House Votes To Rescind Tax Increase

Thursday, July 27th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — The House capped a summer of tax-cutting by voting Thursday to rescind a 1993 tax increase that now applies to 9 million Social Security beneficiaries and more in the coming years.

Republicans, heading to their presidential convention, say they have carried out the will of the people, but President Clinton is poised to veto this and other GOP tax bills.

The legislation, approved 265-159, reduces taxes on Social Security for individuals with incomes above $34,000 and married couples above $44,000. Recipients would pay tax on 50 percent of benefits — the pre-1993 level — instead of the current 85 percent. Fifty-two Democrats voted for the bill.

``Social Security checks should not arrive in the mailbox with a bill from the IRS attached,'' said House Ways and Means Committee Chairman Bill Archer, R-Texas. ``It's unfair, it's unnecessary and it harms the retirement security of millions of Americans now and in the years to come.''

The vote came on the House's final day before House lawmakers were beginning their August recess. Action on the legislation was the finishing touch on what has been a sustained effort by the GOP majority to reduce the tax burden on Americans.

Also Thursday, the Republicans delivered to the White House, by way of staffers dressed as a bride and groom in a car decked with streamers and tin cans, a bill that would reduce income taxes for millions of married couples, including the 25 million who pay higher rates than they would if single.

In addition to the Social Security and marriage penalty tax cuts, Republicans are pushing legislation to phase out the estate tax and a federal phone tax, and provide tax breaks for businesses and health care.

Unlike the $792 billion tax bill package that Clinton vetoed last year, Republicans this year have moved their tax bills separately.

Democrats say they total $733 billion, close to last year's amount and above what is needed or fiscally wise. Democrats support more limited tax cuts, saying a larger share of future budget surpluses should go to health and education programs.

``This tax bill we are debating today and its reckless siblings threaten to pull the plug on our unprecedented prosperity and plunge us right back into the dark days of budget deficits,'' said Rep. Steny Hoyer, D-Md.

The 1993 Social Security tax increase was part of a large revenue and spending package assembled by the Clinton administration — without one Republican supporter — and aimed at reducing a budget deficit that then stood close to $300 billion.

The cost of the Social Security tax cut is estimated at more than $100 billion and the marriage penalty tax break at $292 billion over 10 years.

President Clinton on Wednesday told the GOP to ``stop passing tax bills you know I'll veto.'' Treasury Secretary Lawrence Summers said the Social Security bill would divert resources that could be used for a Medicare prescription drug benefit and senior advisers would urge Clinton to veto it.

About 9 million senior citizens now pay the higher Social Security tax rate, a number expected to reach 13 million by 2010. ``It penalizes seniors who work and discourages Americans from saving,'' said Rep. Pete Sessions, R-Texas.

Social Security tax proceeds go to Medicare, and the bill's supporters said any losses to the health care program would be made up from the non-Social Security budget surplus, which is expected to reach $2 trillion over the next decade.

Democrats offered a substitute that would raise the threshold for the 85 percent of benefit tax to $80,000 for individuals and $100,000 for families and condition the cut on Treasury Department confirmation that the on-budget surplus is sufficient to make up for losses to Medicare. The proposal, which Democrats said cost $40 billion less over 10 years, was defeated, 256-169.

In the Senate, Sen. Spencer Abraham, R-Mich., sponsor of companion legislation, said he had urged the Finance Committee to include his bill in tax relief legislation that Congress will consider this fall.

Last spring, Congress passed and the president signed into law an act that allows senior citizens age 65 to 69 to earn as much outside income as they want without losing Social Security benefits. It repealed a Depression-era law that reduced Social Security payments by $1 for every $3 over $17,000 a beneficiary earned.

White House press secretary Joe Lockhart, asked about the marriage penalty tax, said that Clinton ``in due time, will send it back'' to Congress with a veto.

Echoing the Democratic claim that it is heavily weighted toward benefits for the affluent, he said the Republican plan should be called ``Who Wants to Help a Millionaire.''