeding $25,000. Those earning between $25,000 and $34,000 see up to 50 percent of their benefits taxed, while those making over $34,000 face up to 85 percent of their benefits being taxed, with these thresholds varying by filing status.
Trump’s proposed change seeks to eliminate taxes on Social Security benefits entirely for seniors. “We can do a lot to support our people,” Trump stated. “People on Social Security are struggling, and one of my key actions will be to ensure that no tax is levied on their benefits. I’ll make sure this gets done swiftly.”
Additionally, Trump expressed his intent to remove taxes on tips and highlighted concerns about the impact of immigration on Social Security. He argued that the influx of new immigrants is placing undue strain on the Social Security system and Medicare. “The growing number of people coming into our country is jeopardizing Social Security,” Trump asserted. “They’re being enrolled in Social Security and Medicare, which threatens the system.”
The current Social Security rules permit legal immigrants with sufficient work credits to receive benefits, while those living in the country illegally generally do not qualify unless they have special temporary status. Trump’s remarks have sparked debate about the sustainability of his proposed tax cuts.
Experts have raised concerns about the potential consequences of removing Social Security taxes. The Committee for a Responsible Federal Budget, a nonpartisan organization, along with the Tax Foundation, a conservative think tank, warn that Trump’s plan could accelerate the program’s insolvency by two years and could similarly shorten Medicare’s solvency by six years. The proposed tax cuts are estimated to cost approximately $1.6 trillion over the next decade.
Kevin Thompson, a finance expert and CEO of 9i Capital Group, commented on the proposal’s implications, noting that while eliminating taxes on Social Security could benefit seniors in the short term, it may necessitate significant programmatic adjustments, such as means testing or reduced benefits. “The plan needs more concrete evidence and detailed proposals to address the long-term impacts,” Thompson told Newsweek.
Similarly, Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, acknowledged that removing taxes on Social Security could provide immediate relief but also cautioned about the potential for exacerbating the program’s financial challenges. “While the promise to protect Social Security is appealing, actual governance requires a more nuanced approach,” Beene noted.
As the debate continues, it remains to be seen how the next administration will navigate the complexities of Social Security reform.
