[Congressional Record Volume 149, Number 53 (Wednesday, April 2, 2003)]
[Senate]
[Pages S4705-S4707]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself, Mr. Bayh, Mr. Chambliss, Mr. Miller, 
        and Mr. Warner):
  S. 767. A bill to amend the Internal Revenue Code of 1986 to repeal 
the increase in the tax on social security benefits; to the Committee 
on Finance.
  Mr. SMITH. Mr. President, on behalf of myself and my friend and 
colleague Senator Bayh of Indian, I rise today to introduce legislation 
that will repeal a ten year old tax increase on our senior citizens. We 
are joined by Sens. Chambliss, Miller, and Warner. This tax increase 
was passed in 1993 and has been an onerous and unjust tax on the Social 
Security benefits of America's seniors.
  I am pleased to have the support of the following organizations for 
this important legislation: United Seniors Association, National 
Taxpayers Union, The Seniors Coalition, Americans for Tax Reform, The 
60 Plus Association.
  Mr. President, I ask unanimous consent that their letters be printed 
in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:


                                   United Seniors Association,

                                      Fairfax, VA, March 13, 2003.
     Hon. Evan Bayh,
     Senate Russell Building,
     Washington, DC.
     Hon. Gordon Smith,
     Senate Russell Building,
     Washington, DC.
       Dear Senators: On behalf of United Seniors Association's 
     1.5 million-plus nationwide grassroots network, we 
     enthusiastically support your legislation, the Social 
     Security Tax Equity Act of 2003.
       For over a decade, United Seniors Association has led the 
     charge to eliminate all taxes on Social Security benefits. 
     Your legislation will substantially lift financial burdens 
     from millions of Seniors and I commend you for your 
     leadership.
       Before 1984, no one paid federal income taxes on their 
     Social Security benefits. President Clinton signed the 
     Omnibus Budget Reconciliation Act of 1993, which raised to 85 
     percent the amount of Social Security benefits subject to 
     income taxes. Each year since 1993, more and more Seniors 
     have been hit by this Seniors-only tax. Proponents of the tax 
     hike maintained that it would only affect ``rich Seniors.'' 
     However, that was not true. The tax has hit Seniors with 
     moderate incomes most heavily.
       The taxation of benefits is confusing, unfair, and makes 
     middle class Seniors pay higher marginal tax rates than many 
     millionaires. Every year, more Seniors feel the tax pinch 
     because the income thresholds are not indexed for inflation. 
     Over 9 million Seniors now pay this unfair tax. This tax is 
     not only bad policy, but it is a disincentive for continuing 
     a productive work-life after age 65.
       Again, we applaud both of you for your efforts. United 
     Seniors Association stands ready to help you pass this 
     important piece of legislation not only for Seniors, but for 
     their children, and their grandchildren.
           Sincerely,
                                                Charles W. Jarvis,
     Chairman and Chief Executive.
                                  ____



                                     National Taxpayers Union,

                                   Alexandria, VA, March 12, 2003.
     Hon. Gordon Smith,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
     Hon. Evan Bayh,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senators Smith and Bayh: On behalf of our 335,000 
     members, the National Taxpayers Union (NTU) strongly 
     supports, in addition to the urgently needed tax relief 
     contained in the President's plan (S. 2 by Senators Nickles 
     and Miller), your proposed legislation to repeal the 1993 
     imposed upon Social Security recipients. While NTU would 
     prefer the repeal of all taxes on Social Security benefits, 
     we are pleased to endorse your proposal as a good first step.
       As you know, prior to 1993, seniors paid taxes on half of 
     their Social Security benefits if their combined income 
     exceeded certain levels. In 1993 the taxable portion of 
     Social Security benefits was increased to 85% for individuals 
     with income exceeding $34,000 and couples with incomes 
     exceeding $44,000. This punishing level of taxation applies 
     to almost a fourth of all Social Security recipients. It 
     penalizes seniors who choose to save their money or keep 
     working. For many seniors, just as in the case of dividend 
     income, this taxation is clearly double taxation.
       Again, in addition to the critical need for the Senate to 
     pass the ``Jobs and Growth Act of 2003,'' we would urge your 
     Senate colleagues to pass your repeal of the 1993 tax on 
     Social Security benefits as an important first step on the 
     road to total repeal of all such taxes on Social Security 
     income for retirees.
           Sincerely,
                                                     Al Cors, Jr.,
                               Vice President, Government Affairs.

[[Page S4706]]

     
                                  ____
                                        The Seniors Coalition,

                                  Springfield, VA, March 18, 2002.
     Hon. Gordon H. Smith,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
     Hon. Evan Bayh
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senators Smith & Bayh: On behalf of our four million 
     senior members and supporters nationwide, I commend you for 
     introducing the Social Security benefits that unfairly 
     targets seniors and results in a disincentive for them to 
     work, invest and save. We likewise applaud you for your 
     commitment to a more equitable and nondiscriminatory tax 
     system for older Americans.
       As you know, Congress passed a law in 1983 that required 
     Social security beneficiaries to pay taxes on 50 percent of 
     their benefits when they exceeded certain income levels. In 
     1993, Congress increased the threshold to 85 percent of 
     Social Security benefits for single retirees with income 
     above $34,000 and for couples with income over $44,000. Since 
     Social Security taxes are only 50 percent deductible (the 
     employer's share), and seniors have already paid taxes on 
     their payroll tax contribution, they are currently taxed 
     twice when they pay taxes on more than 50 percent of 
     benefits.
       Seniors have spent a lifetime saving and investing in 
     America in order to enjoy financial independence and security 
     in retirement and to accrue assets for their children. Sadly, 
     however, the double tax on Social Security punishes years 
     spent exercising financial discipline. Worse yet, this tax 
     ultimately forces seniors to limit their non-Social Security 
     income or face the financial burdens it imposes at certain 
     levels of earned and investment income.
       While this double tax on Social Security clearly targets 
     seniors, our entire society bears an incalculable economic 
     penalty as an experienced and knowledgeable senior workforce 
     opts to sit on the sidelines rather than work and invest for 
     substandard returns. In the midst of this current economic 
     downturn, America would greatly benefit from the faithful 
     investment practices and the productive work habits of its 
     senior citizens.
       Your bill would put an end to the unfair and discriminatory 
     practice of double taxation of seniors' Social Security 
     benefits and encourage senior Americans to continue 
     contributing to the nation's growth. We therefore strongly 
     support the ``Social Security Tax Equity Act of 2003'' and 
     are ready to assist you in securing its passage.
           Sincerely,
                                                   Mary M. Martin,
     Executive Director.
                                  ____



                                     Americans for Tax Reform,

                                   Washington, DC, March 12, 2003.
     Hon. Gordon Smith,
     Russell Senate Building,
     Washington, DC.
       Dear Congressman Smith: On behalf of Americans for Tax 
     Reform (ATR), I want to thank you for introducing the Social 
     Security Tax Equity Act of 2003. ATR pledges full support for 
     this critically important legislation.
       As you know, the 1993 Clinton tax increase levied on Social 
     Security was on attack on senior citizens and workers. Worker 
     payroll contributions finance Social Security benefits. Yet 
     the benefits that senior citizens receive are again taxed--a 
     second time--if these citizens have incomes above a threshold 
     amount. This is an unjust form of double taxation and it must 
     be eliminated.
       Before the 1993 tax increase, single retirees with incomes 
     above $25,000 and $32,000 for couples paid taxes on half of 
     Social Security benefits. The 1993 increase, however, raised 
     the threshold income for single retirees to $34,000 and 
     $44,000 for couples. The increase also imposed levies on 85 
     percent of Social Security benefits--a 35 percent increase on 
     benefits. Roughly a quarter of Social Security recipients now 
     pay higher taxes.
       ATR is encouraged by your bold leadership to roll back this 
     unfair form of double taxation. Repealing the 1993 tax 
     increase will yield economic benefits that will grow our 
     economy and reward productive behavior. We applaud your 
     effort to fight for working men and women and especially for 
     our elderly citizens.
           Sincerely,
     Grover Norquist.
                                  ____



                                      The 60 Plus Association,

                                    Arlington, VA, March 25, 2003.
     Hon. Gordon H. Smith,
     Hon. Evan Bayh,
     U.S. Senate,
     Washington, DC.
       Dear Senator Smith and Bayh: On behalf of the 60 Plus 
     Association, I want you both to know you have our complete 
     support for legislation you soon plan to introduce, the 
     Social Security Tax Equity Act of 2003.
       Increased taxes for Social Security benefits are a crystal 
     clear example of government greed at the expense of America's 
     seniors. Social Security benefits are already financed by 
     worker payroll tax contributions--but to tax senior citizens 
     a second time on their Social Security benefits should they 
     elect to continue working only burdens retired Americans 
     unfairly.
       The 60 Plus Association stands foursquare with any group or 
     individual dedicated to maintaining and strengthening Social 
     Security. This vital program ought not be the catalyst for 
     exacting tax revenues on hard-earned retirement benefits.
       Working allows seniors to earn income that in turn boosts 
     economic growth. Tax penalties on these additional retirement 
     incomes discourage seniors from continuing to lead active, 
     productive lives according to their ability and choosing. 
     That's wrong and needs to be remedied.
       Senior, the 60 Plus Association is with you in eliminating 
     this double taxation of Social Security benefits.
           Kind regards,
                                                  James L. Martin,
                                                        President.

  Senior citizens pay Federal taxes on a portion of their Social 
Security benefits if they receive additional income from savings or 
from work. As ludicrous as it seems, our seniors who have worked hard 
their lives, and planned and saved for their retirement are being taxed 
a second time, when they need their income the most.
  One of the most unfair tax increases occurred in the 1993 tax bill. 
Before 1993, seniors paid taxes on half their Social Security benefits 
if their combined income--which includes adjusted gross income and one-
half of their Social Security benefits--exceeded $25,000 for 
individuals or $32,000 for couples. In 1993 this tax was increased--
individuals with incomes above $34,000 and couples with income above 
$44,000 now had a portion of their Social Security benefits taxes at 85 
percent.
  I strongly believe that this increase in the taxable portion of 
Social Security benefits violated the contract seniors had with the 
United States government. This tax increase was unfair and it provided 
a disincentive to our seniors who chose to save or chose to work. This 
single provision increased taxes for almost one-quarter of Social 
Security recipients.
  Seniors have spent a lifetime saving and investing in America in 
order to enjoy financial independence and security in retirement and to 
accrue assets for their children. Sadly, the double tax on Social 
Security punishes years spent exercising financial discipline. Worse 
yet, this tax ultimately forces seniors to limit their non-Social 
Security income or face the financial burden it imposes at certain 
levels of earned income.
  This tax hits middle income seniors, kicking in as soon as that 
senior crosses the $34,000 mark.
  While this double tax clearly targets seniors, our entire society 
carries the economic burden as an experienced and knowledgeable senior 
workforce chooses to sit on the sidelines rather than work and invest 
for substandard returns. In the middle of the current economic 
downturn, America would greatly benefit from the faithful investment 
practices and the productive work habits of its senior citizens.
  I have been a cosponsor of various bills in the past few Congresses 
to repeal this unfair tax. As a member of the Senate Finance Committee, 
I am pleased to announce the introduction of the Social Security Tax 
Equity Act of 2003.
  I believe that we must do everything possible to turn back this 10 
year old tax increase and return some small measure of equity and fair 
play to those senior citizens affected by that tax. I urge you all to 
join me and my fellow senators by becoming cosponsors of this 
legislation, and roll back this unfair form of double taxation on our 
senior citizens and encourage them to continue contributing to the 
Nation's growth. Those who have helped build this great country through 
their lifetimes deserve our support now.
  I ask unanimous consent that the text of the Social Security Tax 
Equity Act of 2003 be printed in the Record.

                                 S. 767

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY 
                   BENEFITS.

       (a) Repeal of Increase in Tax on Social Security 
     Benefits.--
       (1) In general.--Paragraph (2) of section 86(a) of the 
     Internal Revenue Code of 1986 (relating to social security 
     and tier 1 railroad retirement benefits) is amended by adding 
     at the end the following new flush sentence:
     ``This paragraph shall not apply to any taxable year 
     beginning after December 31, 2002.''
       (2) Effective date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.
       (b) Revenue Offset.--The Secretary of the Treasury shall 
     transfer, for each fiscal year, from the general fund in the 
     Treasury to the Federal Hospital Insurance Trust Fund 
     established under section 1817 of the Social Security Act (42 
     U.S.C. 1395i) an amount equal to the decrease in revenues to 
     the Treasury for such fiscal year by reason of the amendment 
     made by this section.

[[Page S4707]]

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