Friday, August 24, 2012

Stealth Tax on the Middle Class...(which isn't indexed for inflation, Ouch!!)

via John Goodman's Health Policy Blog by John Goodman on 8/24/12

It’s the Social Security benefit tax. Here is Scott Burns:

This is not small change. According to the 2012 Annual Report by the Trustees of Social Security, $22.2 billion of the benefits paid out were taken back in income tax payments in 2011. More important, the amount had doubled from only $11.9 billion in 2002 — and that, in turn, was double the $5.9 billion collected in 1992. The same trustees report projects that tax collections will increase even faster over the next 10 years, nearly tripling to $61.7 billion by 2021.

If you are still working and think this doesn’t affect you, don’t go away. The unique construction of this tax — based on one of the only formulas in the entire tax code that isn’t inflation-indexed — means that more and more retirees, at lower and lower levels of real income, will be sending some of their Social Security benefits back to the Treasury in the future. This is a tax that quietly keeps on growing. The younger you are today, the more it will affect you tomorrow.

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