Social Implications of Tax Law
Posted onWe often talk about the social implications of tax law.
In the US, we have a progressive tax system which means, those who make more pay proportionally more. This is simply because they can afford to pay more.
Where this breaks down in the most painful way (in my opinion) is the phase in of taxability of social security benefits. These tax laws require social security recipients to pay tax on their benefits based on what their other income is (eg pension). If there’s no other income then there’s no tax on social security benefits. If there is other income, then there’s not only tax on that income but ALSO on the social security benefits. This creates a very high tax rate situation and it’s levied upon those in our society that we would hope to protect (the elderly and the disabled).