Ronald Reagan raised taxes REPEATEDLY

[ProSense]

14. "Don't believe the bullshit mythology about Reagan"

Since we're mythbusting:

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Q3. Which political party started taxing Social Security annuities?

A3. The taxation of Social Security began in 1984 following passage of a set of Amendments in 1983, which were signed into law by President Reagan in April 1983. These amendments passed the Congress in 1983 on an overwhelmingly bi-partisan vote.

The basic rule put in place was that up to 50% of Social Security benefits could be added to taxable income, if the taxpayer's total income exceeded certain thresholds.

The taxation of benefits was a proposal which came from the Greenspan Commission appointed by President Reagan and chaired by Alan Greenspan (who went on to later become the Chairman of the Federal Reserve).

The full text of the Greenspan Commission report is available on our website.

President's Reagan's signing statement for the 1983 Amendments can also be found on our website.

A detailed explanation of the provisions of the 1983 law is also available on the website.



Q4. Which political party increased the taxes on Social Security annuities?

A4. In 1993, legislation was enacted which had the effect of increasing the tax put in place under the 1983 law. It raised from 50% to 85% the portion of Social Security benefits subject to taxation; but the increased percentage only applied to "higher income" beneficiaries. Beneficiaries of modest incomes might still be subject to the 50% rate, or to no taxation at all, depending on their overall taxable income.

This change in the tax rate was one provision in a massive Omnibus Budget Reconciliation Act (OBRA) passed that year. The OBRA 1993 legislation was deadlocked in the Senate on a tie vote of 50-50 and Vice President Al Gore cast the deciding vote in favor of passage. President Clinton signed the bill into law on August 10, 1993.

(You can find a brief historical summary of the development of taxation of Social Security benefits on the Social Security website.)

http://www.ssa.gov/history/InternetMyths2.html

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TAX TREATMENT

Taxation of Social Security and Railroad Retirement Tier 1 Benefits

Beginning in 1984, includes in taxable income up to one-half of Social Security (and railroad retirement tier 1) benefits received by taxpayers whose incomes exceed certain base amounts. The base amounts are $25,000 for a single taxpayer, $32,000 for married taxpayers filing jointly and zero for married taxpayers filing separately. Income for purposes of figuring these base amounts includes adjusted gross income under prior law, plus nontaxable interest income, and one-half of Social Security and railroad retirement tier 1 benefits. The amount of benefits that could be included in taxable income will be the lesser of one-half of benefits or one-half of the excess of the taxpayers' combined income (AGI + one-half of benefits) over the base amount. The provision for including nontaxable interest income is intended to provide similar tax treatment of benefits received by individuals whose total incomes consist of different mixes of taxable and nontaxable income and to limit opportunities for manipulation of tax liability on benefits.

Includes in the definition of Social Security benefits for tax purposes workmen's compensation benefits to the extent they cause a reduction in Social Security and railroad retirement tier 1 disability benefits. This provision is intended to assure that these social insurance benefits, which are paid in lieu of Social Security payments, are treated similarly for purposes of taxation.

The provision applies to nonresident aliens as well as U.S. citizens. Under the Internal Revenue Code, nonresident aliens who have income from sources other than a U.S. trade or business are taxed at a flat rate of 30 percent, unless a tax treaty provides otherwise, and the taxes must be withheld at the source of payment. Thus, 30 percent of 1/2 of the Social Security benefit (15 percent of the total benefit) will be withheld from nonresident alien beneficiaries.

Provides special rules for dealing with overpayments and lump-sum retroactive benefit payments. Benefits paid to an individual in any taxable year will be reduced by any overpayments repaid during the year. Taxpayers who receive a lump-sum payment of retroactive benefits may treat the benefits as wholly payable for the year in which they receive them or may elect to attribute the benefits to the tax years in which they would have fallen had they been paid timely. No benefits for months before December 1983 would be taxable, regardless of when they are paid.

Requires the Secretary of Health and Human Services and the Railroad Retirement Board to file annual returns with the Secretary of the Treasury setting forth the amounts of benefits paid to each individual in each calendar year, together with the name and address of the individual. Also requires furnishing of similar information to each beneficiary.

Requires that amounts equivalent to estimated quarterly proceeds from the taxation of benefits be automatically deposited in the Social Security trust funds and the railroad retirement account, as appropriate, at the beginning of each calendar quarter, subject to final adjustments based on estimates by the Secretary of the Treasury. Requires an annual report by the Secretary of the Treasury concerning the transfers under this provision.

The provision is estimated to affect about 10 percent of Social Security beneficiaries in 1984. Amounts equal to the estimated tax revenues under this provision will be automatically deposited to the OASDI trust funds. The provision increases trust fund revenues by $26.7 billion for 1983-1989 and by .62 percent of taxable payroll in the long range.

http://www.ssa.gov/history/1983amend2.html