[Congressional Record Volume 147, Number 10 (Thursday, January 25, 2001)]
[Senate]
[Pages S570-S571]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SHELBY:
  S. 181. A bill to amend the Internal Revenue Code of 1986 to phase 
out the taxation of Social Security benefits; to the Committee on 
Finance.
  Mr. SHELBY. Mr. President, I rise today to introduce the Older 
Americans Tax Fairness Act of 2001. My bill would completely eliminate 
the unjust taxation of Social Security benefits by the end of 2005. The 
premise of my legislation is simple: Social Security benefits were 
never intended to be taxed. At its inception and continuing on for the 
next fifty years, Social Security benefits were exempt from taxation. 
Budgetary shortfalls in 1984 and 1993, however, led to the taxation of 
these benefits. The economic situation of America is now such that the 
continued taxation of Social Security benefits is wasteful and 
unnecessary.
  Under the current law, beneficiaries of Social Security are taxed on 
as much as 85 percent of their benefits. Furthermore, under the latest 
changes made by the Clinton Administration, some older Americans find 
themselves in a situation where for every dollar they earn over a 
threshold amount, $1.85 is subject to tax. In addition to being 
fundamentally and logically unfair, I believe such taxation provides 
senior citizens with a strong disincentive to work. In other words, 
taxation of benefits creates a situation where many senior citizens 
decide to not work rather than to earn additional income which may 
trigger taxation of their Social Security benefits.
  Working senior citizens add a wealth of knowledge and experience to 
the workplace. As such, we must make sure that our American workforce 
is not deprived of these valuable assets. Our laws should encourage, 
not discourage, older Americans with a desire to work to continue 
contributing to our society. Unfortunately, that is not what is 
happening today.
  Despite disincentives to work, many older Americans are forced to do 
so to be able to pay for living expenses, healthcare, prescription 
drugs and other essentials. To these people, every penny counts in 
determining whether they are able to meet these costs. However, when we 
tax Social Security benefits, we make it virtually impossible for 
millions of older Americans to make ends meet. In effect, taxation of 
Social Security benefits forces many Americans to endure stressful 
situations in what should be a special time of their lives. Clearly, we 
cannot allow such an unjust situation to continue.
  The taxation of Social Security benefits impacts a wide segment of 
society, including a large portion of the middle class. For example, a 
person with $35,000 in income and $10,000 in benefits pays almost 
$1,000 more in taxes than he or she would, had the Clinton-Gore 
increase not been enacted. By repealing the 1993 Clinton-Gore increase, 
as well

[[Page S571]]

as the 1984 tax on Social Security benefits, my bill would give 
millions of Americans the financial freedom and security they deserve.
  Mr. President, every day my office receives letters and calls from 
older Americans throughout the country voicing their opinions on the 
taxation of Social Security benefits. Their message is clear--stop the 
unfair taxation of these benefits. I ask my colleagues to listen to 
their constituents and to do the right thing by joining me in support 
of this bill.
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