Unfairness of Taxing Social Security Benefits

Amidst all the furor about President Reagan’s tax proposals for “fairness, growth and simplicity” I have seen no mention of the unfairness of the taxation of Social Security benefits, which started last year!

Why should a small percentage (said to be 5%to 10%) of retired people, who saved their money, and now have finally achieved adequate incomes (such as $32,000 per couple), be penalized with taxes on certain tax-exempt income and on one-half their Social Security. They have paid Social Security taxes for many years and everyone still working past 65, continues to pay Social Security taxes.

We were told, all our working lives, that Social Security would be tax-exempt, but the government has now reneged on this promise, which is a serious matter.

If these benefits continue to be taxed, there are two inequities that should be eliminated. As the “base amount,” above which the benefits are taxed, is $25,000 for single persons, it should be changed to $50,000 for married couples--not $32,000 as it is now. Secondly, the “base amount” should be $25,000 not zero as it is now for “married persons, filling separate returns, if they lived together at any time during the year.” These provisions are an intrusion into the personal lives of the taxpayer!

I believe that the investing public does not realize the significance of the start to tax tax-exempt income. At present, the tax-exempt income counts in determining the base amount above which the Social Security benefits are taxed, so in some cases the so-called tax-exempt income is taxed! This presages the beginning of the end of this type of investment and will increase the cost of bond interest for many local governments.

In addition to all this, the present Reagan tax proposal, includes another increase in taxes for people over 65, who have more than $14,000 income, by eliminating the extra exemption of $1,080 for each older and blind person.

I realize this penalized group of aging is a minority , but minorities are presumably not to be punished by such flimsy excuses. These persons are self-supporting and are not a burden to the body politic.

GEORGE GIBBS

Claremont

Gibbs is emeritus professor of accountancy and economics at Claremont McKenna College.