[Congressional Record Volume 149, Number 27 (Thursday, February 13, 2003)]
[Senate]
[Pages S2471-S2472]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ENSIGN (for himself and Mrs. HUTCHISON):
  S. 397. 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.
  Mr. ENSIGN. Mr. President, 194 years ago this week, a son was born to 
Nancy and Thomas Lincoln in Elizabethtown, Kentucky. That son, Abraham, 
would go on to become President of the United States at one of the most 
defining times in our Nation's history.
  President Lincoln is still revered today for his leadership and 
vision of a country in which all citizens have the opportunity to 
succeed. In 1864, when the outcomes of the war and his re-election were 
in question, he asked soldiers from Ohio's 66th regiment to stop at the 
White House on their way home so he could express his appreciation. 
President Lincoln shared with them the following:
  ``I beg you to remember this . . . I happen temporarily to occupy 
this big White House. I am a living witness that any one of your 
children may look to come here as my father's child has. It is in order 
that each of you may have through this free government which we have 
enjoyed, an open field and a fair chance for your industry, enterprise 
and intelligence; that you may all have equal privileges in the race of 
life, with all its desirable human aspirations. It is for this the 
struggle would be maintained, that we may not lose our birthright . . . 
The nation is worth fighting for, to secure such an inestimable 
jewel.''
  That jewel--the American dream that should be within reach of all who 
grasp for it--has been the hope of generations in this nation. This 
Nation that elected Abraham Lincoln--born in a one-room log cabin and 
once a farmhand . . . This Nation that harvests in its children a 
yearning to soar beyond the earth's atmosphere . . . This Nation that 
preaches that education, hard work, and family bring success.
  Unfortunately, making a living, raising a family, and educating 
ourselves and our children is becoming more and more difficult in 
America. And it's the

[[Page S2472]]

leaders of this nation that have made the obstacles to success higher 
to get over and wider to get around.
  Here in Washington, we've built a wall of obstacles with one tax 
burden after another. Our Founding Fathers outlined exactly the powers 
they wanted Congress to have in Article I, Section 8 of the 
Constitution. Just because the first thing listed is the power to lay 
and collect taxes, doesn't mean it's the power we need to exercise the 
most.
  Not only should we take the responsibility of stopping the building 
of this wall of tax burdens, we need to step up and start removing 
these burdens. We need to alleviate the tremendous stress that comes 
with having to work to pay so much of what we earn to the government.
  Last year, the average taxpayer in my home State of Nevada did not 
finish paying taxes until April 27, which was also the average across 
the United States. Everything earned for the first 117 days of the year 
went to a government entity. In comparison, the average American spends 
only 106 days paying for food, clothing, and shelter combined.
  That doesn't leave enough days to pay for a family vacation or to 
save for education or to pay medical bills or to save for retirement or 
to take a class to improve skills or to do whatever you want with your 
money--after all, it is your money.
  In itself, our tax system is unfair because American families have to 
work harder to make more money only to pay greater taxes, and workers 
bear the burden of a government that continues to find ways to tax them 
into working even harder.
  Whatever our individual thoughts are on tax relief, we must agree 
that, although being taxed has become a challenging part of life, the 
idea of being double taxed is truly the government stealing from 
working Americans. Double taxation is immoral. Think about it in terms 
of a parent teaching a child. I am a parent of three young children. 
Just as I would explain to my children that it is not all right to take 
a piece of candy that they have not paid for, I would also tell them it 
is absolutely not okay to charge someone for something they aren't 
getting. But that is exactly what our government is doing with the 
Social Security tax.
  Time magazine recently called it ``The Really Unfair Tax.'' I call it 
the Social Security double dip. The take-home pay of 100 million 
Americans is fodder for this gutsy government scam. In very simple 
terms, this means that when a family pays income tax, the portion that 
is withheld for Social Security--money that they never see--is 
calculated into their personal income. The first dip is the tax that 
workers pay on wage income. The second dip is the icing on the cake for 
the government--taxing money that they are already taking anyway. 
Working Americans are forced to pay income tax on their Social Security 
tax. It is textbook double taxation, and if a business concocted such a 
scheme it would be shut down. How can we continue this policy if we 
would teach our children that it is wrong? This is only one reason why 
the tax is unfair.
  Another example of the outrageousness of this tax is that while 
working families are double taxed, American businesses are not. You 
see, half the Social Security tax is paid by workers, but employers pay 
the other half. Businesses and corporations get to deduct what they pay 
in Social Security taxes--a savings that working families are not 
afforded. This tax discrimination is unacceptable.
  We must eliminate this absolutely wrong tax policy that mocks our 
Constitution's goal to ``promote the general Welfare.'' I propose an 
above-the-line deduction for Social Security taxes so that an 
individual's Social Security taxes are not included in the calculation 
of income for income tax purposes. It's the right thing to do if we 
want to lead this Nation by example. Providing a Social Security tax 
deduction makes sense and will make a real difference to working 
families. About 100 million individuals and families would feel the 
savings--to the tune of around $2,000 each. Such savings translate into 
real growth and opportunity. Scholars predict that the Payroll Tax 
Deduction Act would mean 900,000 new jobs in this country, and it also 
means a Nation of workers who get to keep more of their hard-earned 
money.
  When government takes money away from working families, it stifles 
growth and builds obstacles to success. Let's take this chance to 
provide relief to America's families, open the doors to opportunity, 
and let future generations know that the American dream--the jewel that 
inspired Abraham Lincoln--is well within the reach of all who truly 
desire it.
  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. 397

       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 ``Payroll Tax Deduction Act''.

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

       (a) Taxes of Employees.--
       (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 (18) the following new paragraph:
       ``(19) 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.--Subsection (a) of section 275 of 
     such Code is amended in the matter following paragraph (6) 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, 
     2004.
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