Tuesday, May 5, 2015

Smith: Means-testing won't save Social Security

Brenton Smith, writing in The Hill, takes on Gov. Chris Christie’s proposal to means-test Social Security benefits for high-income retirees.

Christie's proposal contained a controversial policy option of means-testing benefits.  Some believe that phasing-out benefits for higher-income Americans should be the first option to consider for addressing the financing gap in Social Security.  This alternative should be the last.  It introduces terrible incentives to the system, and begs questions about how we pay for benefits.

Check out the whole piece here.

I took on the issue of mean-testing in National Affairs a couple years back. Worth checking out if you’re interested in the issue.

An additional issue I don’t think I considered at the time: Social Security benefits for high-income retirees are subject to income taxes. So the gain to the system’s financing from means-testing is the amount of the benefit cut – which is usually pretty small, on a system-wide basis – minus the income taxes that would have been collected on those benefits. It doesn’t really seem worth the effort.

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