- Joined
- Jun 8, 2022
- Messages
- 5,692
I am still convinced they will means test Roth’s some day when they get desperate.
I am still convinced they will means test Roth’s some day when they get desperate.
Bless you, sir! I'd love to say while working I was making more than $178,150 to get to the 24% rate bracket (married filing joint, 2022 tax tables), but that would be telling a wopper.It that’s at the top of you marginal rate. So your likely still paying less than when you were working.
Before 1984, Social Security benefits were exempt from federal income taxes. In 1983, Congress passed a set of amendments that authorized the taxation of Social Security benefits. The amendments took effect in 1984. The new revenue was necessary to partially offset the corporate and upper bracket income tax reductions.I have. Trouble is the Feds now tax 85% of Social Security payments.
Sounds like a first world problem!i am at the same tax rate in retirement as when working, but i do have some real estate I'd like to sell
Take from the poor who really need the SS money to live on to instead pay for what the rich should be paying for their fair share ... sounds like normal operations on the hill.Before 1984, Social Security benefits were exempt from federal income taxes. In 1983, Congress passed a set of amendments that authorized the taxation of Social Security benefits. The amendments took effect in 1984. The new revenue was necessary to partially offset the corporate and upper bracket income tax reductions.
If the SS deposits - both the person and company portions - were not taxed, then why should the payments not be taxed.Take from the poor who really need the SS money to live on to instead pay for what the rich should be paying for their fair share ... sounds like normal operations on the hill.
I won’t say it keeps me up at night but I do wonder when the rules will change/what that will look like. I look at the savings potential on a Roth and wonder when someone will try something for over X million saved.I am still convinced they will means test Roth’s some day when they get desperate.
Treasury's underlying rationale for not taxing Social Security benefits was that the benefits under the Act could be considered as "gratuities," and since gifts or gratuities were not generally taxable, Social Security benefits were not taxable.If the SS deposits - both the person and company portions - were not taxed, then why should the payments not be taxed.
Not that I am saying your wrong on the other side of the equation.
Excellent. I will ask the company owner to stop paying me an income, and instead just send me gratuity payments. No tax liability. Problem solved!Treasury's underlying rationale for not taxing Social Security benefits was that the benefits under the Act could be considered as "gratuities," and since gifts or gratuities were not generally taxable, Social Security benefits were not taxable.
The idea was, and is, current payments go to prior generations of tax payers. My benefits are someone else's payments. Hence, a gratuity. Just like the original beneficiaries.Excellent. I will ask the company owner to stop paying me an income, and instead just send me gratuity payments. No tax liability. Problem solved!
Hey, I am not going to argue with tax free, but still makes no sense. Your not paying in by free will - its garnished. Then your entitled to a benefit per the current law. No one gives it to you, you have to apply.The idea was, and is, current payments go to prior generations of tax payers. My benefits are someone else's payments. Hence, a gratuity. Just like the original beneficiaries.
Here is where your argument, as I think I understand it, breaks down. As a teacher, I paid pre tax into my retirement fund, just like into a regular 401k. And, just like distributions from a 401k, retirement payments from that retirement fund are taxable. I pay into Social Security post tax, just like into a Roth 401k or IRA so Social Security distributions should also not be taxable.Hey, I am not going to argue with tax free, but still makes no sense. Your not paying in by free will - its garnished. Then your entitled to a benefit per the current law. No one gives it to you, you have to apply.
By the same logic a private pension should also be tax free, no? People pay in before you. Some people die before there even eligible. You get money out at retirement?
Not to mention the fund was put "on budget" in the 60's so at that point its not quite the general fund, but close.
Huh?If the SS deposits - both the person and company portions - were not taxed, then why should the payments not be taxed.
Not that I am saying your wrong on the other side of the equation.
Well its not a "tax" in a pure sense of the word. Its a sort of pension. You pay, and also our employer pays on your behalf - and that money goes into the social security trust fund, not the general fund.Huh?
At least how it looks to the layperson, those deposits are very much a tax.
I suspect given the progressive tax code, if all you get is a small ss payment, there’s no real tax. If you make too much, what you earn or distribute above the SS payout is taxable according to its type.
It would be stupid for ss to be paid, just to be returned. I suspect that’s a scheme to make the optic that ss is paying more, but net payout less.
It would be reasonable that an ss elligibke person would just subtract ss income received from total income received, so agi wouldn’t include it. But that doesn’t seem to be how it works…
Agree it’s not a tax, but since it’s compelled payments and then payback, I see no reason why they couldn’t just reduce the payout, retain solvency a few seconds longer, and make things more straightforward.Well its not a "tax" in a pure sense of the word. Its a sort of pension. You pay, and also our employer pays on your behalf - and that money goes into the social security trust fund, not the general fund.
You have no option not to pay, so from that standpoint you can call it a tax, however given the financial expertise on this thread, I would say we can agree its at least not a direct tax.
The fund Must only invest in US treasuries - so that part is sort of an extortion. Its a way for the government to fund their debt. From time to time the government has stolen from it - such as payroll tax holidays, or in some cases a direct withdrawal / IOU. Some would call the artificially low ZIRP theft - but that could be said well beyond SS.
When you take SS they look back at your payment history and actuarily come up with a payout amount. That part is not much different than a private pension.
However here is one that is very different than a private pension - its progressive - meaning the more you pay in, which is linear, the less you get back. The ones that pay the least get the most, as a percentage of what they put in.
Tax break for everyone: Investors in domestic REITs (Real Estate Investment Trusts) get a 20% tax break on dividends, no matter what their tax bracket is.
Agree it’s not a tax, but since it’s compelled payments and then payback, I see no reason why they couldn’t just reduce the payout, retain solvency a few seconds longer, and make things more straightforward.
Yeah, right…