[Congressional Record Volume 144, Number 129 (Thursday, September 24, 1998)]
[Senate]
[Page S10923]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID:
  S. 2515. A bill to amend the Internal Revenue Code of 1986 to 
increase the amount of Social Security benefits exempt from tax for 
single taxpayers; to the Committee on Finance.


                SENIOR CITIZEN TAX REDUCTION ACT OF 1998

 Mr. REID. Mr. President, today I introduce legislation which 
will help alleviate a tax burden for senior citizens with modest 
incomes.
  Until 1984, Federal taxes were not imposed on social security 
benefits. People pay taxes their whole working life for social security 
benefits and I do not believe that these payments should be taxed when 
they retire.
  This legislation will help those single persons, widows and widowers 
with moderate incomes to keep more of their own money in their own 
pockets. When you responsibly plan for your retirement, you should be 
able to count on your government to meet its obligations under the 
contract you've made with social security.
  Under current law, there is first, a calculation to determine whether 
any of your social security benefits are taxable. The base amount is 
$25,000 for singles and $32,000 for married persons. This base amount 
is figured by taking one-half of your social security benefits and 
adding in your other income. If you are single and the result is under 
$25,000, you don't pay taxes on your social security benefit. If the 
amount is over this base amount, then a further calculation is done to 
figure what portion of your social security benefit is taxable.
  This further calculation determines how much of a person's benefit is 
taxed and the answer depends on the total amount of a person's social 
security benefit and their other income. Right now, if the total of 
one-half of your benefits and all your other income is more than 
$34,000 for a single person and $44,000 for married persons, up to 85% 
of your benefits could be taxable. My legislation increases the single 
amount to $44,000.
  Let me give you an example of the effect my law would have. A widow 
has $37,000 total income consisting of $10,000 in social security 
benefits and $27,000 in other income. So for this widow, she adds half 
of her social security benefit which is $5,000 and her other income of 
$27,000 for a total of $32,000. Under the current law, since she has 
over $25,000 total income, she does the next calculation. The result is 
that she has to include $3,500 of her social security benefits in her 
adjusted gross income. Under my legislation, none of her social 
security benefits would be taxable.
  While I realize that this may be considered a small step in removing 
an unfair tax burden, it is also an important first step to those 
seniors who have made America the greatest country in the world. I 
encourage the committee to give favorable consideration to our 
legislation.
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