Latest news with #TheTaxFoundation
Mint
6 days ago
- Business
- Mint
New tax law shields most seniors from Social Security taxes—but not how you think
A new $6,000 tax deduction (or $12,000 for married couples) is the real reason most seniors won't pay taxes on Social Security benefits under Donald Trump's 'One Big Beautiful Bill'. Available through 2028 to those 65+ earning ≤$75,000 individually or ≤$150,000 jointly, this deduction lowers taxable income so much that for 88% of seniors, up from 64%, their benefits effectively become tax-free. But the law doesn't eliminate Social Security taxes directly; it just makes them disappear for many through this backdoor method. The biggest winners are middle-income seniors. Those earning $50,000–$200,000 could see taxes on benefits reduced or erased because the deduction lowers their 'combined income' used to calculate taxes. However: Low-income seniors already paying $0, gain nothing Under-65 beneficiaries (e.g., disability recipients) are ineligible High earners above $175,000 (single) or $250,000 (couples) get no break The Tax Foundation confirms this helps 'lower-middle and middle-income taxpayers most." The SSA emailed millions claiming the law 'eliminates federal income taxes on Social Security benefits', calling it 'historic relief for seniors'. Experts slammed this as misleading and politically charged for a typically neutral agency. Former SSA officials noted emails like this blur trust in government communications and risk confusing vulnerable seniors . While the White House stands by its '88%' claim, tax analysts stress the deduction only indirectly affects benefit taxes, according to recent reports. Though senior citizens save money now, the program faces accelerated financial risk. The $30 billion/year revenue loss from fewer taxed benefits could drain Social Security's trust fund by late 2032, a year earlier than projected. Since taxes on benefits fund Social Security and Medicare, this 'relief' deepens the program's $22.4 trillion funding gap.
Hindustan Times
21-04-2025
- Business
- Hindustan Times
Social stability amidst tariff wars
While the concept and phenomenon of conflict dominate international relations, be it military or economic conflicts, the fact remains that the citizens or consumers bear the brunt of it. Alliances or animosity between states are often based on the policies chosen by the heads of state, as per their understanding of what makes their country stronger. However, the impact of these decisions trickles down to the lowest echelons of the societies therein. Beyond sovereignty-based conflicts, states also suffer several other forms of conflicts, ranging from income inequalities to lack of access to medical services, gender-based conflicts, and so on. The ongoing tariff wars between the two most powerful states of the international system, i.e. the US and China, have multiple complex implications for the fight against poverty and environmental protection, to name just two. The trade and tariff-based conflicts create economic ripple effects that influence global poverty alleviation efforts and environmental policies. Increased consumer prices and greater economic burdens on low-income households in particular become harsher realities. Tariffs, such as the 25% on Canadian and Mexican goods, or up to 145% on certain Chinese products, raise the cost of imported goods, which gets passed on to consumers. China, leveraging its vast labour pool, revalued Yuan and export supporting policies since 1978, emerged as the manufacturing platform of the world, which in turn ensured that every single country in the world relies on it for cheap intermediate or finished products. To offset that reliance in particular and to Make America Great Again (MAGA), the second term of Donald Trump in the US sees extreme attempts to renegotiate the role the US has traditionally played, i.e. that of a stability provider of the international system, which creates economic dependencies of other States on itself. While on paper, the plan looks great, fact is that till the goal of MAGA, through tariffs and trade wars, is accomplished, the ordinary consumer, even in the US is likely to undergo immense strains. According to a study by the International Monetary Fund, US consumers bore the brunt of tariffs during the 2018-2019 US-China trade war, with increased prices for essentials such as food, clothing, and basic electronics. As per estimates from The Tax Foundation, the 2025 tariffs amount to an average tax increase of $ 1,300 per US household, straining budgets for the poor. In the case of developing countries that are reliant on exports to the US such as Mexico, tariffs can slash up to 16% of Gross Domestic Product (GDP), reducing income and deepening poverty. For China, the US tariffs are expected to reduce China's GDP by roughly 0.8- 2.4% in 2025. Over 2025- 2027, the cumulative reduction could reach 2.5% in high tariff scenarios. A reduction in Chinese GDP by 1-2% will cut tax revenue by around 440-660 billion yuan, straining fiscal resources for social programmes and by increasing reliance on debt. Poverty will increase, with 5-19 million people at risk of falling below the poverty line due to job losses, higher living costs and reduction in welfare spending. The climate crisis, which affects the poorest of the poor much more than other segments of society has the potential to wreak greater havoc. Higher costs of green tech could delay renewable energy adoption, undermining environmental protection efforts. Tariffs induced economic slowdowns also reduce government and private resources for environmental initiatives. In the US, an estimated $ 911.8 billion loss from a global tariff war could strain budgets for climate programmes. In developing countries, economic growth reduction due to reduced exports limits the funding for environmental protection, such as those of reforestation or pollution control. Also, the tariff war will delay China's 2030 carbon peak and 2060 neutrality targets by one to two years, particularly if Chinese fiscal priorities shift to traditional industries. China is the world's largest coal user in any case, as it consumes more than half the world's coal with its demands only increasing. China's coastal provinces like Guangdong for example, facing export revenue losses may ramp up polluting industries, leading to further worsening of local air and water pollution. Textile production, for example, generates about 20% of China's wastewater pollution. Pollution, thus could only worsen in the country. As the established international order comes under severe strain owing to the US renegotiating its role, countries, unfortunately, will have to rely more on themselves to shield themselves from the impacts produced. The social stability in countries of the international system will be affected, and a retreat to self-reliance could well be only way forward. This article is authored by Sriparna Pathak, professor, China Studies and International Relations, Jindal School of International Affairs, OP Jindal Global University, Sonipat.
