[Congressional Record Volume 143, Number 44 (Tuesday, April 15, 1997)]
[Senate]
[Pages S3210-S3212]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ASHCROFT:
  S. 579. A bill to amend the Internal Revenue Code of 1986 to allow a 
deduction for the old-age, survivors, and disability insurance taxes 
paid by employees and self-employed individuals, and for other 
purposes; to the Committee on Finance.


               the working americans wage restoration act

  Mr. ASHCROFT. Mr. President, it has been said that America is a city 
on a hill, a special example for the rest of the world to observe--a 
place of hope, a place of opportunity--what America is and ought to be. 
But it might be said that if we are a city, we are in need of urban 
renewal. We need to restart our engine, to regenerate the potential for 
growth, for the development of opportunity in this culture.
  Economic growth has been the idea, it has been the mechanism whereby 
America could find a special place of opportunity, where America could 
be that particular country that said:

       Give me your tired, your poor, your huddled masses, 
     yearning to breathe free, the wretched refuse of your teeming 
     shore. Send these, the homeless tempest tossed, to me.

  With what the writer of that great poem inscribed on the Statue of 
Liberty, America could proudly proclaim, ``I lift my lamp beside the 
golden door.''
  America has been a place of opportunity because it has been a place 
of growth, with an understanding that we could always grow our way 
through problems. Growth has been that marvelous key toward providing 
some new hope for individuals. Individuals from anywhere and everywhere 
at all times in our history have provided a part of the stream of a 
growing America, a set of opportunities that is the envy of the world. 
Yet what is happening and has happened to our growth? What has happened 
to our culture? Working families are being stressed. They get up early. 
They work hard. They sacrifice time with each other and with their 
children, and they seem to have less and less to show for it. They are 
squeezed not just financially but as families.
  What is the reason? Why is that we as a culture find ourselves 
laboring under this weight rather than soaring with the opportunity 
characteristic of our heritage?
  I think we have a tax load that is weighing down individuals in this 
culture, and it is a major one. It is simple. It is not hard to 
understand. The most recent issue of Baron's magazine, which is a 
magazine that monitors business activity and government and families 
and opportunity, spells out the tremendous tax load--heavier at this 
moment in history than at any other time in the history of America. It 
is interesting to note that we were able to spend our way out of the 
Great Depression with lower tax rates than we now have. We were able to 
make the world safe for democracy or to work toward making it in the 
First World War. We were able to defeat the onerous and terrible power 
of Nazi Germany in the Second World War with lower tax rates than we 
have now.
  Big government is taking so much of the working wages of Americans 
that Americans no longer have the resources to spend on themselves that 
they need.
  The family budget in 1955, for example, was 27.7 percent in total 
taxes. Now the total taxes of the average American family is well over 
38 percent. And you are well aware of the fact that we spend more on 
taxes than

[[Page S3211]]

we do on food, clothing, and shelter combined. We need to take a look 
at what we are spending and how we are deploying it, to see what has 
happened to what we thought were our wage increases. We have had a lot 
of wage increases, but we end up with less and less. It turns out that 
the wage increase for America has been stolen by the Government. If we 
had the kind of income that we have now and we were paying 27.7 in 
total taxes like we were in 1955, we would have had real wage 
increases.
  Mr. President, today is April 15. It is tax day. Yet most Americans 
do not realize that we are forced to pay a double tax. We pay income 
tax on the Social Security taxes that are deducted from our check, on 
those taxes which are pulled out before we ever see our check. We pay 
income taxes on that tax. That is particularly unfortunate. We are 
double taxed. Money that we never see, money that goes to Government, 
we pay a second tax to Government on that money. It does not make 
sense.
  Interestingly enough, this is not a tax that hits American businesses 
the same way. As you will recall, half of the Social Security tax is 
paid by citizens; half is paid by corporations or the employers. The 
citizen who pays the tax pays a double tax--not only pays the Social 
Security tax but then has an income tax on that same money that is 
required to be taken out of his remaining funds. The business that pays 
Social Security taxes gets to deduct from its other taxes what it has 
paid in Social Security taxes, or gets to deduct from its taxable 
income what it has paid in Social Security taxes.

  So the business community gets fair treatment of a single tax while 
the working individual has a double tax situation there, and it is time 
to end that kind of arbitrary, unreasonable, unequal, discriminatory 
approach to the worker and to provide parity with the reasonable 
expectation that is demanded from the employer and the corporation. If 
this is deductible to the employers and to corporations and to 
businesses, the payment of those taxes should also be deductible to 
individuals in our culture.
  The ordinary citizen, the worker, cannot though, and it is time that 
we lift the American worker at least to tax parity and to tax equality, 
a position that they should share with the corporate community and the 
business community.
  For those who are fond of saying that every tax break is a tax break 
for the rich, it is time to think again. This is not a proposal that is 
designed to help people who make millions and millions of dollars. 
Social Security taxes are only levied on the first $65,000 of income. 
If we provide a deduction for those Social Security taxes which are 
paid, the person who makes $65,000 in income does not have any smaller 
deduction or any smaller benefit than the person who makes $650,000 in 
income or the person who makes $65 million in income. The tax benefit 
is the same once you reach the $65,000 level.
  So this is a tax benefit that is not focused on the rich. It is not 
any more valuable to the very rich than it is to the middle class. The 
truth is this is the middle-class tax cut that is fair. It provides for 
people who work, that they will not be double taxed on their work. 
Social Security taxes are the only tax in America levied on work. 
Income taxes are levied on earned income or unearned income, but Social 
Security taxes are levied on work. How ironic that in America we would 
have a double tax on work. We ought to be standing for a proposition, 
instead of double taxing work, at least give it equality with other 
income that would not be double taxed. We would give Americans an 
opportunity to retain some of that for which they had worked so they 
could spend it themselves.
  There would be a significant improvement in the setting for the 
average two-income family in America. The average two-earner family 
pays about $1,227 more in income taxes because they cannot deduct from 
their income tax the taxes they have already paid to Social Security. 
If we allow them to deduct those, that means that $1,227 that is paid 
in income taxes would be available for individuals to have to meet 
their family needs. This is not just a way of saying that people will 
be able to spend the money. It is saying that people will be able to 
spend this money on themselves rather than have Government spend this 
money on more Government programs. I think most Americans understand 
that they would be better off deciding what they need most and how best 
to meet those needs than expecting Government to spend the money for 
them.
  The thrust of the matter is that this $1,227 per year for the average 
two-income family would be a welcome relief from a tax load which is 
higher than it has ever been before in the history of this country.
  I had the privilege of being Governor in my State for two terms 
before I came here, and I know what jobs mean and how important jobs 
are. What is interesting to note is that if we were to implement this 
tax measure of relief for the American people, the scholars estimate it 
would mean 900,000 new jobs in this country. Nine hundred thousand new 
jobs would provide a real spurt of growth for this Nation and would 
help us reacquire the sense of dynamic that America has had 
historically and that our heritage contains. Nine hundred thousand new 
jobs would be an average of about 18,000 jobs per State. I know that 
18,000 jobs is equivalent to at least 3 car plants, new car plants, in 
a State. That would mean growth. That would mean opportunity. It would 
build for the future of this great country. I think we need to remind 
ourselves on a consistent basis when we tax people it is not a question 
of whether or not the money will be spent; it is a question of whether 
Government will spend the money or people will spend the money. I 
believe people can decide best.

  The passage of this act would affect the take-home pay of 77 million 
Americans who would have more resources to devote to meet the needs of 
their families, and it would be a measure of providing equity and 
fairness so that they would not be double taxed and neither would they 
be taxed unequally and in a discriminatory way as compared to the taxes 
which are levied on the corporate community.
  Mr. President, so often we say that bigger Government is required 
because some think that families will not do what they ought to do. I 
believe we have come to a juncture where Government has made it 
impossible for families to do what they need to do. Families want to 
share. They want to be involved in their communities. They want to be 
involved in reaching out to other people. When Government takes such a 
big portion of your income, when you have to work 3 hours every day to 
pay your taxes and you struggle through the rest of your day to meet 
your own needs, it does not leave much opportunity for sharing.
  The purpose of Government is related to growth. It is related to the 
growth of people, not the growth of Government. If we are to perpetuate 
a system where the only thing that can grow is Government, we have made 
a mistake. We would have destroyed the genius of America and repudiated 
our rich history of being able to grow our way through any challenge. 
It is time for us, the United States of America, the city on the Hill, 
again to be a city of hope and opportunity. It is time for us to 
provide a basis upon which the American worker and the American economy 
can grow. We can do that by ceasing the practice of double taxing work. 
We must stop double taxing working Americans.
  The bill, which I now send to the desk, is cosponsored by Senators 
Craig, Shelby, Cochran, Hagel, and Hatch. It would end the double 
taxation that American workers pay on Social Security taxes, because 
income taxes are levied on those amounts which are deducted as payroll 
taxes, known as Social Security taxes.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 579

       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 ``Working Americans Wage 
     Restoration Act''.

     SEC. 2. DEDUCTION FOR OLD-AGE, SURVIVORS, AND DISABILITY 
                   INSURANCE TAXES OF EMPLOYEES AND SELF-EMPLOYED 
                   INDIVIDUALS.

       (a) Taxes of Employees.--

[[Page S3212]]

       (1) Deduction allowed in arriving at adjusted gross 
     income.--Section 62(a) of the Internal Revenue Code of 1986 
     (defining adjusted gross income) is amended by inserting 
     after paragraph (16) the following new paragraph:
       ``(17) Employees' oasdi taxes.--The deduction allowed by 
     section 164(g).''
       (2) Determination of deduction.--Section 164 of such Code 
     (relating to deduction for taxes) is amended by redesignating 
     subsection (g) as subsection (h) and by inserting after 
     subsection (f) the following new subsection:
       ``(g) Employees' OASDI Taxes.--
       ``(1) In general.--In the case of an individual, in 
     addition to the taxes described in subsection (a), there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the sum of--
       ``(A) the taxes imposed by section 3101(a) for the taxable 
     year, and
       ``(B) the taxes imposed by section 3201(a) for the taxable 
     year but only to the extent attributable to the percentage in 
     effect under section 3101(a).
       ``(2) Special rule for certain agreements.--For purposes of 
     paragraph (1), taxes imposed by section 3101(a) shall include 
     amounts equivalent to such taxes imposed with respect to 
     remuneration covered by--
       ``(A) an agreement under section 218 of the Social Security 
     Act, or
       ``(B) an agreement under section 3121(l) (relating to 
     agreements entered into by American employers with respect to 
     foreign affiliates).
       ``(3) Coordination with special refund of social security 
     taxes.--Taxes shall not be taken into account under paragraph 
     (1) to the extent the taxpayer is entitled to a special 
     refund of such taxes under section 6413(c).
       ``(4) Coordination with earned income credit.--No deduction 
     shall be allowed under paragraph (1) for any taxable year if 
     the individual elects to claim the earned income credit under 
     section 32 for the taxable year.''
       (3) Conforming amendment.--The next to last sentence of 
     section 275(a) of such Code is amended by inserting ``or 
     164(g)'' after ``164(f)''.
       (b) Deduction for Self-Employed Individuals.--
       (1) In general.--Paragraph (1) of section 164(f) of the 
     Internal Revenue Code of 1986 (relating to deduction for one-
     half of self-employment taxes) is amended to read as follows:
       ``(1) In general.--In the case of an individual, in 
     addition to the taxes described in subsection (a), there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the sum of--
       ``(A) the taxes imposed by section 1401(a) for such taxable 
     year, plus
       ``(B) 50 percent of the taxes imposed by section 1401(b) 
     for such taxable year.

     In the case of an individual who elects to claim the earned 
     income credit under section 32 for the taxable year, only 50 
     percent of the taxes described in subparagraph (A) shall be 
     taken into account.''
       (2) Conforming amendments.--
       (A) Section 32(a)(1) of such Code is amended by inserting 
     ``who elects the application of this section'' after 
     ``eligible individual''.
       (B) The heading for section 164(f) of such Code is amended 
     by striking ``One-Half'' and inserting ``Portion''.
       (C) Section 1402(a)(12) of such Code is amended--
       (i) by striking ``one-half'' the first place it appears and 
     inserting ``portion'', and
       (ii) by striking subparagraph (B) and inserting:
       ``(B) a percentage equal to the sum for such year of the 
     rate of tax under section 1401(a) and one-half of the rate of 
     tax under section 1401(b);''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.
                                 ______