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July 28, 2000, Friday, Late Edition - Final
SECTION: Section A; Page 18; Column 1; National Desk
LENGTH: 1066 words
HEADLINE:
House Passes Bill to Reduce Benefits Tax Passed in '93
BYLINE: By RICHARD W. STEVENSON
DATELINE: WASHINGTON, July 27
BODY:
The House today passed
legislation that would reduce taxes on some Social Security benefits, giving
Republicans another victory in their effort to make tax cuts a defining
election-year issue.
The vote was 265 to 159. Fifty-two Democrats broke
ranks to support the bill, which President Clinton said he would veto.
The bill would roll back a tax imposed in 1993, at Mr. Clinton's behest,
on part of the benefits received by the one-fifth of Social Security recipients
with the highest incomes.
The Senate voted earlier this month to approve
a similar measure as an amendment to another bill but later stripped out the
amendment for procedural reasons. Republicans said they hoped to bring it up
again.
It was the final major piece in a series of tax cuts brought up
this year by Republicans, who have succeeded in attracting considerable support
for the bills from Democrats in Congress even as Mr. Clinton has vowed to keep
them from becoming law. They include tax cuts for married couples, repeal of the
federal estate tax and expansion of retirement savings programs.
The
vote today came as Republicans prepared for the opening of their national
convention on Monday in Philadelphia. Republicans plan to use the convention to
press their case that voters will not see any substantial tax cuts, despite the
large and growing federal budget surplus, until a Republican is in the White
House.
"We're saying these are good, common sense tax cuts for the
American people, they ought to be signed, there's no excuse," said the speaker
of the House, J. Dennis Hastert of Illinois.
In a statement, Mr. Clinton
pressed his case that Republicans were frittering away the projected budget
surplus on tax cuts without addressing other long-term problems including the
solvency of Social Security and Medicare.
"I am disappointed that the
Republican Congress continues to strip away our fiscal discipline bill by bill
by passing another in a series of costly tax cuts that, taken together, will
spend our entire hard-earned surplus," Mr. Clinton said.
The bill passed
by the House today would repeal an element of the budget deficit-reduction plan
pushed through Congress by Mr. Clinton in 1993 without support from a single
Republican.
The 1993 measure increased to 85 percent, from 50 percent,
the part of Social Security benefits subject to income tax when a recipient's
income, including half the annual Social Security benefit, exceeds certain
levels. Those levels are $34,000 for a single person and $44,000 for a married
couple.
The tax revenue generated by the 1993 measure -- about $8
billion this year and rising fast -- is earmarked only for Medicare. It is
projected to double over the next decade.
The bill passed today would
reduce the taxable portion of the benefit back to 50 percent, the level agreed
on by President Ronald Reagan and Congress in 1983, when they first imposed a
tax on Social Security. The 50 percent level applies starting at lower income
thresholds than the 85 percent level -- $25,000 for a single person and $32,000
for a couple.
If enacted, the change would reduce federal revenues by
$117 billion over the next decade. The bill would provide for the same amount of
money to be channeled into Medicare out of general tax revenues, thereby,
leaving Medicare unharmed by the change, Republicans said.
Although it
would only affect relatively well off beneficiaries, the issue has considerable
political sensitivity. Vice President Al Gore cast the tie-breaking vote in the
Senate to pass the 1993 measure, and Republicans linked him to it throughout the
day of debate on the House floor today.
Facing attacks from Democrats
over their proposals to create private investment accounts within the retirement
system, Republicans also saw the bill as a way to attract support from older
voters, who polls show tend to be leery of tinkering with Social Security. The
bill also proved attractive to Democrats who have large numbers of elderly
voters in their districts and those who were always uncomfortable levying a tax
on Social Security.
Republicans said that since the additional levy on
Social Security had been imposed in 1993 to help eliminate the budget deficit,
it should be repealed now that the deficit has given way to a substantial
surplus. Moreover, they said, it was wrong to tax retirees on benefits they had
spent a lifetime earning.
Democrats said the bill would help those
retired people who needed help the least.
KEEPING TRACK
The
Republican Tax Agenda
MARRIED COUPLES -- Packaged as an effort to
reduce the marriage penalty on two-income couples, it would give a tax break to
nearly all couples, totaling $292 billion over 10 years. Has passed both houses
of Congress and was sent yesterday to President Clinton, who has said he will
veto it.
ESTATE TAX -- Would gradually repeal the federal estate
tax, reducing revenues by $100 billion over the next decade and $750 billion in
the second decade after it is fully phased in. Intended in part to help
family-owned farms and businesses, its benefits would go to the 2 percent of
estates with the highest values. Passed the House and Senate, but faces a veto.
SOCIAL SECURITY TAX -- Would roll back a tax increase imposed in
1993 on some Social Security beneficiaries. Would return to 50 percent, from 85
percent, the maximum amount of a benefit subject to income tax. Would reduce
revenues by $117 billion over 10 years. Passed yesterday by the House. Senate is
likely to take up similar measure. The president has said he will veto it.
SOCIAL SECURITY EARNINGS -- Removed the limit on how much Social
Security recipients could earn starting at age 65 without losing part of their
benefit. Passed by Congress and signed into law by Mr. Clinton.
RETIREMENT SAVINGS -- Would expand maximum allowable contributions to
individual retirement accounts to $5,000 from $2,000 and raise the limit on
employee contributions to 401(k) plans to $15,000 from $10,500. Would reduce
revenues by $52 billion over 10 years. Passed the House. Senate will take up a
similar measure in September. Opposed by the White House.
TELEPHONE TAX -- Would remove a 3 percent federal excise
tax on telephone service. Would reduce revenues by $55 billion over 10 years.
Passed the House. Has strong support in the Senate. The administration has not
opposed the bill.
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