When did Social Security Benefits become taxable under the IRS Income Tax Code?

[NNN0LHI]

http://wiki.answers.com/Q/When_did_Social_Security_Benefits_become_taxable_under_the_IRS_Income_Tax_Code#ixzz1kDCe5zPE

In 1981 the National Commission on Social Security Reform (sometimes referred to as the Greenspan Commission after its Chairman) was appointed by Congress and President Reagan to work on the financing crisis in Social Security. The result of their study included several amendments that were passed by Congress, signed by President Reagan and made into law in 1983. The specific rule applying to the taxation of Social Security benefits for the first time is copied below:

If the taxpayer's combined income (total of adjusted gross income, interest on tax-exempt bonds, and 50% of Social Security benefits and Tier I Railroad Retirement Benefits) exceeds a threshold amount ($25,000 for an individual, $32,000 for a married couple filing a joint return, and zero for a married person filing separately), the amount of benefits subject to income tax is the lesser of 50% of benefits or 50% of the excess of the taxpayer's combined income over the threshold amount. The additional income tax revenues resulting from this provision are transferred to the trust funds from which the corresponding benefits were paid. Effective for taxable years beginning after 1983.

[Cleita]

1. Not only that, I got my monthly benefit reduced this year because

I have a part time job and I'm 71. I have the job to make ends meet so why do they think I'm getting too much? I don't know when this provision got sneaked in. It seems like it was in the last year. I intend to talk to my tax preparer about it to see if she knows what happened. I haven't talked to SS about it yet. They are too hard to get through to.

[valerief]

2. Was is 25K in 1983? If so, that amount hasn't changed.

http://www.irs.gov/newsroom/article/0,,id=179091,00.html

[customerserviceguy]

3. It was a tough time for another form of previously nontaxed income, as well

With the taxation of Social Security, the concept was that half of the Social Security income would remain free of tax, because it represented a return of the worker's contribution to FICA taxes, as the worker had already paid income taxes on that money. It seemed 'fair' to tax the other half that was represented by the employer's contribution to FICA taxes, which were indeed tax-deductable by the employer, and had never had income taxes paid on them. Of course, they changed the law some years later, to make Social Security means-tested in a way.

The same thing happened with unemployment benefits which had not been taxed prior to the Carter Administration. The limits of adjusted gross income were figured to be pretty high in 1978, $25K for a married couple (hey, the spouse could have a good job, right?) and $20K for a single person, on the theory that someone making that kind of money at that time was either in a very high paying job, or they were in strictly seasonal employment that provided very high pay during a season (think crab fishing or construction) that had an off-season where the worker collected unemployment, and that was just part of the career choice that the worker made.

Then, the recession of the early Eighties took hold, and Bob Dole made sure the limits were throttled down to $18K for the married couple and $12K for the single person. Later, the limits disappeared entirely, and other than a brief respite for the first couple thousand dollars of UC contained in the original Obama stimulus package, it's become fully taxable.

It's like the question they asked Willie Sutton about why he robbed banks and his reply was, "Because that's where the money is." I'm sure we'd see taxation of welfare benefits, worker's comp, and food stamps if it would produce any possible return for the government.

[Warren Stupidity]

4. Note how these fuckers conveniently neglected to COLA the threshold.

In 1981 25k was a decent income. In 2011, not so much. But then again they had no familiarity with the effects of inflation way back in '81, it isn't like they had just gone through the worst inflationary run up in like 100 years or so or anything.

These fuckers have been fucking us on a regular basis since 1981. I don't give a rat's ass about Ron Paul. Fuck. Ron. Reagan.

[Ih2puo]

6. Really.

Who was the President who raised the max rate to 85%? Oh could it be the great democrat president Bill Clinton? Yes. The utter refusal to acknowledge any democrat involvement in both 83 and 93 screwing of Americans in this thread doesn't surprise me but only reinforces the fact that Americans screw themselves.

Democrats are Blue
republicans are red.
Your favorite team.
Doesn't care about you.

[ellenfl]

5. i thought reagan opposed raising taxes?

i guess we know who started the war on the old and the poor.

ellen fl