Inflation is only making things worse!
We hear the term COLA talked about every year. It represents the Cost Of Living
Adjustments that are made to all types of Government expenses. It is basically the
Inflation Factor for the year. The Social Security Administration calls this number
their Index Factor when they calculate your benefits.
The problem that we face with the Tax Hump caused by the Parallel Taxation of our
income and Social Security is that when the Government decided to make our Benefits
taxable income, they "forgot" to make COLA part of the legislation they passed in
1983 and 1993.
Let’s use the official government Index Factors to look back in
time.
| Year | 2018 | 2013 | 2008 |
2003 | 1998 | 1993 | 1988 | 1983 |
|---|
| Index Factor | 1.00 | 1.08 | 1.18 |
1.43 | 1.69 | 2.10 | 2.52 | 3.19 |
|---|
| Single | 50% | $25,000 | $27,000 |
$29,500 | $35,750 | $42,250 | $52,500 |
$63,000 | $79,750 |
|---|
| 85% | $34,000 | $36,720 | $40,120 |
$48,620 | $57,460 | $71,400 |
|---|
| Married | 50% | $32,000 | $34,560 |
$37,760 | $45,760 | $54,080 | $67,200 |
$80,640 | $102,080 |
|---|
| 85% | $44,000 | $47,520 | $51,920 |
$62,920 | $74,360 | $92,400 |
|---|
| Year | 2019 | 2013 | 2008 |
2003 | 1998 | 1993 | 1988 | 1983 |
|---|
| Index Factor | 1.00 | 1.12 | 1.22 |
1.48 | 1.74 | 2.18 | 2.60 | 3.30 |
|---|
| Single | 50% | $25,000 | $28,000 |
$30,500 | $37,000 | $43,500 | $54,500 |
$65,000 | $82,500 |
|---|
| 85% | $34,000 | $38,080 | $41,480 |
$50,320 | $59,160 | $74,120 |
|---|
| Married | 50% | $32,000 | $35,840 |
$39,040 | $47,360 | $55,680 | $69,760 |
$83,200 | $105,600 |
|---|
| 85% | $44,000 | $49,280 | $53,680 |
$65,120 | $76,560 | $95,920 |
|---|
In 1983, when the Government decided to start the 50% taxation of our Social Security
Benefits at the $25,000 level for single individuals and $32,000 for married couples,
as they said to all of us, they were only "Taxing the Rich". In today's
dollars, that taxation did not start until the "Basis", half your benefits plus
all of your other taxable income, exceeded $79,750
$82,500 for single individuals and
$102,080$105,600
for married couples. Not exactly "Rich" today, but better than average!
It seemed like $79,750$82,500 in 1983,
but like I said, to be nice, they "forgot" to include the COLA adjustments in their
legislation! So, it is still $25,000 in today’s dollars!
They did the same thing in 1993 when they established the $34,000 and $44,000 Basis
levels for the 85% taxation of our benefits, in today’s dollars,
$71,400$74,120 for single
retirees and $92,400$95,920
for married retirees.
As average incomes increase and the starting points for the taxation of our benefits
remains constant, the taxation of our benefits will become more and more intrusive
on a larger and larger percentage of our retired population!
|
|
A-
A+
-- 2018 +
-- 2019 +
Table of Content
|
