What's especially onerous about that $34,000 level is that
1. Included in the $34,000 is every form of otherwise tax-exempt income, PLUS 50% of your Social Security distribution.
2. This level of income ought to be easily attained by any two-paycheck couple; all you need is about $10,000 a year from any pension source, if you are both draeing SS.
3. That is the HIGHEST level: 85% of your SS is treated as ordinary taxable income above that level.
I guess that does reserve complete benefits for the truly indigent. But it also means a huge transfer of what is billed as a retirement system into the general tax coffers--and once again, it's the middle income people who lose the most by far. Especially working married couples, whose income can be taxed on up to $160,000 a year, combined employer/employee contribution on such an amount being about $20,000 a year. But when they retire, all that money (on which they ALREADY paid federal and state taxes) is taxed a second time, effectively putting them in something like a 50% tax bracket. A CEO making $250,000 a year would only be taxed about $10,000 a year for Social Security (only taxed on the first $80,000 or so).
OK anybody: What did I get wrong here? |
