>>>>You suggest making all SS benefits subject to income tax.
>>>>One thing is certain: The present tax situation is intolerable. It creates a 51.8% marginal tax bracket for some of our seniors. That's right---51.8%! For seniors who are in the transition area from 50% to 85% taxation, every additional dollar of "other income" results in 51.8 cents of additional federal income tax. This is not widely known because it is not explicitly stated on the tax forms or in the tax publications. It is necessary to work through a worksheet which is not presented in a straightforward manner, multiplying figures and comparing, subtracting and adding, to arrive at the taxable amount of SS benefits.
>>>>These are not wealthy seniors, those who have to pay these horrific marginal rates. For the most part they are trying to follow the retirement scenario which was advocated when SS was first proposed, that of the three-legged stool of pension, savings and SS.
You imply that seniors would want to eliminate this 'high marginal rate'. Not true at all, if the solution costs them more money in taxes. If we taxed all SS, then those people with the high marginal rates currently, would not experience such rates, but would pay more in taxes. Since they are mostly retired, we are not talking about the 'work disincentive' we would have for high marginal rates for workers.
>>>>Some suggest taxing 85% of all SS benefits. The question I have for you and for those who support the current law is:
>>>>What is the justification for taxing any more than 50% of SS benefits?
The rationale for 85% was that they figured (at some previous point in the 80's) that 15% of SS benefits, on average, represented actual after tax contributions of workers. The rest came from the untaxed employer's share and the imputed return or interest.
