[Congressional Record Volume 140, Number 56 (Tuesday, May 10, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 10, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                 SOCIAL SECURITY ACT AMENDMENTS OF 1994

  Mr. ROSTENKOWSKI. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 4278) to make improvements in the old-age, survivors, 
and disability insurance program under title II of the Social Security 
Act.
  The Clerk read as follows:

                               H.R. 4278

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Social Security Act 
     Amendments of 1994''.

     SEC. 2. SIMPLIFICATION OF EMPLOYMENT TAXES ON DOMESTIC 
                   SERVICES.

       (a) Coordination of Collection of Domestic Service 
     Employment With Collection of Income Taxes.--
       (1) In general.--Chapter 25 of the Internal Revenue Code of 
     1986 (relating to general provisions relating to employment 
     taxes) is amended by adding at the end thereof the following 
     new section:

     ``SEC. 3510. COORDINATION OF COLLECTION OF DOMESTIC SERVICE 
                   EMPLOYMENT TAXES WITH COLLECTION OF INCOME 
                   TAXES.

       ``(a) General Rule.--Except as otherwise provided in this 
     section--
       ``(1) returns with respect to domestic service employment 
     taxes shall be made on a calendar year basis,
       ``(2) any such return for any calendar year shall be filed 
     on or before the 15th day of the fourth month following the 
     close of the employer's taxable year which begins in such 
     calendar year, and
       ``(3) no requirement to make deposits (or to pay 
     installments under section 6157) shall apply with respect to 
     such taxes.
       ``(b) Domestic Service Employment Taxes Subject to 
     Estimated Tax Provisions.--
       ``(1) In general.--Solely for purposes of section 6654, 
     domestic service employment taxes imposed with respect to any 
     calendar year shall be treated as a tax imposed by chapter 2 
     for the taxable year of the employer which begins in such 
     calendar year.
       ``(2) Annualization.--Under regulations prescribed by the 
     Secretary, appropriate adjustments shall be made in the 
     application of section 6654(d)(2) in respect of the amount 
     treated as tax under paragraph (1).
       ``(3) Transitional rule.--For purposes of applying section 
     6654 to a taxable year beginning in 1994, the amount referred 
     to in clause (ii) of section 6654(d)(1)(B) shall be increased 
     by 90 percent of the amount treated as tax under paragraph 
     (1) for such taxable year.
       ``(c) Domestic Service Employment Taxes.--For purposes of 
     this section, the term `domestic service employment taxes' 
     means--
       ``(1) any taxes imposed by chapter 21 or 23 on remuneration 
     paid for domestic service in a private home of the employer, 
     and
       ``(2) any amount withheld from such remuneration pursuant 
     to an agreement under section 3402(p).

     For purposes of this subsection, the term `domestic service 
     in a private home of the employer' does not include service 
     described in section 3121(g)(5).
       ``(d) Exception Where Employer Liable for Other Employment 
     Taxes.--To the extent provided in regulations prescribed by 
     the Secretary, this section shall not apply to any employer 
     for any calendar year if such employer is liable for any tax 
     under this subtitle with respect to remuneration for services 
     other than domestic service in a private home of the 
     employer.
       ``(e) General Regulatory Authority.--The Secretary shall 
     prescribe such regulations as may be necessary or appropriate 
     to carry out the purposes of this section. Such regulations 
     may treat domestic service employment taxes as taxes imposed 
     by chapter 1 for purposes of coordinating the assessment and 
     collection of such employment taxes with the assessment and 
     collection of domestic employers' income taxes.
       ``(f) Authority To Enter Into Agreements To Collect State 
     Unemployment Taxes.--
       ``(1) In general.--The Secretary is hereby authorized to 
     enter into an agreement with any State to collect, as the 
     agent of such State, such State's unemployment taxes imposed 
     on remuneration paid for domestic service in a private home 
     of the employer. Any taxes to be collected by the Secretary 
     pursuant to such an agreement shall be treated as domestic 
     service employment taxes for purposes of this section.
       ``(2) Transfers to state account.--Any amount collected 
     under an agreement referred to in paragraph (1) shall be 
     transferred by the Secretary to the account of the State in 
     the Unemployment Trust Fund.
       ``(3) Subtitle f made applicable.--For purposes of subtitle 
     F, any amount required to be collected under an agreement 
     under paragraph (1) shall be treated as a tax imposed by 
     chapter 23.
       ``(4) State.--For purposes of this subsection, the term 
     `State' has the meaning given such term by section 
     3306(j)(1).''.
       (2) Clerical amendment.--The table of sections for chapter 
     25 of such Code is amended by adding at the end thereof the 
     following:

``Sec. 3510. Coordination of collection of domestic service employment 
              taxes with collection of income taxes.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to remuneration paid in calendar years beginning 
     after December 31, 1994.
       (4) Expanded information to employers.--The Secretary of 
     the Treasury or his delegate shall prepare and make available 
     information on the Federal tax obligations of employers with 
     respect to employees performing domestic service in a private 
     home of the employer. Such information shall also include a 
     statement that such employers may have obligations with 
     respect to such employees under State laws relating to 
     unemployment insurance and workers compensation.
       (b) Threshold Requirement for Social Security Taxes.--
       (1) Amendments of internal revenue code.--
       (A) Subparagraph (B) of section 3121(a)(7) of the Internal 
     Revenue Code of 1986 (defining wages) is amended to read as 
     follows:
       ``(B) cash remuneration paid by an employer in any calendar 
     year to an employee for domestic service in a private home of 
     the employer (within the meaning of subsection (y)), if the 
     cash remuneration paid in such year by the employer to the 
     employee for such service is less than the applicable dollar 
     threshold (as defined in subsection (y)) for such year;''.
       (B) Section 3121 of such Code is amended by adding at the 
     end thereof the following new subsection:
       ``(y) Domestic Service in a Private Home.--For purposes of 
     subsection (a)(7)(B)--
       ``(1) Exclusion for certain farm service.--The term 
     `domestic service in a private home of the employer' does not 
     include service described in subsection (g)(5).
       ``(2) Applicable dollar threshold.--The term `applicable 
     dollar threshold' means $1,250. In the case of calendar years 
     after 1995, the Secretary of Health and Human Services shall 
     adjust such $1,250 amount at the same time and in the same 
     manner as under section 215(a)(1)(B)(ii) of the Social 
     Security Act with respect to the amounts referred to in 
     section 215(a)(1)(B)(i) of such Act, except that, for 
     purposes of this paragraph, 1993 shall be substituted for the 
     calendar year referred to in section 215(a)(1)(B)(ii)(II) of 
     such Act. If the amount determined under the preceding 
     sentence is not a multiple of $50, such amount shall be 
     rounded to the nearest multiple of $50.''.
       (C) The second sentence of section 3102(a) of such Code is 
     amended--
       (i) by striking ``calendar quarter'' each place it appears 
     and inserting ``calendar year'', and
       (ii) by striking ``$50'' and inserting ``the applicable 
     dollar threshold (as defined in section 3121(y)(2)) for such 
     year''.
       (2) Amendment of social security act.--Subparagraph (B) of 
     section 209(a)(6) of the Social Security Act (42 U.S.C. 
     409(a)(6)(B)) is amended to read as follows:
       ``(B) Cash remuneration paid by an employer in any calendar 
     year to an employee for domestic service in a private home of 
     the employer, if the cash remuneration paid in such year by 
     the employer to the employee for such service is less than 
     the applicable dollar threshold (as defined in section 
     3121(y)(2) of the Internal Revenue Code of 1986) for such 
     year. As used in this subparagraph, the term `domestic 
     service in a private home of the employer' does not include 
     service described in section 210(f)(5).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to remuneration paid in calendar years beginning 
     after December 31, 1994.
       (4) Relief from liability for certain underpayment 
     amounts.--
       (A) In general.--On and after the date of the enactment of 
     this Act, an underpayment to which this paragraph applies 
     (and any penalty, addition to tax, and interest with respect 
     to such underpayment) shall not be assessed (or, if assessed, 
     shall not be collected).
       (B) Underpayments to which paragraph applies.--This 
     paragraph shall apply to an underpayment to the extent of the 
     amount thereof which would not be an underpayment if--
       (i) the amendments made by paragraph (1) had applied to 
     calendar years 1993 and 1994, and
       (ii)(I) the applicable dollar threshold for calendar year 
     1993 were $1,150, and
       (II) the applicable dollar threshold for calendar year 1994 
     were $1,200.

     SEC. 3. ALLOCATIONS TO FEDERAL DISABILITY INSURANCE TRUST 
                   FUND.

       (a) Allocation With Respect to Wages.--Section 201(b)(1) of 
     the Social Security Act (42 U.S.C. 401(b)(1)) is amended by 
     striking ``(O) 1.20 per centum'' and all that follows through 
     ``December 31, 1999, and so reported,'' and inserting ``(O) 
     1.20 per centum of the wages (as so defined) paid after 
     December 31, 1989, and before January 1, 1994, and so 
     reported, (P) 1.88 per centum of the wages (as so defined) 
     paid after December 31, 1993, and before January 1, 2000, and 
     so reported, and (Q) 1.80 per centum of the wages (as so 
     defined) paid after December 31, 1999, and so reported,''.
       (b) Allocation With Respect to Self-Employment Income.--
     Section 201(b)(2) of such Act (42 U.S.C. 401(b)(2)) is 
     amended striking ``(O) 1.20 per centum'' and all that follows 
     through ``December 31, 1999,'' and inserting ``(O) 1.20 per 
     centum of the amount of self-employment income (as so 
     defined) so reported for any taxable year beginning after 
     December 31, 1989, and before January 1, 1994, (P) 1.88 per 
     centum of the amount of self-employment income (as so 
     defined) so reported for any taxable year beginning after 
     December 31, 1993, and before January 1, 2000, and (Q) 1.80 
     per centum of the amount of self-employment income (as so 
     defined) so reported for any taxable year beginning after 
     December 31, 1999,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to wages paid after December 31, 
     1993, and self-employment income for taxable years beginning 
     after such date.
       (d) Study on Rising Costs of Disability Benefits.--
       (1) In general.--As soon as practicable after the date of 
     the enactment of this Act, the Secretary of Health and Human 
     Services shall conduct a comprehensive study of the reasons 
     for rising costs payable from the Federal Disability 
     Insurance Trust Fund.
       (2) Matters to be included in study.--In conducting the 
     study under this subsection, the Secretary shall--
       (A) determine the relative importance of the following 
     factors in increasing the costs payable from the Trust Fund:
       (i) increased numbers of applications for benefits;
       (ii) higher rates of benefit allowances; and
       (iii) decreased rates of benefit terminations; and
       (B) identify, to the extent possible, underlying social, 
     economic, demographic, programmatic, and other trends 
     responsible for changes in disability benefit applications, 
     allowances, and terminations.
       (3) Report.--Not later than December 31, 1995, the 
     Secretary shall transmit a report to the Committee on Ways 
     and Means of the House of Representatives and the Committee 
     on Finance of the Senate setting forth the results of the 
     study conducted under this subsection, together with any 
     recommendations for legislative changes which the Secretary 
     determines appropriate.

     SEC. 4. NONPAYMENT OF BENEFITS TO INCARCERATED INDIVIDUALS 
                   AND INDIVIDUALS CONFINED IN CRIMINAL CASES 
                   PURSUANT TO CONVICTION OR BY COURT ORDER BASED 
                   ON FINDINGS OF INSANITY.

       (a) In General.--Section 202(x) of the Social Security Act 
     (42 U.S.C. 402(x)) is amended--
       (1) in the heading, by inserting ``and Certain Other 
     Inmates of Publicly Funded Institutions'' after 
     ``Prisoners'';
       (2) in paragraph (1) by striking ``during which such 
     individual'' and inserting ``during which such individual--
     '', and by striking ``is confined'' and all that follows and 
     inserting the following:
       ``(A) is confined in a jail, prison, or other penal 
     institution or correctional facility pursuant to his 
     conviction of an offense punishable by imprisonment for more 
     than 1 year (regardless of the actual sentence imposed), or
       ``(B) is confined by court order in an institution at 
     public expense in connection with--
       ``(i) a verdict that the individual is guilty but insane, 
     with respect to an offense punishable by imprisonment for 
     more than 1 year,
       ``(ii) a verdict that the individual is not guilty of such 
     an offense by reason of insanity,
       ``(iii) a finding that such individual is incompetent to 
     stand trial under an allegation of such an offense, or
       ``(iv) a similar verdict or finding with respect to such an 
     offense based on similar factors (such as a mental disease, a 
     mental defect, or mental incompetence),

     and, for purposes of this subparagraph, an individual so 
     confined shall be treated as remaining so confined until he 
     or she is unconditionally released from the care and 
     supervision of such institution and such institution ceases 
     to meet the individual's basic living needs.''; and
       (3) in paragraph (3), by striking ``any individual'' and 
     all that follows and inserting ``any individual who is 
     confined as described in paragraph (1) if the confinement is 
     under the jurisdiction of such agency and the Secretary 
     requires such information to carry out the provisions of this 
     section.''.
       (b) Conforming Amendments.--
       (1) Section 226 of such Act (42 U.S.C. 426) is amended by 
     adding at the end the following new subsection:
       ``(i) The requirements of subsections (a)(2) and (b)(2) 
     shall not be treated as met with respect to any individual 
     for any month if a monthly benefit to which such individual 
     is entitled under section 202 or 223 for such month is not 
     payable under section 202(x).''.
       (2) Section 226A of such Act (42 U.S.C. 426-1) is amended 
     by adding at the end the following new subsection:
       ``(d) The requirements of subsection (a)(1) shall not be 
     treated as met with respect to any individual for any month 
     if a monthly benefit to which such individual is entitled 
     under section 202 or 223 for such month is not payable under 
     section 202(x).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to benefits for months commencing 
     after 90 days after the date of the enactment of this Act and 
     with respect to items and services provided after such 90-day 
     period.
  The SPEAKER. Pursuant to the rule, the gentleman from Illinois [Mr. 
Rostenkowski] will be recognized for 20 minutes, and the gentleman from 
Kentucky [Mr. Bunning] will be recognized for 20 minutes.
  The Chair recognizes the gentleman from Illinois [Mr. Rostenkowski].
  Mr. ROSTENKOWSKI. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, the Committee on Ways and Means brings before the House 
today H.R. 4278, a bill simplifying and streamlining the payment of 
Social Security payroll taxes on domestic workers.
  This bill will reform the so-called nanny tax to update an old law 
and to ease the paperwork burden on household employers. It will 
increase the number of employers who comply with the law and it will 
assure that more workers will receive much-needed protection under 
Social Security.
  First, the Social Security tax threshold will be updated from $50 a 
quarter to $1,250 a year, beginning in 1995. In addition, the threshold 
will be indexed for the future. This threshold has not been updated 
since 1950, and, during those years, its value has declined.
  No one ever intended that Americans be required to pay taxes on 
occasional babysitters or yard workers. But that's what has happened 
over time. This bill will take care of that problem by exempting this 
type of occasional work from Social Security taxes. At the same time, 
it will protect full-time nannies and housekeepers by assuring that 
they receive Social Security coverage.
  Second, the bill will reduce paperwork for employers by permitting 
them to file their employment taxes on their own annual 1040 forms. 
This simplification--coupled with the updating of the threshold--should 
result in a significant increase in compliance with the law and should 
therefore increase the number of people protected under Social 
Security.
  The bill includes two other provisions. The first reallocates a small 
portion of the Social Security payroll tax from the retirement and 
survivors fund to the disability fund. About one-third of 1 percent of 
payroll would be reallocated between funds. The total payroll tax rate 
paid by individual taxpayers would not change.
  The Social Security trustees have recommended this reallocation to 
assure the short-term solvency of the fund. Without it, the disability 
insurance fund would become insolvent in 1995.
  Finally, the bill suspends Social Security payments to people who are 
ordered--by a court of law--to be institutionalized at public expense 
because they are found not guilty of a crime by reason of insanity.
  This measure would result in significant savings for the Social 
Security trust fund and would assure that this legislation falls within 
the budget rules.
  Mr. Speaker, the House acted responsibly last summer and passed a 
change in both the nanny tax and in the allocation of the trust funds.
  At the insistence of the Senate, however, the House was forced to 
drop these provisions in conference--for procedural reasons. So we are 
here today to pass them again.
  I strongly urge my colleagues to give this bill their full support 
and to send it on to the Senate for speedy action.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BUNNING. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it is a pleasure to be here. I would first like to 
acknowledge my esteemed colleagues The chairman of the Committee on 
Ways and Means, and particularly the chairman of the Social Security 
Subcommittee, for all of his efforts, including holding a separate and 
in depth hearing on each of the three issues in the bill that we are 
considering today. I appreciate his fairness and willingness to 
consider my views and those of other Members on my side.
  The bill we are considering today contains three important 
provisions, all of which are long overdue in my estimation.
  The first, a provision to fix the nanny tax problem, made famous by 
Zoe Baird--is in my view, just about 40 years overdue.
  As anyone who has read a newspaper in the last year knows, domestic 
workers--many of whom work in private homes as housekeepers or 
nannies--have been covered under Social Security for almost 40 years, 
since 1955, as long as they earned at least $50 in wages in a calendar 
quarter.
  Back then $50 was also the minimum amount that a worker had to earn 
in order to get any credit toward a Social Security benefit, and 
represented a week and a half's wage. But that $50 amount was never 
indexed.
  And so, while times have changed for all other employers and workers, 
domestic workers and the people who employ them have remained frozen in 
the 1950's.
  Because this amount was never indexed, householders who occasionally 
hire teenage baby sitters and pay them more than $50 a quarter, are 
technically in violation of the law for failing to report their wages 
to pay FICA taxes on them.
  Congress never intended to make tax cheats out of law-abiding 
householders who occasionally hire a teenager to baby sit their 
children.
  And then there is the issue of all the burdensome paperwork that a 
householder had to complete in order to pay FICA taxes on the wages of 
a domestic or nanny.
  The bill we are considering today addresses all of these problems.
  It raises this outdated $50 wage threshold in a calendar quarter to 
$1,250 paid in a year--enough to exempt most teenage baby sitters and 
lawn mowers.
  I personally would have preferred a higher threshold amount--like the 
$1,800 threshold that was stripped from last year's budget 
reconciliation bill.
  But I also appreciate the need to protect Social Security entitlement 
for those who spend their lifetimes in domestic employment--many of 
whom are low-income women, $1,250 is a reasonable middle ground.
  The bill also allows householders who employ domestic workers to pay 
FICA taxes on their wages as part of their personal tax returns rather 
than have to complete all sorts of complicated additional paperwork.
  The second provision seems to me to be something we need to do 
whether we like it or not. It would allow a transfer of funds from the 
Social Security retirement trust fund, which has enough money to last 
until 2036, to the disability trust fund, which will run out of money 
next year if we don't act now.
  At the same time, however, I think we have to recognize that this 
transfer is just a Band-Aid. It is a temporary solution.
  The administration has to take a serious look at why the disability 
program is in trouble and it has to act fast.
  Congress voted the Social Security Administration extra money last 
year to process disability backlogs. We voted them $200 million to get 
the job done, and now we find out that $32 million of that was spent on 
pay increases and bonuses. This is outrageous and irresponsible.
  Social Security Administration needs to get serious about clearing up 
the disability backlogs--they need to do something about disability 
reviews. They need to address these problems with the disability 
program before they hand out any more raises or bonuses.
  The third provision is also overdue. Fourteen years ago, in 1980, 
Congress voted to prohibit payment of Social Security benefits to 
criminals like the Son of Sam, who are being completely supported at 
the taxpayers' expense as they serve out their time behind bars. The 
provision in their bill would likewise prohibit payment of benefits to 
those who have committed terrible crimes, but who are found not guilty 
by reason of insanity, and are institutionalized at taxpayers' expense 
instead of being imprisoned.
  That is basically what this is all about. Nothing controversial. It 
is a commonsense approach to three issues which needed to be addressed. 
It deserves my colleagues support.
  I thank the Chair for its attention to this important bill, and I 
look forward to its speedy passage.

                              {time}  1220

  Mr. Speaker, I reserve the balance of my time.
  Mr. ROSTENKOWSKI. Mr. Speaker, I yield the remainder of my time to 
the gentleman from Indiana [Mr. Jacobs], the chairman of the 
Subcommittee on Social Security, and I ask unanimous consent that the 
gentleman from Indiana [Mr. Jacobs] be authorized to yield time.
  The SPEAKER pro tempore (Mr. Montgomery). Is there objection to the 
request of the gentleman from Illinois?
  There is no objection.
  Mr. JACOBS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I also thank the ranking member of the Committee on Ways 
and Means Social Security Subcommittee for his generous remarks, and in 
response, say that I have never had the pleasure of working with a more 
cooperative colleague in the Congress than I have the gentleman from 
Kentucky [Mr. Bunning]. It takes two to work things out, and I am very 
grateful for that. I should also express for the record my gratitude to 
the gentleman from Massachusetts [Mr. Torkildsen] for his contribution 
to this legislation in clearing up a question of what is a felony and 
what is not a felony and who should be denied the Social Security 
benefits. His contribution has been enormous.
  I incorporate by reference the remarks of the chairman, the gentleman 
from Illinois [Mr. Rostenkowski], and of the ranking member, the 
gentleman from Kentucky [Mr. Bunning]. They have described the proposed 
legislation well and the background of it.
  A free society will not be civilized and will not be law-abiding in 
those instances in which the Government is negligent in terms of 
fairness of the law, and I confess for the Government that over the 
past half-century this Government has not forgotten to raise the 
threshold for any credit you might get for paying Social Security 
taxes, but in all that time has never raised the threshold for paying 
it, perhaps the best way to illustrate the ravages of inflation and 
what profound effects they can have on statutes.
  I also incorporate by reference the phenomenon that happened in the 
earned income tax credit during the first few years of the 1980's when, 
in fact, it raised the taxes of the poorest working people in our 
society.
  But one little anecdote I think would serve. When Speaker Joe Cannon 
was in office, or, rather, when he was elected Speaker for the first 
time, some of his friends explained to him that he had risen high on 
the social ladder in Washington, and he really ought to have a better 
place to live. So they took him out and they showed him a nice 
apartment that ran $400 a month rent, and the Speaker replied, ``It 
would be OK with me fellows. But what would I do with the other $200 of 
my salary?'' The congressional salary when he was Speaker of the House 
was $5,000, which seems rather unreal today, although I am sure there 
are some people who are watching C-SPAN who think that would be too 
much even today even for Members of Congress. But I think most people 
have a practical knowledge of how inflation works, and this bill is 
meant to ameliorate that situation.
  I commend all of my colleagues who have participated and will 
participate in this effort for the splendid way in which they have done 
it in response to the public.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BUNNING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Massachusetts [Mr. Torkildsen].
  Mr. TORKILDSEN. Mr. Speaker, certain issues that come before this 
body cry out for attention. Making sure that prisoners do not collect 
benefits while in jail is certainly one of them.
  Convicted criminals in jail should not collect taxpayer-funded 
payments while there. Period.
  But under a loophole in existing law, felons who are behind bars are 
denied Social Security benefits while convicts who are serving time for 
misdemeanors are allowed to continue receiving money. Because the 
definition of misdemeanor varies from State-to-State, this means some 
prisoners serving sentences in excess of 1 year continue to receive 
Federal money.
  This defies logic.
  While the taxpayers are paying to keep them in prison, prisoners 
should not receive any cash benefits.
  The problem was highlighted in the Lawrence Eagle-Tribune, a 
newspaper that circulates in my district.
  I propose simply that we cut off benefits to prisoners serving in 
prison. This simply makes sense.
  Mr. Speaker, my proposed change has received bipartisan support in 
the subcommittee and the full committee, and I want to publicly thank 
the gentleman from Indiana and the gentleman from Kentucky for their 
assistance and also thank the gentleman from Indiana for his very kind 
words and support. This change has been partially included in this bill 
before the House today, and I hope my colleagues will also lend 
support.
  There has been a lot of talk about welfare reform in the 
administration and by Members of this body. As we undertake this 
important task, there will no doubt be numerous areas of legitimate 
disagreement. However, there should be little room for disagreement on 
ending Social Security benefits for prisoners.
  I urge my colleagues to support this important measure.
  Mr. JACOBS. Mr. Speaker, I yield such time as she may consume to the 
distinguished gentlewoman from Connecticut [Mrs. Kennelly].
  (Mrs. KENNELLY asked and was given permission to revise and extend 
her remarks.)
  Mrs. KENNELLY. Mr. Speaker, 1\1/2\ years ago, much of the Nation was 
made aware of a law which affects hundreds of thousands of people and 
has been broken by countless employers--the law regarding Social 
Security earnings for domestic employees, the so-called nanny tax.
  Excellent choices for public service could not be made in part 
because of nominees' failures to fully comply with this law. Many 
people have discovered they have run afoul of this law, which has not 
been updated in more than 40 years.
  Today, if you use a babysitter or someone to mow your lawn on a 
regular basis, you may have an obligation to pay Social Security taxes 
for them. And while it was never the intent of this law to pay this tax 
for your 12-year-old babysitter, the law is very much needed to protect 
the men and women who make their living at domestic work.
  This law is not one that affects only a few high-profile people. This 
affects hundreds of thousands of domestic workers, their families, and 
their employers. When employers fail to pay this tax, workers who have 
multiple employers can find themselves ineligible for benefits even 
after a lifetime of work. That is not right. This is absolutely wrong.
  Mr. Speaker, I want to thank today a member of the staff of Ways and 
Means, Sandy Wise, for being very aware of what was happening as we 
were addressing this piece of legislation in knowing if we passed it in 
the wrong way many people who worked for multiple employers would lose 
their Social Security.
  Last year, the Ways and Means Committee considered this issue in 
budget reconciliation. At that time, I was concerned that the $1,750 
threshold adopted by both the subcommittee and the full committee would 
have caused 300,000 people--40 percent of domestic workers--to lose 
eligibility for Social Security. Those most affected would have been 
women with multiple employers who work only once or twice each month 
for each employer. Those women could conceivably work fulltime and 
receive no credit for Social Security.

  Last fall, I introduced a bill with Congresswoman Meek and 
Congressman Houghton to raise the threshold to $1,000 per year. The 
$1,200 threshold in this bill is a good compromise that reduces the 
administrative burden on employers of the occasional babysitter, or 
house cleaner while ensuring that workers receive the benefits they are 
due. This action is long overdue, and I urge my colleagues to support 
it.
  I would like to thank Congresswoman Meek and Congressman Houghton for 
their perseverance in working with me to bring forth good legislation. 
I look forward to containing work with them on this issue.

                              {time}  1230

  Mr. BUNNING. Mr. Speaker, I yield 3 minutes to the gentleman from 
Florida [Mr. Goss].
  (Mr. GOSS asked and was given permission to revise and extend his 
remarks.)
  Mr. GOSS. Mr. Speaker, I thank my distinguished colleague, the 
gentleman from the Commonwealth of Kentucky, for yielding this time to 
me.
  Mr. Speaker, I strongly support H.R. 4278, and commend the committee 
for its hard work. This bill contains several important provisions that 
are long overdue. The so-called nanny tax became a household topic over 
the last 15 months, when several high-profile administration appointees 
were disqualified from service because they had failed to comply with 
the law. Those cases raised public awareness that the existing law is 
sorely out of date and in need of review. Many of my colleagues offered 
proposals to update a 1950's provision in the law to reflect modern day 
realities. My bill, H.R. 929, would have increased the threshold 
requirement from the current $50 limit to $300 per quarter, for an 
annual earnings total of $1,200. H.R. 4278 does virtually the same--
making the annual threshold $1,250. This legislation also limits Social 
Security benefits for the criminally insane, a provision that closes a 
current inequity in our system that bars incarcerated felons from 
receiving Social Security but allows criminally insane people living in 
mental institutions to continue to claim those benefits. In effect, 
today we provide Social Security to the criminally insane while society 
is already paying for their housing and subsistence needs through 
mental institutions. Finally, this bill makes a technical change that 
will ensure continued funding of the gentleman from Social Security 
disability insurance fund--at least in the short term. Many Americans 
were stunned to learn recently that this fund is so strapped that it is 
heading for insolvency next year. This causes anxiety in my district. A 
report last month from the Social Security trustees delivered sobering 
news that SSDI and the other Social Security funds were in far worse 
shape and were becoming depleted at a much faster rate than had been 
predicted. As a member of the President's Bipartisan Commission of 
Entitlement Reform, I studied this report with alarm. Clearly, the 
current system is unsustainable. Today's action, although predominantly 
a stop-gap measure, at least buys us time until we can implement fair 
and effective changes to ensure the long-term solvency of Social 
Security. This is something we owe not only to today's retirees--but 
their children and grandchildren as well.
  Mr. HOUGHTON. Mr. Speaker, I want to urge my fellow Members to 
support this legislation, H.R. 4278, to raise the threshold at which 
employers must start paying Social Security taxes for their domestic 
employees. The legislation is long overdue and will protect domestic 
employees while simplifying reporting requirements for employers.
  As one of the originators of the bill, I want to emphasize that the 
bottom-line people issue is retirement coverage for domestic employees. 
Yes, there are other issues, such as the payment of income tax; 
although many of the employees probably have income below the minimum 
taxable amount. Also, the present filing requirements are numerous and 
burdensome. However, the overriding concern is to provide retirement 
coverage for domestic employees.
  This bill is not complicated. It raises the threshold that triggers 
reporting of income to $1,250 per year from the present $50 a quarter. 
That was set during the Presidency of Mr. Truman. It ties this level to 
inflation. And it makes it easy for taxpayers to report openly, 
payments for domestic help, both to the Government and to the 
employees.
  Employees should pay their share of income taxes. But the thrust of 
this new legislation is to bring those outside the Social Security 
system back under the umbrella--for their own ultimate protection.
  We have been talking about this problem for over a year. It's time to 
make a change and pass this legislation.
  Mrs. MEEK of Florida. Mr. Speaker, today is a happy day for me.
  Almost 18 months ago, I introduced legislation to simplify and 
streamline the payment of employment taxes for domestic workers.
  Today, after many twists and turns in the legislative process, the 
House is poised to pass our bill, H.R. 4278, the Social Security Act 
Amendments of 1994. Today, we can take a great leap forward in insuring 
fairness and economic justice for thousands of Americans who work hard 
for low wages but who, by and large, have been denied the full benefits 
of their labor.
  This issue has gotten a lot of attention over the past year because 
several prominent people--the employers of domestic workers--failed to 
pay Social Security taxes for their employees.
  Some of these prominent people were denied appointments to power 
government posts as a consequence of their failure. They became objects 
of sympathy to some because of what they were forced to give up.
  H.R. 4278 will make it easier for employers like these by simplifying 
and streamlining the payment of Social Security taxes for domestic 
workers and reducing their administrative burden.
  But Mr. Speaker, to me the chief value of H.R. 4278 is that it will 
help the employees--the people who work in other peoples' homes. For 
this bill will insure that they receive the Social Security coverage to 
which they are entitled by law when they retire or become disabled.
  I know well these mostly nameless and faceless people who clean 
houses, offer in-home child care or provide other services in the home. 
I was once a domestic worker myself. My mother was a domestic worker. 
All of my sisters were domestic workers.
  Over the years, I have known many women who have worked hard for low 
pay in domestic jobs. They struggled to support their children and 
often managed, through great effort and self-denial, to save a little 
so that their children could have a better future. They are very often 
minority women, already among the most vulnerable in our society.
  These are people who do not get their names in the paper, and until 
recently, they have been unrepresented in Congress. H.R. 4278 changes 
all of that.
  H.R. 4278 will provide Social Security coverage for these household 
workers and will give them the security and peace of mind that most 
workers in this country take for granted.
  I strongly urge my colleagues to support this bill.
  Mr. Chairman, I want to recognize and thank the chairman of the House 
Ways and Means Committee, Representative Danny Rostenkowski, and the 
chairman of the Senate Finance Committee, Senator Moynihan, for their 
sensitivity to the plight of domestic workers and the key roles they 
have played in moving this legislations forward.
  I would also like to thank the distinguished chairman of the 
subcommittee on Social Security, Mr. Jacobs, for his leadership on this 
issue, as well as my friends and colleagues, Representative Barbara 
Kennelly of Connecticut and Representative Amo Houghton of New York, 
who have worked so hard in keeping this issue on the national agenda 
and getting us to where we are today.
  Mr. BUNNING. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. JACOBS. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Montgomery). The question is on the 
motion offered by the gentleman from Illinois [Mr. Rostenkowski] that 
the House suspend the rules and pass the bill, H.R. 4278.
  The question was taken.
  Mr. JACOBS. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to the provisions of clause 5, rule 
I, and the Chair's prior announcement, further proceedings on this 
motion will be postponed.

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