September 15, 2023
Since its creation in 1935, Social Security has been the backbone of most Americans’ retirement plans. For decades, workers paid into Social Security via the payroll tax each pay period. According to the Social Security Administration, nearly nine out of ten people aged 65 and older received a Social Security benefit as of June 30 of this year.
From the beginning, Social Security benefits were untaxed, and rightly so. Think about it: why would the government send you 12 checks a year and then ask for money back the following year? For nearly five decades, Social Security benefits remained tax-free, respecting the fact that seniors had been paying into the program via the payroll tax each pay period. In 1983, 50% of Social Security benefits became taxable. In 1993, President Clinton signed a bill into law to make 85% of benefits taxable. This double taxation remains the law today. It must change.
When I became Governor, Nebraska taxed Social Security benefits at the state level as well. Working with the Legislature, I proudly signed LB873 into law to eliminate this tax and provide needed relief to Nebraska seniors. We did it in a fiscally responsible way. We gradually phased in the tax cuts over a period of years while controlling our state government spending.
This was not a Republican priority or a Democrat priority. It was a Nebraska priority. Every Nebraska State Senator voted to pass the tax cut in a strong bipartisan endorsement of this common-sense idea. 100% support, and 0% opposition.
This policy is working for Nebraska, enabling more people to keep their hard-earned dollars in retirement. Now, it is ready for America. That’s why I’m introducing the Social Security Check Tax Cut Act. My bill would bring the same policy we implemented in Nebraska to all Americans and eliminate the double tax on Social Security benefits. It starts with a fiscally responsible phase-out of taxes, beginning with a 10% cut in year one and increasing to 20% in year two. Like any tax cut, there must be a plan to make up the difference. There are numerous examples of wasteful federal spending that can be reigned to pay for this.
I believe all Social Security benefits should be completely tax-free, but big changes usually don’t happen overnight. My bill, the Social Security Check Tax Cut Act, is the first step toward completely eliminating the double tax on Social Security benefits.
Passing my bill would allow a typical senior to save $800 in 2025. That would mean $800 more to pay for visits to grandkids, groceries, medication, utilities, and more. That’s 187 gallons of milk or 208 gallons of gas at current prices – real relief in this time of rising costs and stubborn inflation. It would mean government stops taking money you earned, and are entitled to, out of your pocket.
My bill is the first step in boosting the retirement income of millions of seniors in Nebraska and across the country. I will continue working with my colleagues until we see the same kind of bipartisan support we saw in Nebraska.
Along with Senator Fischer and the rest of my colleagues in the Nebraska delegation, my team and I are here to serve you. Contact my team and I anytime by phone at 202-224-4224 or on my website at www.ricketts.senate.gov/contact. I am honored to serve our great state and will continue to work to protect the Good Life from Washington overreach.