[Congressional Record Volume 141, Number 65 (Friday, April 7, 1995)]
[Extensions of Remarks]
[Pages E833-E834]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


  ON HOW THE REPUBLICAN CONTRACT WITH AMERICA HELPS AMERICA'S SENIORS

                                 ______


                       HON. CHRISTOPHER H. SMITH

                             of new jersey

                    in the house of representatives

                        Thursday, April 6, 1995
  Mr. SMITH of New Jersey. Mr. Speaker, as we reach the end of the 
first 100 days of the session, it is fitting that the grand finale of 
the Contract With America honors our senior citizens by easing the 
burdens older Americans now face.
  For instance, the comprehensive tax bill, which we approved by a 
substantial margin yesterday evening, includes a substantial reduction 
in the Social Security earnings test, which unfairly penalizes seniors 
for working to supplement their Social Security benefits.
  If the November elections taught us anything it was that the American 
people want to see their fellow citizens begin to take more 
responsibility for their personal circumstances. Many seniors want to 
do just that, but have been hindered from doing so by the Social 
Security earnings test.
  The earnings test was instituted during the Great Depression when the 
Federal Government wanted to encourage older Americans from remaining 
in the national work force and occupying much-needed jobs. Despite the 
fact that this provision is clearly obsolete, it continues to be an 
unfair penalty to industrious seniors.
  Essentially, seniors who earn more than $11,280 a year face a 
supplemental tax of 33 percent on that income. This is in addition to 
the 7.65-percent FICA withholding tax and a 15-percent Federal income 
tax, bringing a hard-working, low-income senior's tax burden up to 
nearly 56 percent.
  How many times have we all heard from constituents who acknowledge 
that they cannot survive on the meager Social Security benefits they 
are due? We cannot earnestly encourage these people to work to 
supplement these benefits while simultaneously taxing them at a highly 
unfair rate.
  Furthermore, the earnings test deprives the American workplace of the 
talents and knowledge of our most experienced laborers.
  The Contract With America, through H.R. 1215, increases the threshold 
at which the earnings test kicks in to $30,000 in annual income over a 
5-year period.
  While this does not represent perfect resolution on this issue, it is 
a step toward equity in the workforce. In fact, I would encourage my 
colleagues to continue to work toward a full repeal of the earnings 
test, such as that represented by Representative Howard Coble's H.R. 
201, of which I am a cosponsor.
  In addition, the tax relief bill includes a full repeal of the 1993 
Clinton tax increase on Social Security benefits over a 5-year 
transitional period. In the mid-eighties, Congress instituted a tax on 
50 percent of the Social Security benefits received by seniors earning 
$25,000 as individuals or $32,000 as couples.
  Many of you voted against this tax--as I did--recognizing it as a 
double taxation on seniors who had taken the initiative to plan and 
save for their retirement. However, instead of repealing this unfair 
and counter-productive tax, President Clinton pushed through Congress 
in the first months of his administration--and over the vote of every 
House and Senate Republican, I might add--an increase in this tax.
  The Clinton tax package allowed 85 percent of the Social Security 
benefits received by seniors making only $34,000 per year to be counted 
as taxable income. This runs entirely contrary to the pact between the 
Federal Government and seniors which the Social Security program is 
supposed to represent.
  Seniors involuntarily turned over portions of their hard-earned 
paychecks to the Federal Government as a safety net for their 
retirement. They should not be taxed on this meager nest egg when they 
most need it and when many of them are living on fixed incomes.
  I immediately introduced legislation to repeal the Clinton Social 
Security tax, but it was unfortunately stonewalled. I am very pleased 
that the Republican Contract With America includes a full repeal of 
President Clinton's unfair tax and that we have had the opportunity to 
relieve seniors of this burden.
  The tax cut bill also makes great strides toward improving the 
provision of long-term care for seniors. Specifically, the bill 
provides a $500 non-refundable eldercare tax credit to families caring 
for a dependent senior in their home.
  Currently, 12.5 percent of our Nation's population is aged 65 and 
older. By the year 2030, when baby boomers peak in their golden years, 
fully one-fifth of our population will be in this age bracket. Already, 
American families nationwide have been faced with the difficult 
decision of how to best care for an aging parent or relative within 
their financial means. As society ages, more and more families will 
face this dilemma.
  Many aging adults, particularly those suffering from Alzheimer's and 
other dementia, cannot lead a quality life without assistance and 
constant care. Often the full-time attention and individualized care 
these men and women require can only be found in a nursing home 
facility or in the privacy of their family home.
  Providing the care at home can be costly and time-consuming. However, 
this sort of personalized care is preferable to many families, 
especially since it affords a terrific opportunity to solidify the 
family unit. Children can learn so much from the knowledge and 
experiences of their grandparents. And having a loving family around 
does a world of good for an ailing senior.
  Last year, the Alzheimer's Association reported that more than one-
half of all working Americans have either provided long-term care for 
their friends or relatives or believe that it is likely in the near-
future. The Contract With America's eldercare tax credit will go a long 
way to help these well-intentioned people meet the needs of their loved 
ones.
  The tax cut bill includes other improvements in the long-term care 
market as well to make it easier for seniors and their families to 
purchase long-term care insurance. In 1990, seniors aged 65 and older 
faced a 43 percent lifetime risk of requiring nursing home care. By 
1992, the cost of such care was approximately $30,000 per year.
  Too frequently, seniors are caught between a rock and a hard place as 
they get older and need this more constant medical attention. Private 
long-term care insurance as it currently exists is often too costly to 
be comfortably within reach and Medicaid assistance is only available 
if they spend down their savings.
  This measure provides seniors and their families with the financial 
incentives they need to save for quality long-term care. For instance, 
it: First, gives long-term care insurance the same preferable tax 
treatment as accident and health insurance, second, excludes up to $200 
per day in long-term care benefits from taxable income, third, excludes 
employer-provided long-term care coverage from taxable income, fourth, 
allows long-term care expenses to be treated equal to medical expenses 
as an itemized tax deduction, fifth, excludes withdrawals from IRAs and 
other pension plans for the purchase of long-term care 
[[Page E834]] insurance from tax penalties, and sixth, allows the 
accelerated payment of death benefits from life insurance for the 
terminally or chronically ill to be paid tax-free.
  These are common-sense approaches to a problem faced by more and more 
families every day and they are long overdue.
  Finally, the tax relief bill increases the current estate and gift 
tax exemption over a 3-year period of time from $600,000 to $750,000. 
Through this modest change, seniors will be able to pass along their 
family business or family farm to their children and grandchildren 
without passing along an unmanageable tax burden as well.
  In addition to these pro-senior provisions in the tax cut bill, the 
House overwhelmingly passed H.R. 660--which I am cosponsoring--to 
ensure that seniors will not be unfairly discriminated against for 
living in senior housing communities. These communities allow seniors 
to live amongst their peers and often provide access to services of 
particular need to seniors--such as periodic blood pressure screenings 
by local medical personnel.
  Despite their increasing popularity amongst the senior population, 
vague language in the Fair Housing Act has left these communities 
vulnerable to litigation claiming that they discriminate against 
younger families. Furthermore, proposed HUD interpretations of this 
language have placed an insurmountable financial burden on these 
communities, requiring extravagant services and facilities to quality 
for Fair Housing Act exemptions.
  The language of H.R. 600 clarifies the definition of an ``adult-
only'' housing community as a residential area consisting of a 
population of at least 80 percent seniors aged 55 and older. With this 
clarification, seniors will be able to form neighborhoods which conform 
to the unique needs of their retirement years without fear of unfair 
litigation or retribution.
  I am proud to have supported each of these measures over my tenure in 
Congress and to have cosponsored them as part of the Contract With 
America as well. It is a credit to these past 100 days that we have 
soundly approved these proposals as the crowning achievement of the 
contract. America's seniors deserve no less.


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