Congressional Record: Proceedings and Debates of the 106th Congress, Second Session, Volume 146, Part 12 Page: 16,584
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CONGRESSIONAL RECORD-HOUSE
July 27, 2000
There was no objection.
Mr. ARCHER. Mr. Speaker, I yield
myself such time as I may consume.
Mr. Speaker, I rise today in strong
support of H.R. 4865. This is a bipar-
tisan bill to repeal the 1993 tax on So-
cial Security benefits. Several Demo-
crats have cosponsored similar legisla-
tion and four Democrats in the Senate
voted to repeal the tax just 2 weeks
ago. So like other common sense tax
relief bills that this House has ap-
proved this year, there is once again bi-
partisan support.
Seniors should not be taxed on their
Social Security benefits, period. Social
Security checks should not arrive in
the mailbox with a bill from the IRS
attached.
President Clinton and Vice President
GORE created this tax on Social Secu-
rity benefits to reduce the deficit. In
1993, the deficit was $255 billion a year.
This year the surplus is $233 billion. We
have no deficit and it is time to repeal
the tax.
Seniors work their whole lives to
earn these benefits. They should not
have to pay taxes on them when they
retire.
In effect, this tax changes the rules
of the game in the middle of the
lifestream of a worker in this country.
They believe they will get benefits of a
certain economic value. This takes
away the value of those benefits.
There are many reasons to repeal
this tax. It is a ticking time bomb that
will explode on millions of seniors over
the next generation because the in-
come thresholds are not indexed for in-
flation. Almost 10 million seniors pay
the tax today and more than 20 million
retirees will be hit soon. This tax is a
clear and present danger to their re-
tirement security.
Second, taxing Social Security bene-
fits is not good tax policy. Last week,
this House voted overwhelmingly to
give Americans tax incentives to save
for retirement. What are we telling
Americans by taxing these Social Se-
curity benefits? We are telling them
not to save, because only if they save
during their lifetime and have any
other income are they faced with this
tax. That does not make sense, particu-
larly at a time when we need private
savings in this country more than ever
before.
Third, this tax serves to undermine
Social Security. In a 1995 letter, AARP
says the following, and I quote, "The
1993 tax may serve to undermine the
program. Dramatic changes that sub-
stantially erode net benefits will fur-
ther undermine public confidence that
the Social Security system will provide
a fair return on contributions."
At this point, I would include that
letter in the RECORD.AARP,
January 20, 1995.
Hon. BILL ARCHER,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
DEAR CHAIRMAN ARCHER: In the interest of
time, I did not respond to Representative
Cardin's question at the January 19th hear-
ing regarding a rationale for taxing Social
Security income differently from private
pension income. I would appreciate your in-
serting my written response in the appro-
priate place in the hearing record.
Some maintain that Social Security is like
a private pension, and therefore should be
taxed more like a pension. While both pro-
grams provide income in retirement, the
simple fact is that Social Security is not a
private pension. Social Security is a manda-
tory, government-sponsored, portable pro-
gram with almost universal coverage. The
private pension system is a voluntary, em-
ployer-established program that is rarely
portable and covers less than fifty percent of
the workforce. Social Security is based on a
progressive benefit formula that provides a
greater rate of return for low-wage earners.
The private pension system is based on myr-
iad plan designs that more often favor the
relatively higher income earner. Social Se-
curity is partially pre-funded with generally
no access tocontributions before retirement
(or disability). Private pensions are gen-
erally advance-funded, and access to money
pre-retirement is common. Social Security is
social insurance and is the base of retire-
ment security. Private pensions represent a
privately sponsored, tax-subsidized income
supplement.
Those who argue that Social Security
should be taxed as a pension fail to fully rec-
ognize these substantial policy differences.
In fact, policy goals often have led to dif-
ferent tax treatment where fundamental dif-
ferences exist. For example, the tax code
treats mortgage interest payments different
than rental payments (even though both are
for housing), and employer provided health
benefits different than wages (even though
both are forms of compensation). Similarly,
Social Security is appropriately taxed dif-
ferently than a pension.
The 1993 tax may serve to undermine the
program. By adding additional taxes to an
already progressive Social Security benefit
formula, these changes risk undermining the
widespread public support the system enjoys.
Dramatic changes that substantially erode
net benefits will further undermine public
confidence that the Social Security system
will provide a fair return on contributions.
Once again, thank you for letting the
American Association of Retired Persons
testify at the January 19th hearing.
Sincerely,
ROBERT SHREVE,
Chairman, AARP Board of Directors.
Finally, let me underscore that this
bill protects Medicare because it re-
quires that the annual general revenue
transfer to Medicare be increased by an
amount equal to revenues generated by
this tax.
Every Member of the House knows
that Congress routinely transfers gen-
eral revenues to Medicare. Perhaps in
the beginning this was not considered
to be appropriate. I myself wish that
we had never inserted general Treasury
money into the Medicare Trust Fund,
but it has happened. All we do is con-
tinue the very same process. So thisbill would not set any precedent what-
soever.
On the contrary, the bill maintains
Medicare's current financing; and
Medicare's Office of the Actuary con-
firms that.
If Medicare were threatened in any
way, shape or form by this bill, AARP
would certainly be opposed, and they
are not. So it is time to repeal this tax
on millions of seniors. It is unfair. It is
unnecessary, and it harms the retire-
ment security of millions of Americans
now and in the years to come.
Now, some may make the argument
that this is not fiscally responsible, but
I would turn that right back to them
and say if they believed that we needed
money to pay down the deficit, would
they choose to tax senior citizens on
their retirement benefits? And the an-
swer would be a resounding no.
If we want to follow that route then
perhaps those who believe in it would
propose that we tax 100 percent of the
senior citizens' Social Security bene-
fits because of their concern about fis-
cal responsibility.
I think not. This is fiscally respon-
sible, and it is fair and it is right. I
urge a strong bipartisan vote for this
bill.
Mr. Speaker, I reserve the balance of
my time.
Mr. STARK. Mr. Speaker, I yield my-
self such time as I may consume.
Mr. Speaker, I rise in opposition to
this bill, not in support of taxes but in
support of fairness and in support of
the Medicare system which this bill
gravely endangers for the seniors in
our country.
This bill confirms what we Demo-
crats in Congress and the American
people have long suspected, that Re-
publicans do not govern with a budget
but with a tax-cut-a-day plan. If it is a
tax cut, it is in the Republican budget,
no questions. But there is a danger in
this bill. There is unfairness in this
bill, and it is important that the public
and my colleagues realize that.
This bill, first of all, takes $10 billion
a year or thereabouts out of the Medi-
care Trust Fund. It removes dedicated
revenues. The Republicans say, oh, we
are not taking the money out of Medi-
care; trust us.
It is clear there will no longer be a
dedicated tax revenue, but we can trust
the Republicans to make sure that
they protect Medicare, just as they
asked us to trust them to make sure
that HMOs did not pull out of Medicare
and leave seniors without important
coverage.
These may be the same requests to
trust the Republicans to lock away
Medicare in a lockbox. Aha. Then with
this very bill, we broke open the
lockbox and we are spilling the con-
tents of that lockbox into the pockets
of a very few Social Security bene-
ficiaries, the very richest ones. These
are the same Republicans asking us to16584
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United States. Congress. Congressional Record: Proceedings and Debates of the 106th Congress, Second Session, Volume 146, Part 12, book, 2000; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc31030/m1/25/: accessed April 23, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.