You Earned It, You Keep It Act
Summary
The "You Earned It, You Keep It Act" proposes significant changes to Social Security and tax laws. It aims to repeal the inclusion of Social Security benefits in gross income, adjust wage and self-employment income calculations for Social Security taxes, and modify the Social Security benefit formula. The bill also includes provisions to hold Social Security Trust Funds harmless and adjust the national average wage index.
Expected Effects
If enacted, this bill would eliminate taxes on Social Security benefits, increase the earnings base subject to Social Security taxes, and alter how Social Security benefits are calculated. This could lead to higher take-home pay for Social Security recipients and increased Social Security tax revenue from higher earners.
Potential Benefits
- Eliminating taxes on Social Security benefits could increase disposable income for retirees.
- Adjusting wage calculations could increase Social Security contributions from high-income earners.
- Modifying the benefit formula could lead to higher benefits for some future retirees.
- The bill aims to protect Social Security Trust Funds by appropriating funds to offset revenue losses.
- The Act may incentivize work and reduce reliance on government assistance by allowing individuals to keep more of their earned benefits.
Most Benefited Areas:
Potential Disadvantages
- Increasing the earnings base subject to Social Security taxes could be viewed as a tax increase on higher earners.
- Changes to the benefit formula could negatively impact some future retirees, depending on their earnings history.
- The bill's long-term impact on the solvency of Social Security is uncertain.
- Increased taxes on high earners could disincentivize work and investment.
- The complexity of the changes may create confusion and administrative challenges.
Constitutional Alignment
The bill's provisions related to taxation and Social Security fall under the broad authority granted to Congress by Article I, Section 8 of the Constitution, which allows Congress to lay and collect taxes, duties, imposts, and excises to pay the debts and provide for the common defense and general welfare of the United States. The bill also addresses Social Security benefits, which are established under federal law.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).