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House Votes to Repeal '93 Tax Increase on Social Security Benefits
July 28, 2000
Last week's issue reported on the House Ways and Means Committee Vote to repeal
the co-called Tier II tax on Social Security benefits implemented in the Clinton
administration's 1993 budget, which makes up to 85 percent of benefits subject
to income taxes for single retirees with incomes exceeding $34,000 and couples
with incomes exceeding $44,000.
While facing a threatened veto from President Clinton, the legislation had
significant Democratic supporters in both the House and Senate. Advocates correctly
point out that the 1993 Tier II provisions constitute double-taxation of benefits.
On the other hand, as reported last week, the move has been criticized by non-partisan
groups such as the Concord Coalition as a threat to Medicare and a bad precedent
for Social Security. Currently, the proceeds of the Tier II tax on Social Security
benefits are credited to Medicare. The Republican legislation would make up
for these lost credits to Medicare with pledges of general revenue funds. Republicans
have criticized Vice President Gore's Social Security plan for making pledges
of general revenue to the system, yet have supported legislation that makes
a similar pledge to Medicare.
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