Bill Overview
Title: You Earned It, You Keep It Act
Description: This bill excludes Social Security benefits from gross income for purposes of federal income taxes.
Sponsors: Rep. Craig, Angie [D-MN-2]
Target Audience
Population: Individuals receiving Social Security benefits
Estimated Size: 70000000
- The act affects individuals who receive Social Security benefits in the United States.
- According to the Social Security Administration, about 70 million people received benefits in 2021, including retirees, disabled individuals, and their families.
- The taxation of Social Security benefits may directly affect recipients who have additional income sources that push them into tax brackets where their benefits become taxable.
- Not all Social Security beneficiaries are currently required to pay taxes on their benefits, as this depends on their total income level.
Reasoning
- Considering the policy targets Social Security beneficiaries, roughly 70 million people might initially be viewed as impacted, though the actual affected subset is smaller due to existing income thresholds for taxation on benefits.
- The budget constraints imply an average potential tax saving or corresponding increase in beneficiaries' spendable income is quite small relative to individual needs but can still shift wellbeing, especially among lower-income beneficiaries.
- The diversity among Social Security recipients (retired versus disabled, low-income versus moderate income) calls for a representative cross-section to understand varied impacts on wellbeing.
- Savings from tax exclusion for those currently taxed might be used for health, leisure, or savings, impacting wellbeing differently across recipients.
- For high-income individuals, benefits might not impact wellbeing significantly even if savings are realized. Conversely, they might perceive inequity or policy as less impactful.
- The projected long-term savings or improved financial stability due to the policy could lead to improved life satisfaction, affecting Cantril scores positively over time.
Simulated Interviews
Retired teacher (Florida)
Age: 72 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- I am grateful for any financial relief at this stage in life.
- With the policy, I can afford healthier groceries without worrying about my tax bill.
- It's a nice gesture but the difference isn't dramatic for me; still, every bit helps.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 7 |
Retired engineer (California)
Age: 68 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- I appreciate any reduction in my tax obligations.
- This policy might allow me to donate more to my preferred charities or to travel.
- Overall, my lifestyle won't change much, but this is a welcome adjustment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Disabled former nurse (Ohio)
Age: 53 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- I'm struggling to make ends meet, so this policy could be a game-changer.
- With less tax, I might finally afford some necessary health treatments.
- I'm anxious to see this implemented as soon as possible. It could vastly improve my stress levels.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 9 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 9 | 5 |
Retired business owner (New York)
Age: 75 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 2/20
Statement of Opinion:
- The monetary change is negligible for me personally.
- It seems more symbolic than substantial in my situation.
- I think the policy is fair overall and could help many others more than me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Retired administrative assistant (Illinois)
Age: 62 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- Even a slight tax relief would greatly help with utility bills.
- It'll provide me room to breathe, maybe put a little aside for my grandchildren.
- This makes a huge financial difference to people like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retired factory worker (Texas)
Age: 84 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- I'm just trying to afford my meds and bills as it is.
- Policy might let me save a bit more in case of emergencies.
- I'm hopeful this change carries forward, making a real difference three, five years from now.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Retired school counselor (Pennsylvania)
Age: 67 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This policy could mean less stress over annual taxes.
- The saved income could contribute to a few luxuries or better nutrition.
- A small shift, but it helps balance my budget more comfortably.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retired university professor (Arizona)
Age: 77 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- The concept of the policy is straightforward and supportive.
- Slight tax saving might provide a small comfort, not life-changing for me.
- I'm glad for those who truly need this policy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Semi-retired mechanic (Missouri)
Age: 65 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 4/20
Statement of Opinion:
- Reducing tax on benefits is a wise move.
- Might affect my decision on when to fully retire, with one less financial worry.
- Every dollar saved is valuable to someone trying to retire on a tight budget.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Retired librarian (Michigan)
Age: 81 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- I find this policy encouraging for people in my situation.
- A little extra money without taxes could mean extra security or medical support.
- Glad this is being considered as a support measure.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Cost Estimates
Year 1: $32000000000 (Low: $29000000000, High: $35000000000)
Year 2: $33000000000 (Low: $30000000000, High: $36000000000)
Year 3: $34000000000 (Low: $31000000000, High: $37000000000)
Year 5: $36000000000 (Low: $33000000000, High: $39000000000)
Year 10: $40000000000 (Low: $37000000000, High: $43000000000)
Year 100: $65000000000 (Low: $60000000000, High: $70000000000)
Key Considerations
- Potential increase in disposable income for Social Security beneficiaries could lead to higher consumer spending.
- May require offsetting tax increases or spending cuts elsewhere to maintain budget neutrality.
- This policy might affect income inequality measures due to increased disposable income among beneficiaries.