S.458 - Senior Citizens Tax Elimination Act (119th Congress)
Summary
The Senior Citizens Tax Elimination Act aims to amend the Internal Revenue Code of 1986 by repealing the inclusion of Social Security benefits in gross income. This means that Social Security benefits would no longer be subject to federal income tax. The bill also includes a provision to ensure that Social Security trust funds are held harmless by appropriating funds from the Treasury to offset any reduction in transfers due to the repeal.
The bill explicitly states that tax increases should not be used to fund this appropriation. This implies that the funding would need to come from other sources within the existing federal budget.
The bill was introduced in the Senate by Mr. Tuberville and Mr. Sheehy and referred to the Committee on Finance.
Expected Effects
If enacted, the primary effect of this bill would be to reduce the tax burden on senior citizens receiving Social Security benefits. This would increase their disposable income.
However, it would also reduce federal tax revenue, requiring either cuts in other government programs or increased borrowing to offset the loss. The bill stipulates that the Social Security Trust Funds must be held harmless, meaning the government would need to find alternative funding sources.
The long-term effects would depend on how the government chooses to address the revenue shortfall and the overall impact on the national debt.
Potential Benefits
- Increased disposable income for seniors: Eliminating taxes on Social Security benefits would directly increase the amount of money available to senior citizens.
- Simplified tax filing: Seniors would no longer need to calculate and report their Social Security benefits as part of their gross income.
- Potential economic stimulus: Increased disposable income could lead to increased spending, potentially boosting economic activity.
- Reduced financial burden: This could particularly benefit lower-income seniors who rely heavily on Social Security.
- Political popularity: The bill could be politically popular among senior voters.
Most Benefited Areas:
Potential Disadvantages
- Reduced federal revenue: Eliminating taxes on Social Security benefits would decrease the amount of money collected by the government.
- Potential impact on Social Security Trust Funds: Although the bill aims to hold the trust funds harmless, the long-term impact on the system's solvency needs careful consideration.
- Increased national debt: If the revenue shortfall is not offset by spending cuts, it could lead to an increase in the national debt.
- Potential for inflation: Increased disposable income without a corresponding increase in goods and services could lead to inflation.
- Fairness concerns: Some may argue that it disproportionately benefits seniors at the expense of other taxpayers.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's constitutional alignment primarily concerns Article I, Section 8, which grants Congress the power 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 proposes to amend the Internal Revenue Code, which falls under Congress's power to tax.
The bill also involves appropriations, which are subject to the appropriations clause in Article I, Section 9, Clause 7, requiring that "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law."
The stipulation that tax increases will not be used to offset the revenue loss is a policy choice rather than a constitutional requirement. The bill does not appear to infringe on any specific constitutional rights or liberties.
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).