A ‘Win-Win’ Solution: Bill Targets Federal Tax Reductions While Ensuring Social Security’s Future

A newly proposed Congressional bill, named the “You Earned, You Keep It Act,” seeks to alleviate the tax burden on Social Security beneficiaries while addressing the financial challenges faced by the Old Age and Survivors Insurance (OASI) Trust Fund. 

The bipartisan bill, reintroduced by US Representatives Angie Craig and Yadira Caraveo, aims to eliminate federal taxes on Social Security benefits and extend the solvency of the OASI Trust Fund to 2054, providing what lawmakers call a “win-win” solution.

The OASI Trust Fund is projected to face insolvency by 2033 or 2034, relying solely on payroll taxes to cover benefits, which currently fall short at 77%. 

To sustain the trust fund, the proposed legislation suggests expanding Social Security payroll taxes to income exceeding $250,000, progressively increasing the cap from the current $168,600.

According to the Social Security’s Office of the Chief Actuary, the bill’s provisions could prolong the OASI fund’s ability to meet scheduled benefits by an additional two decades. 

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Bill Proposes Tax Relief on Social Security Benefits

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A newly proposed Congressional bill, named the “You Earned, You Keep It Act,” seeks to alleviate the tax burden on Social Security beneficiaries while addressing the financial challenges faced by the Old Age and Survivors Insurance (OASI) Trust Fund.

Additionally, the proposed legislation would eliminate federal income taxes on Social Security benefits, providing relief for recipients who currently face tax liabilities based on their additional income.

The bill, described as fiscally responsible, is projected to reduce the federal debt by $8.9 trillion over 75 years, according to the Social Security’s Office of the Chief Actuary. 

Representative Craig said, “This bill is a win-win,” highlighting the benefits it would provide for elders. Seniors’ taxes will be lowered, and more Americans will be able to rely on their earned Social Security payments.”

However, the bill’s fate remains uncertain. Introduced in August 2022 and initially stalled due to insufficient support, its chances in the current divided Congress are challenging. 

Despite these difficulties, proponents of Social Security, such as the progressive group Social Security Works, which works to protect and expand Social Security benefits, have endorsed the concept.

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