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House Passes Bill To Repeal Tax on Social Security Benefits The House recently passed legislation that would repeal a tax on Social Security benefits that affects some 9.8 million seniors. Under current law for individuals with annual incomes between $25,000 and $34,000, and couples with annual incomes between $32,00 and $44,000, up to 50% of their Social Security benefits are taxable. For individuals with more than $34,00 in annual income or couples with more than $44,000, up to 85% of their Social Security benefits are taxable. The House bill would "roll back" the second tier so that only a maximum of 50% of benefits would be taxed. Although the bill has wide support in the Senate, President Clinton has promised a veto. Critics charge that only 22% of the highest-income seniors would benefit from the tax repeal, while the tax revenue generated by the 1993 measure, about $8 billion this year and rising quickly, would be lost from the Medicare Trust Fund. That revenue, which is projected to total approximately $117 billion over the next 10 years, is currently earmarked solely for Medicare. To avert such an outcome, the House bill contains a provision which requires that annual transfers be made to the Medicare Trust Fund in amounts equal to what the Trust Fund would lose if this legislation is enacted. Medicare's Office of the Actuary says the bill would have no impact on Medicare. Source: "House Passes Bill To Reduce Benefits Tax Passed In '93," Richard W. Stevenson, The New York Times, July 28, 2000. "Repeal The Tax On Social Security," Representative Bill Archer (R-TX), The Washington Post, July 24, 2000. This article first appeared in Volume 6, Issue 1 of "The Social Security and Medicare Advisor" newsletter (November/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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