Presidential hopeful Donald Trump wants to give seniors a major tax break. On July 31, Trump wrote on Truth Social that “seniors should not pay tax on Social Security.” While this might sound like music to the ears of beneficiaries, the implementation and effects of this policy change are not so clear-cut.
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GOBankingRates spoke with Chris Orestis, founder of Retirement Genius and an expert in retirement planning and financial health, about what this proposed tax policy would look like in reality.
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Who Would Really Benefit From This?
According to Orestis, not everyone would benefit from Trump’s proposed tax break.
“This would benefit only higher-income seniors, cost workers and the middle class higher taxes, and have no impact on lower-income seniors that need the relief the most,” he said. “In the short term, this tax break penalizes workers not yet on the programs and does nothing for lower-income beneficiaries. In the long run, it hurts future beneficiaries of all stripes, but particularly lower income, as both Social Security and Medicare are undermined.”
Social Security taxes pay into the solvency of programs that benefit many Americans, so eliminating them for an entire group of taxpayers could have dire consequences, according to Orestis.
“I would be very concerned about eliminating a tax that immediately undermines the solvency of both Social Security and Medicare to score political points today,” he said. “In essence, this is a tax break for the rich paid for by workers. There is absolutely no benefit for lower-income beneficiaries, but this quickly begins to do great harm to the essential programs they rely on for income and healthcare.
“If this were passed, the current and immediate future solvency of both programs would be immediately jeopardized, requiring action to address this with higher taxes and reduced benefits.”
Trump Likely Will Not Be Able To Implement This Tax Cut
While Orestis is concerned about the possible consequences of the elimination of Social Security taxes for seniors, in reality, he does not believe that Trump will be able to enact this proposal.
“The political will for either party to enact a tax cut like this does not exist,” he said. “This is really not much more than political fodder. [It’s] not a serious tax cut proposal for seniors with any chance of being enacted.”
Alternatives to Eliminating Social Security Taxes for Seniors
Orestis believes there are better ways to financially help seniors through tax cuts.
“Other approaches to giving tax cuts to seniors that are more realistic would be in the form of reduced capital gains or earned income tax levels past a certain age, increasing the tax exemption level for the sale of a residence, and giving 100% tax deduction for premiums spent on long-term care insurance policies,” he said.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: What a Trump Tax Cut for Seniors Would Really Mean, According to an Expert
