Eliminating Social Security taxes is one of Donald Trump’s campaign promises, however, doing so could backfire.
Month after month, the Social Security Administration issues millions of payments to beneficiaries of its program who, for the most part, are retirees and individuals who belong to Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).
Much of these payments are financed by income taxes that beneficiaries and active workers pay into Social Security. However, as part of a campaign pledge prior to the November general election, Donald Trump has promised seniors that he will eliminate Social Security taxes.
“Seniors shouldn’t pay Social Security taxes, and they won’t,” the Republican candidate said at a campaign rally last Wednesday in Harrisburg, Pennsylvania.
While this promise could earn Trump greater approval from seniors, the truth is that complying with such a proposal could backfire on Social Security beneficiaries, and here’s why.
Trump promises to eliminate Social Security taxes: How would this affect beneficiaries?
According to the U.S. Government Accountability Office, most seniors reach retirement with no savings; while about 40% of retired workers pay federal income taxes on their benefits, making tax payments a major source of funding for the Program. By eliminating the tax payment, the Administration would run out of trust funds, accelerating its insolvency.
“In a sense, Trump is advocating defunding Social Security,” Nancy Altman, president of Social Security Works, an advocacy group for the program, explained for CBS MoneyWatch. “It’s a sleight of hand: give with one hand and take away with the other.”