Every once in a while, Congress manages to get something right. This is one of those times. The proposed legislation is Senator Rubio’s Let Seniors Work Act of 2014. Current law requires America’s working seniors who are past retirement age to continue to pay Social Security taxes, all while receiving almost no extra benefits in return. Therefore, the way the law is written today encourages some seniors to quit the workforce before they otherwise would have.
As the law stands today, seniors who have reached retirement age and continue to work are forced to pay a 12.4 percent payroll tax. Senator Rubio’s legislation will remove this disincentive to work, and would repeal the Retirement Earnings Test (RET).
Eliminating the 12.4 percent Social Security payroll tax for all individuals 65 and older, will help seniors save more, and allow them to keep more of their money. This tax cut will pay for itself and seniors will most likely respond by working more, thus increasing overall federal income tax revenue. In addition, it allows seniors to save more, making them less dependent on federal programs.