Is there fairness of the tax treatment of social security benefits based on the income of the recipient.?

Question

Is there a calculation to show if it is fair?

Answer 1

If you are referring to the current income of persons who are also receiving Social Security benefits, then most persons who fall into this category would tell you that it is not "fair".

This is because, as a group, retired people with substantial income have made larger contributions to Social Security than others, yet this same group is now having their benefits reduced by further taxes, on benefits that were funded with taxable income.

Retired persons with income other than Social Security may have some of their Social Security benefits taxed. The amount of SS benefits subject to tax can go as high as 85%.

Retired persons with no other income than SS will pay no income tax at all. Most people agree that this is fair, since the recipients have paid into the system.

Answer 2

"Fair" is a hard thing to define, since everyone's definition would be different. But for people who don't have a lot of income other than their social security, the social security benefits don't get taxed - there's some "fairness" there.

Answer 3

Look for the word "fair" in the tax code.

Here is a hint: It isn't there!!

With the Tax Code, it is pretty black and white. Either it is subject to income taxes or it is not. There are not many grey areas. If your income is above a certain amount, then up to 85% of your social security is taxable. Period.

Answer 4

It isn't fair but it is the law, it is like asking if it would be fair to start taking ROTH IRA income taxes were paid when the benefit was earned.
I remember when it started my dad was retired and mom still working suddenly his SS was taxable making it harder for mom to save enough to retire. People counted on the SS as non taxable income when planning to retire.
Now they are talking means testing for getting you hard earn benefit because they can decide what we need to live on in retirement.
It makes you not trust that saving is going to help you at all, tax the savers to support the spenders.

Answer 5

It's marginally fair if you're a single taxpayer. It's completely unfair if you're married. I know of several elderly couples who have gotten divorced due to the way that SS is taxed. They saved a TON of money, though they're still living together as they always have.

The Reps make all this noise about "family values" and then don't fix a tax code that forces elderly couples to get divorced to survive. Go figure!