When a person reaches their full-retirement age their Social Security
Benefits should not be subject to taxation.
Congess seems to think this is their money to spend as they see fit. The principal plus a fair percentage of interests it earns shall be protected by this policy.
We’ve worked all our income-earning lives, paying into this fund, so we can retire. The individual themselves control how many years and how much they pay toward their social security. This is our money to have at retirement, not the government’s go-to fund. We paid our fair share in taxes and shouldn’t be subject to income tax on our Social Security Benefits.
I don’t think it should be limited to the age of “full benefits.” We get reduced benefits for life if we don’t wait, so the total amount of SS we receive should be balanced out either way. At the very least, no more than half of our SS benefits should be taxed - we already paid taxes on the money we paid in, but the portion paid by our employers was not taxed.
The income threshold was set when the law taxing benefits went into effect in 1984, and it has never been adjusted for inflation. Originally only higher income people were meant to be taxed. Therefore, at a minimum, the threshold needs to be drastically increased.
However, the simplest and best thing to do is to stop taxing Social Security retirement benefits completely. As more and more people start tapping into their 401K accounts, they will see more and more of their earned benefits taken away by taxes. 401K accounts were meant to allow people to use the money when they were in a lower tax bracket, but they were not warned that it would cause their Social Security benefits to be taxed. This alone could push them back into the higher tax bracket they were in while working. Previous generations saved for retirement in after-tax accounts and only had to worry about the interest being taxed; withdrawing the principle did not affect taxes at all because the money had already been taxed.
Therefore, again, the best option is to stop taxing Social Security benefits completely.