When it comes to the fairness test, the White House fails it, hands down. At least on senior issues.
The White House proposal to increase the percentage of Social Security benefits subject to taxation fails the fairness test and should be rejected by members of Congress.The plan being considered by Congress would subject 85 percent of Social Security benefits to taxation, a sharp increase from the 50 percent of benefits currently subject to tax. As recently as 10 years ago, Social Security benefits were completely exempt from federal income tax.
I applaud the efforts to reduce the budget deficit, and seniors recognize that deficit reduction will require shared sac-ri-fice. Tax increases must be fair and equitable to all segments of society. But the president's plan would place an unfair portion of the national tax burden on the backs of America's senior citizens.
It's easy to see that the budget bill discriminates against seniors by singling them out to pay more than their fair share of the cost of government. While most Americans will not pay higher income taxes unless their incomes are over $100,000, seniors will pay higher taxes on incomes down to $25,000.
For example, a Social Security beneficiary with total income of $40,000, including $8,000 in Social Security benefits, will face an additional annual tax burden of $784. But a non-beneficiary with an income of $40,000 would face no additional tax liability. Where is the fairness in this?
In addition, the president's flawed plan gets worse with age. "Bracket creep" has been eliminated for every taxpayer with one exception - Social Security beneficiaries. When Social Security benefits were first taxed in 1984, beneficiaries paid taxes only if their income exceeded $25,000 ($32,000 per couple).
But those thresholds haven't changed in a decade. As a result, thanks to inflation, more and more beneficiaries have "crept" over the thresholds. The percentage of beneficiaries who now pay tax on benefits has nearly tripled - thanks to this bracket creep. And there's no end in sight.
By 1998, about one-third of all beneficiaries will pay taxes on benefits. That means that over time, many moderate- and low-income retirees will see their incomes pushed over the tax thresholds because those thresholds are not indexed to inflation.
In the name of fairness, this proposal should be rejected. Most Americans under 65 won't see a tax hike unless their incomes are more than $100,000, so why impose higher taxes on seniors with incomes a quarter of that amount? Seniors want to do their part to reduce our federal budget deficit. But we shouldn't be called on to shoulder the brunt of the nation's tax burden. Every American must contribute and sacrifice to make the plan successful.
Seniors will be following what's going on in Congress very closely. Congress will cast its votes this summer. And you can bet that older Americans will cast their votes accordingly next year.
(Martha A. McSteen, acting commissioner of the Social Security Administration from 1983-86, is president of the National Committee to Preserve Social Security and Medicare. With about 6 million members and supporters, the group is the nation's second largest senior advocacy organization.)