7. I would change how Social Security benefits are taxed. Currently, the taxation of Social Security can almost double the marginal tax rates of low- and middle-income retirees. The details are complex, but the main idea is that at certain income levels, adding extra income will cause that income to be subject to income taxes and cause more of your Social Security benefits to become taxable as well.
For example, if you add $1,000 of income, you may also cause $850 of Social Security benefits to become taxable. A $1,000 increase in income can cause $1,850 of income to be taxed. While people who receive Social Security benefits think they are in the 10% or 12% tax bracket, the complicated method used to determine how much of your Social Security benefits are taxable leads to higher effective marginal tax rates, often around 22% for those in the 12% tax bracket.
— Larry Pershing, CFP, founder and CEO, Optimum Retirement Planning, Chicago