As a result, MINT simulations differ from administrative estimates produced by other federal agencies. ![]() Adjusted by sample weights, the beneficiary population modeled by the current version of MINT represents 54.3 million persons in 2015, or 92 percent of the average monthly beneficiary population of 59.0 million for January–June 2015 ( SSA 2015b). If tax brackets continue to be indexed to prices indefinitely, the proportion of Social Security benefit income that beneficiaries owe as income tax will be higher than the estimates shown in this paper for years after 2023.Īnother important caveat about the estimates in this paper is that they apply only to Social Security beneficiaries who are modeled in MINT. MINT assumes that the provisions of the tax code that currently stipulate the use of price indexing will change to require wage indexing after 2023. 1 The estimates in this paper incorporate the key assumption that Congress will act before 2025 to adjust the tax-bracket thresholds upward. Long-term tax estimates must assume either that income tax brackets will continue to be price-indexed or that Congress will act to adjust the brackets upward. If tax brackets continue to be indexed to prices, the share of benefit income paid as taxes eventually will rise above its historical average. In the long run, incomes tend to rise faster than prices as labor productivity increases. For example, under current law, income tax brackets are indexed to the rate of growth of consumer prices. Projecting taxation over a period of decades requires certain assumptions about future tax policy. For those families, that proportion will remain close to 12 percent over the period 2020–2050. Among the 52 percent of families that are projected to owe federal income tax on their Social Security benefits in 2015, the median share of benefits owed as tax will be 11 percent. The model projects that the median percentage of benefits owed as income tax by beneficiary families will rise to about 5 percent over the projection period. For 2015, MINT projects that beneficiary families will owe a median of less than 1 percent of benefits in income tax, but that one-fourth of those families will owe 11 percent or more of their benefits in income tax. In summary, MINT projects that an annual average of about 56 percent of beneficiary families will owe income tax on their benefits over the period 2015–2050. Although 13 states also tax Social Security income, the scope of this paper is restricted to federal income taxes. This issue paper presents MINT projections of the percentage of Social Security beneficiary families that will owe federal income tax on their benefits as well as the proportion of benefit income they will owe as income tax in selected years from 2015 to 2050, with comparative data for 2010. Most of these families will be in the upper half of the total-income distribution. ![]() ![]() A Social Security Administration ( SSA) microsimulation model, Modeling Income in the Near Term ( MINT), projects that 52 percent of families receiving Social Security benefits will pay income tax on their benefits in 2015. In 1984, less than 10 percent of beneficiaries paid federal income tax on their benefits. The income thresholds for taxation of benefits have remained unchanged since Congress first established them but, because wages have increased, the proportion of Social Security beneficiaries who must pay federal income tax on their benefits has risen over time. Since 1984, Social Security beneficiaries with total income exceeding certain thresholds have been required to claim part of their Social Security benefits as taxable income. Survey of Income and Program Participation Omnibus Budget Reconciliation Act of 1993
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