We should all write to our members of Congress and demand tax reforms

[Mountaineer]

Where are all the "for the little man" Ds on that list in the last paragraph above?

[flyingpylon]

Where are all the "for the little man" Ds on that list in the last paragraph above?

orange man bad

[ochotona]

It's disappointing there aren't any D co-sponsors. I view this Bill exactly in the same light as the WEP / GPO elimination bill, which was very bi-partisan.

WEP / GPO came about in 1983 and greatly affected public employees, and was just repealed, and Biden signed that into law.

Taxation of Social Security came about a year later, 1984. From 1933 until 1984 it wasn't taxed, then BOOM, Congress came after those benefits. I remember a couple years ago when my wife filed for her benefits, explaining to her that they would be taxed, and she blew up... "WHAT!? Those benefits derived from a mandatory tax that I could not escape! And now they want to put income tax on top of them?" That's the reaction of many retirees.

So yeah, this is about restoring Social Security taxation back to the way it was originally intended... NONE. I hope this passes and becomes law.

Another funny / not funny tax story was went I was laid off in 2015 and got a nice severance package, and I paid $100,000 in Federal tax for just that one year. Inflation adjusted, $135,000. I think the first $XX,XXX of severance should be tax-free, too. What that limit should be? About the median annual wage for a person, so maybe $43,000?

[yankees60]

It's disappointing there aren't any D co-sponsors. I view this Bill exactly in the same light as the WEP / GPO elimination bill, which was very bi-partisan.

WEP / GPO came about in 1983 and greatly affected public employees, and was just repealed, and Biden signed that into law.

Taxation of Social Security came about a year later, 1984. From 1933 until 1984 it wasn't taxed, then BOOM, Congress came after those benefits. I remember a couple years ago when my wife filed for her benefits, explaining to her that they would be taxed, and she blew up... "WHAT!? Those benefits derived from a mandatory tax that I could not escape! And now they want to put income tax on top of them?" That's the reaction of many retirees.

So yeah, this is about restoring Social Security taxation back to the way it was originally intended... NONE. I hope this passes and becomes law.

Another funny / not funny tax story was went I was laid off in 2015 and got a nice severance package, and I paid $100,000 in Federal tax for just that one year. Inflation adjusted, $135,000. I think the first $XX,XXX of severance should be tax-free, too. What that limit should be? About the median annual wage for a person, so maybe $43,000?

" I think the first $XX,XXX of severance should be tax-free, too."

On what basis?

How is that distinctive from all other employee sourced income that is taxed?

[ochotona]

It's different because you just lost your dang job. It's traumatic as hell, and you may need to live off that money for months or longer. It's adding insult to injury to have tax money taken out before you even have your next job in the pipeline.

[yankees60]

It's different because you just lost your dang job. It's traumatic as hell, and you may need to live off that money for months or longer. It's adding insult to injury to have tax money taken out before you even have your next job in the pipeline.

If different but no different than many other arguments that could be made why certain income should not be taxed.

It's a close cousin to unemployment insurance payments being taxed.

Many could make arguments about the dire life circumstances that they are in so that their income should not be taxed.

[ochotona]

Many could make arguments about the dire life circumstances that they are in so that their income should not be taxed.

If a spouse dies, the other spouse still gets to file as married filing jointly for one more time. We don't apply the IRMAA Medicare surcharge for years in which you lose your job, go from full to part time (reduction in hours), or your spouse dies, or lose rental income if the rental property gets destroyed... that's CMS form SSA-44. If you have serious problems of one kind of another, Congress has waived IRA early withdrawal penalties for you. Those are all tax reductions due to personal tragedies. Are those improper? Should they be repealed?

[yankees60]

Many could make arguments about the dire life circumstances that they are in so that their income should not be taxed.

If a spouse dies, the other spouse still gets to file as married filing jointly for one more time. We don't apply the IRMAA Medicare surcharge for years in which you lose your job, go from full to part time (reduction in hours), or your spouse dies, or lose rental income if the rental property gets destroyed... that's CMS form SSA-44. If you have serious problems of one kind of another, Congress has waived IRA early withdrawal penalties for you. Those are all tax reductions due to personal tragedies. Are those improper? Should they be repealed?

Going case by case.

1. One more time meaning in the year of death? Some sense there since you were married for part of the year and we don't have filing one way for part of the year and another for the other part of the year. So most practical to do it that way.

2. The IRMAA Medicare surcharge is paid to Medicare, which is separate from income taxes.

3. The waiver of IRA early withdrawal penalties are not all due for personal tragedies. Buying a first home is the opposite. I'd have to look at the others. But you still have to pay the taxes. You just don't have to pay the penalties.

I don't think you named any other form of income where you get a reduction of taxes on that income due to certain life circumstances.