never-ending cycle of taking money out to pay taxes and then paying taxes on that money. It’s not good.” Despite the need for sound financial advice, many people don’t have access to financial advisers, so they’re left to navigate the economic headwinds on their own. This is an increasingly fraught path in the 21st century, as Jeremy Shipp, a certified financial planner in Richmond, Virginia, explains in the Times piece. “People sometimes still manage their money as if they’re living in the Great Depression because that’s how their parents handled things,” Shipp said. “That speaks to the way financial mindsets are passed down through generations. Grandpa and Grandma and Mom and Dad never paid taxes on their benefits, so they’re very surprised.” The Times article highlights the increasing difficulty seniors have in managing their money, and Social Security taxes, which many seniors are unaware of, are yet another obstacle. Phipps, mentioned earlier, is a good example of how many seniors view Social Security as a lifeline and are usually operating on tight monthly budgets. Phipps, for example, owed federal income taxes on 85% of her most recent benefits, which defeats the purpose of Social Security in the first place. Social Security is meant to be a minimal financial safety net for senior citizens, and taxing the benefits is extremely regressive, counter-productive and counter-intuitive. After the passage of the Social Security Act in 1935, benefits weren’t taxed at all for nearly the first 50 years of Social Security’s existence. However, that changed in 1984, when taxation on benefits was signed into law by President Ronald Reagan. Then, in 1993, President Bill Clinton signed legislation that expanded tax thresholds, making up to 85% of benefits taxable for recipients with incomes of more than $34,000 ($44,000 for joint filers). Since 1984, both Social Security payments and federal income tax brackets have continually shifted upward to combat inflation, but the income thresholds that result in a recipient’s benefits being taxed haven’t budged. So, as a result, by 2022, 48% of recipients were paying tax on some of their benefits, compared to 10% when the tax began in 1984. Many states, on the other hand, do not apply state income taxes to Social Security benefits. Starting in 2022, New Mexico no longer taxes most Social Security benefits for seniors, legislation that the NMBA is proud to have worked on and helped push into law. It’s no surprise that taxing Social Security benefits began in the 1980s and ‘90s, as those are the decades when the neoliberal turn began in earnest, and counter-intuitive ideas like taxing benefits for seniors started to gain bipartisan support in Washington, D.C. From the 1930s to the 1970s, it would be fair to describe the economy in the United States as managed capitalism, which included antitrust enforcement, a strong social safety net, protections and steadily rising wages for workers, access to affordable housing and healthcare, and reasonable but strong regulation of major industries. However, in the 1970s, when economic growth stagnated, the American economy was steadily transformed into a much more neoliberal model, which had fully taken hold by the 1980s. Neoliberalism can be defined as a political model premised on the belief that free markets can regulate themselves, and maintains an almost fundamentalist view of the free market. While the free market can certainly yield spectacular economic growth, neoliberalism largely views the free market as unimpeachable and deems regulation to be an unnecessary, foolhardy constraint on perpetual growth. In the neoliberal model, the government is incompetent at best, malicious at worst, and only captive to special interests. By the 1980s and 1990s, there was a belief that the neoliberal economic model could not only create fabulous wealth, but also fix existential crises and cure societal ills and, in turn, take society to levels of prosperity never seen before. However, the neoliberal turn contained massive blind spots that have now led to a series of cascading, seemingly intractable problems, all of which usually end in many people feeling like they’re completely overwhelmed economically. While it’s difficult to find an ideal form of governance and government is certainly riddled with flaws, neoliberalism posits that government is the entire problem and that the free market is flawless. If we inversed that ideology and said that the free market is the entire problem and government is flawless, then most people would correctly mock that as absurd. So, why do we accept the premise of neoliberalism? It has become readily apparent that perhaps the main consequence of neoliberalism is extreme market and wealth concentration. We now have entire industries controlled by a few, if not one or two, purely self-interested individuals, leading to a complete inability to address existential issues. These issues include housing, homelessness, healthcare, climate and infrastructure. We can all agree that extreme power and wealth concentration, whether done through the forces of the government or the free market, is far from ideal and leads to a myriad of intractable problems. If there are a few individuals with all the power and no incentive to fix or improve anything, then society inevitably breaks down. Ideas like taxing Social Security, a completely counter-intuitive notion, can only arise from a neoliberal model. Neoliberalism encourages complex solutions to simple problems. People lacking the funds to live month to month is a relatively simple problem to address in the grand scheme of things, but, in a neoliberal model, no problem is simple. Taxing Social Security only makes sense if you view giving senior citizens a safety net as anything but positive. In a neoliberal model, something unambiguously positive, like the government giving senior citizens a financial safety net, must be viewed with a jaundiced eye and, eventually, transferred into the free market. Because under the logic that the free market is always correct and that government is always wrong, Social Security is viewed as a market inefficiency, an entity that can’t be profited from in the free market. 14
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