Rep. Craig introduces bill to eliminate federal tax on Social Security benefits

(FOX 9) - As a retired elementary school teacher, Sally Hokkanen and her husband rely on Social Security and their 401ks to make ends meet.  So getting a little more in their Social Security checks would go a long way.

"With inflation, it's really made a difference in incomes for a lot of people. So I think that would be very helpful and take away some worries," said Hokkanen.

At a roundtable where participants discussed issues facing senior citizens, U.S. Representative Angie Craig announced that she has introduced a new bill called the "You Earned It, You Keep It Act."

Craig says the legislation would eliminate the federal tax on social security benefits, giving many seniors on fixed incomes more money in their pockets.

"Minnesota seniors are having to make really tough choices in their budgets. Whether they pay the rent. Whether they take the medication that they've been prescribed. So it's really important to me to make life just a little bit easier for our nation's seniors," said Craig.

Craig says the bill would pay for itself by raising the cap on the Social Security payroll tax.

Currently, workers stop paying into social security at $168,600 of their earnings.

But under Craig's bill, workers would resume paying the payroll tax at $250,000 and up, which Craig says would shore up social security until 2054 and could also reduce the national debt by 9 trillion dollars over 75 years.

"Seniors get to stop paying their taxes on their federal taxes, on their Social Security. We strengthen and extend the amount of money in the trust fund and at the end of the day, we bring down the nation's debt. it's a win-win-win," said Craig.

Hokkanen says the change would mean an extra couple of thousand dollars a year for her and her husband to travel, which they would like to do more of in their golden years.

"It would be lovely if the tax was eliminated, and it would give more people more opportunities."