[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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