AARP blasts proposal to end taxes on Social Security benefits

   House Speaker Rod Jetton’s plan to eliminate state income taxes on Social Security benefits has received a sharp rebuke from the leading senior advocacy group in the state.
   Norma Collins, associate state director of AARP, the group formerly known as the American Association of Retired Persons, wrote a blistering critique of the proposal in a Jan. 18 letter to Jetton.
   The letter, obtained by KC Buzz Blog Tuesday night, says the plan is bad on multiple levels, from providing tax breaks to the rich to unfairness to the young to undermining Missouri’s tax base as the population ages and more people become eligible for favored tax status.
   “It is AARP’s position that receipt of Social Security benefits does not convey low-income status and it is low-income status that should drive the availability of tax breaks, regardless of age,” Collins wrote.
   The letter directly contradicts Jetton’s assertions that the plan was desperately needed by low-income senior citizens.
   “Seniors are hurting in our state and are hurting when it comes to the necessities of life,” Jetton said earlier this month when unveiling his plan.
   Other groups have pointed out that low-income seniors already pay no income tax on Social Security benefits. Missouri taxes Social Security benefits only on the amount that an individual recipient’s income exceeds $25,000 a year. Critics said 46 percent of all Social Security recipients would receive no benefit, but those seniors earning in the top 11 percent of the population would receive up to $1,200 a year. 
   Collins wrote that as recently as the 1970s, most elderly people were poor. But times have changed. The incomes of seniors are higher on average than for younger segments of the population, she wrote.
   “Offering tax breaks to seniors who do not ‘need’ them is unfair in an intergenerational sense,” the letter said. “In times of tight budgets, (such tax breaks) can result in greater tax burdens being placed on people of lesser means who do not receive special tax treatment. Since Social Security is essentially a universal program, tax breaks on Social Security would also be universal, even though the total incomes of many who receive it may be quite high – think Bill Gates Sr., Warren Buffett or George Soros.”
   AARP prefers to exempt more low-income taxpayers from state income tax. The state’s income tax system, which imposes the maximum rate of six percent on all income over $9,000, could be improved by taxing low incomes at lower rates, the letter said.
   “This would target tax relief to where it is really needed, would be fair to both younger and older citizens and would not subject future state budgets to diminished revenues as larger number of people age into tax-favored status,” the letter said.
   AARP won’t actively oppose the plan, but will express its opposition if requested by any lawmaker, Collins wrote.
   No word on whether the letter has cooled lawmakers’ ardor for the $116 million tax break aimed mostly at senior citizens.

Posted by Kit Wagar

Comments

[Engawyer]

“It is AARP’s position that receipt of Social Security benefits does not convey low-income status and it is low-income status that should drive the availability of tax breaks, regardless of age,” Collins wrote.

(APPLAUSE)

[mrbill]

AARP is very protective of SS in that they are deathly afraid of it ever being labeled as a "welfare" type program solely for the "poor" or low income. They know is would likely lose a lot of its "3rd railness" if it is seen as a welfare redistribution. (which it is already) but they want to keep the general public thinking it isnt. Heck most folks think there is an account out there with their name on it still.

I still think it would be cheaper for the government to put 5-10 thousand in an account at birth that could not be touched for any reason until 65 or whatever. Then its yours and you are then on your own. But most would p**s it away soon , so I doubt any sane program will ever come about. Democrats only version of sane is huge increase of tax etc and keeping it tied to the way it is.

[Mod Dem]

"I still think it would be cheaper for the government to put 5-10 thousand in an account at birth that could not be touched for any reason until 65 or whatever."

Sure it would be cheaper, but it would suck if you happened to be old during a recession.

[Rich]

"The letter, obtained by KC Buzz Blog Tuesday night, says the plan is bad on multiple levels, from providing tax breaks to the rich to unfairness to the young"

Really since when does the AARP give a rats about the young? Is it when they are beating down the doors of Congressmen who dare mention SS and Medicare reform? Or by young does the AARP mean young in a sense of dues paying members of the AARP who have not yet retired. The AARP's sense of entitlement when it comes to their members getting what they have coming is disgusting, when someone of my generation happens to bend the ear of a member of Congress to get action they are attacked. Thanks to the AARP my money isn't the issue, afterall I've got plenty of income earning years left and seniors need it now, maybe I won't notice all that money thats been pilfered over the years in the name of FICA and SS taxes.

[locomotivebreath1901]

I get a fire in my eyes and a shiver up my spine when folks start bad mouthing tax cuts - for old people??

Norma Collins, associate state director of AARP wrote (in part), "....and it is low-income status that should drive the availability of tax breaks, regardless of age."

She went on to write, "....Offering tax breaks to seniors who do not 'need' them is unfair in an intergenerational sense."

Need them?

NEED THEM, Ms. Collins??

Like God Almighty installed you to decide these things about people's private financial affairs??

Krykee!

Had Karl Marx to dinner lately, Ms. Collins???

~I'm gonna hurl.

Social Security is welfare? I've paid into SS for decades, and I'm going to want a return on my "investment" when the time comes.

Screw the Repubs who call it welfare. How many of them would not apply for it when they retire?

Actually, it IS welfare. It was initially created to keep low income seniors from becoming destitute upon retirement. Roosevelt compromised with REPUBLICANS who opposed it and the legislation was re-written to include all citizens, upon reaching a certain age.

No it is not YOUR investment or even your money. It is a TAX. If you want to invest YOUR money, you are free to do so. But anyone depending on social security to maintain their well to do republican lifestyle is just not playing with a full deck.

[craig]

"I've paid into SS for decades, and I'm going to want a return on my "investment" when the time comes."

Good luck. With Socialist Insecurity you won't get back what you paid in. Just look at your statement that you get in the mail, then do the math. You will get pi$$ed.

[ROBERT J LARSON]

TAX RELIEF FOR LOW-MIDDLE INCOME SENIORS Feb18 2007

It is time for some income tax relief on Social Security income for fixed lower to middle income senior citizens.
My suggestion is to change the Social Security tax trigger for married couples from the fixed value of $32,000 to the top of the 15% income tax bracket which is now $61,300. By making the tax trigger equal to the top of the 15% bracket the trigger will automatically be adjusted in the future as the tax brackets are amended for inflation.

Prior to 1983 the Social Security income was exempt from taxation. When the tax laws were changed in 1983 the Social Security income greater than $32,000 for married couples was taxed. This trigger level has not been adjusted for inflation in the last 24 years. The top of the 15% bracket has increased from $11,900 in 1983 to $61,300 in 2007, an increase of 415% !!! As a matter of fact when the Social Security tax went into effect in 1983 the $32,000 trigger was in the middle of the 30% tax bracket, so the tax was never designed to tax the lower to middle income group. Perhaps a better trigger level would be the top of the 25% tax bracket, now at $123,000 in the middle income range. This would be closer to the original intent of the tax code.

This tax relief would certainly help spur the economy because at this income level all the money would be used to cover the cost of basic living expenses. This tax relief should receive bi-partisan support, the Democrats would be assisting the low to middle class fixed income seniors and the Republicans love tax cuts.

I have what people consider to be the four basic sources of retirement income, albeit they are all modest sums,(1) Social Security, (2)company retirement plan, (3) IRA 401K plan, and a (4) savings account. I am in the 15% income bracket before I take the mandatory IRA distribution and still within the 15% bracket after the distribution. One would think that I would pay 15% tax on my distribution sum, but in fact the tax is 25% because of increased amount of tax on Social Security income above $32,000.
I retired in 1993, my retirement income has remained the same, I have received the cost of living increases in Social Security often offset by the increase in Medicare premiums. My secondary medical insurance has increased from $100 a month to $474, increased cost of living in the last 24 years ????

Robert Larson