Sen. Ricketts sees Nebraska’s Social Security tax cuts as model for U.S. legislation

Sen. Pete Ricketts discussed his new tax act aiming to cut taxes on Social Security benefits on Wednesday.
Published: Sep. 20, 2023 at 11:06 PM CDT
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OMAHA, Neb. (WOWT) - Last week, U.S. Senator Pete Ricketts rolled out his Social Security Check Tax Cut Act, a bill that proposes a phasing out of tax on social security benefits nationally similar to what he championed in Nebraska as governor.

Social Security benefits income was ruled taxable in 1982 as an earned benefit, like employer pensions, and there is a threshold that waives taxes for those with a lower income level.

In a media call Wednesday, 6 News asked Ricketts if he would accept a higher threshold for low-income level breaks, rather than getting rid of that benefit completely, if that’s what it takes to get the bill passed.

“What I would like to do is start this phased in of reducing the tax of the 10%, 20% percent, start there, work to see if we can start getting bipartisan support,” Ricketts said. “And then, of course, one of the challenges is finding a vehicle that’s gonna move and put it on, too. So we’ve got a lot of work left ahead of us, to be able to reduce the taxes on social security the way I proposed it.”

Ricketts told 6 News he was able to reach across the aisle in Nebraska and hopes to be successful doing the same in the Senate.

“This is the way we did it, we started phasing it out over time, but it was also something that took years to be able to get passed,” Ricketts said. “So big ideas like this take time to socialize we gotta socialize the idea, so I’m gonna start with the idea that I’ve introduced here based on what we did in Nebraska, and that’s what we’re gonna focus on, going forward with regard to how we provide that tax relief on Social Security benefits.”

The bipartisan Omnibus Reconciliation Act of 1981 during the Reagan administration called for the Social Security income tax, with that tax money to go directly into funding the Medicare and Social Security programs.

His bill would remove that directed money and replace it with dollars from the General Fund.

“What we would do is offset the dollars for the Social Security tax cut reduction with general fund dollars (that are) be going into replacement so that the trust fund would remain hole,” he said.

Again, Ricketts cited his strategy in Nebraska as a road map for success in this legislation.

“By controlling our spending, we were able to do a lot of these things, and that’s what has to happen at the federal government level as well,” he said. “We don’t really have a revenue problem (in the U.S.), you can see how revenue has been growing robustly. What we have to do is start getting a hold of our spending and I think we should start with nondefense discretionary spending.”