re: 'You earned it, you keep it act' bill would eliminate taxes on Social Security

Nm

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-raises the cap on SS tax from 168K to 250K

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No.

It doesn't touch taxes between 168K and 250K.
It would "fill the trust fund’s coffers" by applying a Social Security tax to all earnings above $250,000.

Social security tax is 12.4%
Currently tax rates from ~$250K to $609 are 35%. Above $609, they are 37%.

The Craig tax would constitute a 12.4% tax hike for employed earners in those two tax brackets.

i.e.,

>$250K = 47.4%
>$609K = 49.4%

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Correct, and a very big one. 6+%

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12.4%. Half of that may be shielded from some workers by their employers, but as an employer cost, those chickens will come home to roost somewhere.

For the self-employed, it's a 12.4% hike, flat out.

For trust fund and "unearned" income, it's zero.

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I would be willing to accept this if I thought our government was run efficiently and this was what was needed to keep the program solvent. But it isn’t…so I won’t

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I would be willing to give up the employer side to get the employee side. Opt out now, employer side goes to the fund, employee side goes into and IRA. Anyone under 40 not taking that deal?

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No. It doesn't touch taxes between 168K and 250K. It would "fill the trust fund’s coffers" by applying a Social Security tax to all earnings above $250,000.

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The Craig tax would constitute a 12.4% tax hike for employed earners in those two tax brackets.

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You said all earnings, so it wouldn’t just be employed earners. It would be all earners. Just like the Medicare surtax/net investment tax, the source of the income doesn’t matter, they get you either way (limited exceptions like S Corp active participation).

Your thinking is correct though, it’s simply a high income tax, but they don’t have to raise the marginal tax rates.

And it’s not a permanent fix to the problem. The carrot is just to gain support from current retirees that likely have other income that they won’t pay tax on benefits, so they can put a permanent flat tax on earnings above $250k. Again that Medicare tax threshold hasn’t moved since they came up with it. They are sliding that SS tax threshold swiftly. They will meet in the next 10 years, so employment income will be subject up to $250k, and ALL income above that.

People don’t even really think about FICA in terms of taxes. It’s a compulsory 15.3% tax before income taxes are even considered, that everyone pays. I looked at a return recently, this poor girl made $25k in only self employed income, didn’t take any deductions, and wound up with a $5k tax bill when filing, $3800 was FICA. Those are the people I really feel for. She was barely making a living, but still reported all of her income and didn’t even think to take deductions. Wound up on a payment plan. Meanwhile people making what she makes in welfare, don’t pay any taxes, and take her $3800 with them to Costco.

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WHo are the three deadbeat fricks to downvote this?

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I’m one of them. This is a permanently added flat tax.

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Most of it goes to rent and transportation,” Hokkanen said, adding that she’d love to use the extra money to travel if the tax on Social Security benefits gets eliminated with the “You Earned It, You Keep It Act.”

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Sorry, lady. I'm not interested in a relative tax increase to fund your travel.

The window dressing will make this enticing for those that are receiving or are on the cusp of receiving SS benefits and they absolutely don't give a shite that some people will get boned for this to happen should this proposal go through.

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Spending needs to be cut,

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Indeed. No one understands this.

I've been saying for over 20 years the fix for Social Security and Medicare by our D.C. Overlords will ultimately be no cap on payroll taxes for Social Security and Medicare and means testing of individual wealth.....it's moving that direction.