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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