Trump says he’ll eliminate Social Security taxes: How would it affect beneficiaries?
Eliminating Social Security taxes is one of Donald Trump’s campaign promises, but doing so could have some negative repercussions on the program.
Every month, the Social Security Administration issues millions of payments to its program beneficiaries, most of whom are retirees, and individuals who benefit from Supplemental Security Income or Social Security Disability Insurance.
Much of these payments are funded by income taxes paid into Social Security by beneficiaries and active workers. However, as part of a campaign pledge ahead of the November general election, Donald Trump has promised seniors that he will eliminate Social Security taxes.
“Seniors should not pay Social Security taxes and they will not,” the Republican candidate said at a campaign rally held last Wednesday in Harrisburg, Pennsylvania.
While this promise could earn Trump more approval among seniors, following through on such a proposal could backfire on Social Security recipients, and here’s why.
READ ALSO: No Social Security payments sent out this week
READ ALSO: Beneficiaries of Biden’s latest student loan forgiveness plan
Trump vows to eliminate Social Security taxes: How would it affect beneficiaries?
According to the U.S. Government Accountability Office, most seniors enter retirement with no savings. 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 tax payments, the administration would run out of trust funds, accelerating its insolvency.
“In some ways, Trump is advocating for defunding Social Security,” Nancy Altman, president of Social Security Works, an advocacy group for the program, told CBS MoneyWatch. “It’s a sleight of hand: give with one hand and take with the other.”
Trust fund insolvency is one of the problems that the Social Security Board of Trustees has been grappling with for some years now. According to the most recent estimates, the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100% of total scheduled benefits through 2033. When reserves are depleted, ongoing program revenues will be enough to pay only 79% of benefits.