An Act Concerning The Taxation Of Social Security Income And The Elimination Of The Earned Income Tax Credit.
The proposal to exempt Social Security income from personal income tax would have significant implications for state revenue and budgetary allocations. By removing the taxation on Social Security income, the state may see a decrease in tax revenues collected from retirees, potentially impacting funding for public services. Proponents argue that this exclusion is a necessary adjustment to acknowledge the unique financial conditions faced by retirees. However, opponents may express concern regarding the fiscal sustainability of the state budget and the long-term effects of reducing tax bases.
House Bill 5154 focuses on modifying the taxation framework in relation to Social Security income. Specifically, the bill proposes to exempt Social Security income from being subjected to personal income tax. This change intends to alleviate the financial burden on retirees and individuals dependent on Social Security benefits, allowing them to retain more of their income. Advocates believe this measure is crucial for supporting vulnerable populations who rely heavily on such benefits for their livelihood.
Another contentious aspect of HB 5154 is its proposal to eliminate the Earned Income Tax Credit (EITC). The EITC is a vital financial support mechanism for low to moderate-income working individuals and families. The removal of this tax credit could lead to increased financial strain on these households, potentially exacerbating poverty and reducing their disposable income. The bill's supporters may argue that the exemption on Social Security income compensates for the loss of the EITC, but critics could contest this by highlighting the different demographics affected by each policy.