[Congressional Record Volume 140, Number 33 (Tuesday, March 22, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 22, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               THE SOCIAL SECURITY ACT AMENDMENTS OF 1994

                                 ______


                        HON. ANDREW JACOBS, JR.

                               of indiana

                    in the house of representatives

                        Tuesday, March 22, 1994

  Mr. JACOBS. Mr. Speaker, today Mrs. Kennelly, Mr. Bunning, Mr. 
Houghton, Ms. Meek, and I are introducing the Social Security Act 
Amendments of 1994. A section-by-section description of this proposal 
follows:

               The Social Security Act Amendments of 1994


                         section 1: short title

       The bill is entitled the ``Social Security Act Amendments 
     of 1994.''


   section 2: simplification of employment taxes on domestic services

       Present Law.--Individuals who hire domestic employees such 
     as baby-sitters, housekeepers, and yard workers are required 
     to withhold and pay employment taxes when the worker's wages 
     exceed certain thresholds. (Individuals who hire independent 
     contractors to provide domestic services are excluded from 
     these requirements.) For Social Security, the wage threshold 
     is $50 per quarter; for Federal unemployment insurance, it is 
     $1,000 per quarter. The $50 threshold was enacted in 1950 and 
     has not changed since that time.
       When the $50 threshold is reached, the employer must file a 
     quarterly report (form 942) with the Internal Revenue 
     Service, submitting with it the required Social Security tax 
     for both employer and employee. The employer must also 
     provide the employee and the Social Security Administration 
     with a Wage and Tax Statement (form W-2) at the end of the 
     year. When the $1,000 unemployment insurance wage threshold 
     is reached for any calendar quarter, the employer must file a 
     report (form 940) with the IRS at the end of the year, 
     submitting with it the required tax. (Employers who owe more 
     than $100 in FUTA tax at the end of a calendar quarter must 
     deposit the amount due by the end of the following month.)
       Provision.--The provision would:
       Raise the threshold for withholding and paying Social 
     Security Taxes on domestic workers from $50 per quarter to 
     $1,250 annually in 1995 and index it thereafter for increases 
     in average wages in the economy;
       Adjust the Social Security tax threshold retroactively to 
     $1,150 in 1993 and $1,200 in 1994. No underpayment of taxes 
     (or any penalty or interest with respect to such 
     underpayment) which is covered by this provision shall be 
     assessed (or if assessed, shall be collected), effective on 
     or after the date of enactment. No tax refunds would be 
     provided;
       Require individuals who employ only domestic workers to 
     report on a calendar-year basis any Social Security or 
     Federal unemployment tax obligations for wages paid to these 
     workers and authorize the Secretary of the Treasury to revise 
     the Federal form 1040 to enable such employers to report both 
     taxes on their own Federal income tax returns;
       Include domestic employers' Social Security and Federal 
     unemployment taxes in estimated tax provisions, thereby 
     enabling these employers to satisfy their tax obligations 
     through regular estimated tax payments or increased tax 
     withholding from their own wages;
       Authorize the Secretary of the Treasury to enter into 
     agreements with States to collect State unemployment taxes in 
     the manner described above; and
       Require the Secretary of the Treasury to provide to 
     domestic employers a comprehensive package of informational 
     materials, including all requirements of Federal law and a 
     notification that they may also be subject to State 
     unemployment insurance and workers compensation laws.
       Effective Date.--The provision would generally apply to 
     remuneration paid in calendar years beginning after December 
     31, 1994.


  section 3: Reallocation of a portion of the old-age and survivors' 
      insurance payroll tax to the disability insurance trust fund

       Present Law.--Employees and employers each pay a Social 
     Security payroll tax of 7.65 percent on earnings up to a 
     specified ceiling. Of the 7.65 percent, 1.45 percent is 
     allocated to the Hospital Insurance Trust Fund, 5.6 percent 
     is allocated to the Old-Age and Survivors Insurance Trust 
     Fund, and 0.6 percent is allocated to the Disability 
     Insurance Trust Fund. The 15.3 percent tax on net earnings 
     from self-employment is similarly allocated to the HI Trust 
     Fund (2.90 percent), the OASI Trust Fund (11.2 percent), and 
     the DI Trust Fund (1.2 percent). As a result of the 1983 
     Social Security Amendments (P.L. 98-21), 0.71 percent will 
     be allocated to the DI Trust Fund beginning in the year 
     2000.
       In its 1993 report to Congress, the Social Security Board 
     of Trustees determined that, under its intermediate economic 
     assumptions, the DI Trust Fund will be depleted during 1995.
       Provision.--The provision would allocate an additional 0.34 
     percent of the total the employer and employee Social 
     Security payroll tax rate, each, and 0.68 percent of the 
     self-employment tax rate from the OASI Trust Fund to the DI 
     Trust Fund, effective for 1994 through 1999. As a result, the 
     DI tax would equal 0.94 percent for employers and employees 
     and 1.88 percent for self-employed individuals. The combined 
     OASDHI tax rate of 7.65 percent would remain unchanged. 
     Beginning in 2000, the DI tax rate would be reduced from 0.94 
     percent to 0.90 percent, with a commensurate increase in the 
     OASI tax.
       In addition, the Secretary of Health and Human Services 
     would be required to conduct a comprehensive study of the 
     reasons for rising costs in the DI program. The study would 
     determine the relative importance of: (a) increased numbers 
     of applications for benefits, (b) higher rates of benefit 
     allowances, and (c) decreased rates of benefit terminations 
     in increasing DI program costs. It would also identify, to 
     the extent possible, underlying social, economic, 
     demographic, programmatic, and other trends responsible for 
     changes in DI applications, allowances, and terminations. No 
     later than December 31, 1995, the Secretary would be required 
     to issue a report to the House Committee on Ways and Means 
     and the Senate Committee on Finance summarizing the results 
     of the study and, if appropriate, making legislative 
     recommendations.
       Effective Date.--The provision would apply to wages paid 
     after December 31, 1994, and to self-employment income for 
     taxable years beginning after this date.


  section 4. limitation on payments to criminally insane individuals 
       confined to institutions by court order at public expense

       Present Law.--Individuals who are confined to a prison, 
     jail, or other penal institution or correctional facility as 
     the result of a felony conviction are barred from receiving 
     Social Security benefit payments. (Qualified family members 
     of such individuals may continue to receive benefits). An 
     exception is provided for imprisoned felons who are 
     satisfactorily participating in a court-approved program of 
     rehabilitation which the Secretary of Health and Human 
     Services has determined is likely to result in the 
     individual's return to work upon release from prison.
       The Social Security Act provides no limitation on benefit 
     payments to individuals who are confined to an institution by 
     court order at public expense pursuant to a verdict that they 
     are not guilty of an offense by reason of insanity.
       Provision.--The current limitation on Social Security 
     benefit payments to incarcerated felons would be modified to 
     apply to all individuals sentenced to imprisonment for more 
     than one year. The exception for inmates participating in 
     court-approved rehabilitation would be repealed.
       The limitation would also be extended to individuals who 
     are confined to institutions by court order at public expense 
     in connection with an offense punishable by imprisonment of 
     more than one year. The court order must be issued in 
     connection with a verdict of guilty but insane, a verdict of 
     not guilty by reason of insanity, a finding of incompetence 
     to stand trial, or a similar verdict or finding based on 
     similar factors (such as mental disease, mental defect, or 
     mental incompetence). A similar limitation on benefit 
     payments would be imposed under the Medicare program.
       To enforce the limitation, the Secretary of Health and 
     Human Services would be authorized to require from 
     institutions the names and Social Security numbers of 
     individuals confined there under the conditions described 
     above.
       Effective Date.--The provision would apply to benefits for 
     months commencing after 90 days after enactment and with 
     respect to items and services provided after this 90-day 
     period.

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