WASHINGTON – First District Congressman Paul Ryan today voted to provide tax relief to millions of seniors who currently are subject to federal tax on as much as 85% of their Social Security benefits. The bill Ryan supported - The Social Security Benefits Tax Relief Act (H.R. 4865) – passed the House of Representatives by a vote of 265-159. It would repeal the additional tax on Social Security benefits created in the 1993 White House budget plan. The White House plan increased the taxable level of Social Security benefits from 50% to 85%. This legislation would repeal the additional 35% tax level established in 1993.

"Congress did the right thing today by easing the tax burden on Social Security recipients," said Ryan. "The 1993 tax hike was blatantly unfair. Today's seniors contributed throughout their whole working lives to Social Security, only to find that once they started receiving benefits the rules changed. Suddenly, many seniors faced a situation where up to 85% of their benefits could be taxed. This is something they didn't bargain for, and today the House passed a measure that corrects this."

Before 1984, Social Security benefits were exempt from federal income tax. In 1983, Congress made up to 50% of benefits taxable for Social Security recipients whose gross income plus half of their benefit rose above a certain threshold. In 1993, President Clinton proposed that up to 85% of Social Security benefits be taxable for those recipients whose incomes exceed $34,000 for individuals and $44,000 for married couples. This provision became part of the 1993 federal budget, and proceeds from this tax change are currently devoted to Medicare. The income thresholds are not indexed for inflation. In other words, more and more lower income people bear the burden of this tax each year.

"If enacted, today's legislation would mean that seniors can keep more of the Social Security benefits that they have earned," noted Ryan. "It helps address what amounts to double taxation for many seniors. At the same time, this bill protects Medicare by ensuring that the tax relief it provides will not translate into a decrease in funding for Medicare."

The Social Security Benefits Tax Relief Act requires that funds transferred from general revenues to Medicare be increased by an amount equal to revenues generated by the 1993 Social Security benefits tax. Therefore, Medicare's financing would be unaffected by today's tax repeal.

The Joint Committee on Taxation (JCT) estimates that over 8 million seniors will pay an average $1,180 tax on their Social Security benefits in 2001. At least 13 million seniors could pay an average $1,359 by the year 2010. According to a JCT preliminary estimate, H.R. 4865 would provide roughly $44.6 billion in tax relief over 5 years.