House Approves Tax Cut for Seniors

The Republican-led House voted Thursday to slash a tax paid by about one in five Social Security recipients as the GOP again defied a veto threat from President Clinton and continued its tax-cutting march to the party’s national convention in Philadelphia.

The bill would repeal a 1993 law that requires seniors whose total annual income exceeds $34,000 for singles and $44,000 for couples to pay more in taxes on as much as 85% of their Social Security benefits.

The measure now goes to the Senate, which is expected to approve it in late summer or early fall.

The House passed the bill, 265 to 159, with 52 Democrats joining the House Republican majority in supporting it--a sign of the election-year appeal of a tax cut for seniors, a group that traditionally has a high voter turnout. Still, the margin was short of the two-thirds majority that would be needed to override a presidential veto.

The bill is the latest in a series of tax relief measures moving through Congress this month. The other two measures, which Clinton also has vowed to veto as fiscally irresponsible, would eliminate inheritance taxes and cut taxes for married couples.

But Republicans have argued that, with the federal budget surplus projected to grow to $2.17 trillion over the next decade, tax relief is in order--a theme sure to be echoed as the party convenes Monday to officially tab George W. Bush as its presidential nominee.

Clinton on Thursday objected that the latest tax-cut proposal, like the rest of the recent GOP-sponsored bills, would benefit the most well-off taxpayers and drain surplus funds away from other needs. He criticized the new measure as a “misguided plan” that does nothing “for lengthening the life of Social Security and Medicare, nothing for a prescription drug benefit, nothing for education or other priorities. . . .

“This is the wrong approach. . . . In the interest of fiscal responsibility, I will veto this legislation.”

But in supporting the bill, Rep. Howard P. “Buck” McKeon (R-Santa Clarita) said: “President Clinton and Democratic leaders complain that Republican tax cuts benefit only the wealthy. Well, it seems to me that if you’re making $34,000 or $44,000 a year, you’re not wealthy. But I guess Democrats believe you are.”

In the first year of Clinton’s administration, the tax increase on Social Security benefits--already taxed under a 1984 law--was a key part of his plan to end the federal budget deficit.

During debate on the bill, Republicans clearly had election-year politicking in mind as, one by one, they attacked what they dubbed the “Clinton-Gore” tax hike on Social Security benefits. Vice President Al Gore, the presumed Democratic presidential nominee, cast the tie-breaking vote in the Senate seven years ago to pass Clinton’s deficit-reduction plan.

“Social Security checks should not arrive in the mailbox with a bill” from the Internal Revenue Service, said Rep. Bill Archer (R-Texas), chairman of the tax-writing House Ways and Means Committee.

But Democrats expressed alarm about the bill’s potential effect on Medicare, given that revenue from taxation of Social Security benefits goes into the Medicare trust fund.

Rep. Charles W. Stenholm (D-Texas) warned in a report his office distributed that the measure would “not only threaten the viability of the Medicare program for future generations but it will force an even greater squeeze on hospitals and other health care providers dependent on Medicare payments.”

House Minority Leader Richard A. Gephardt (D-Mo.) said: “This bill should be renamed. It should be the ‘Savage the Medicare Trust Fund Act.’ ”

Republicans countered that the money needed for Medicare would be replaced by revenue from the growing budget surpluses.

GOP leaders estimated that the tax cut would reduce federal revenue by $44.6 billion over five years. But Democrats said the longer-range effect needs to be taken into account, contending that the measure would deprive Medicare of $100 billion over the next 10 years and $464 billion through 2024.

Of the nation’s 43 million Social Security beneficiaries, about 9 million pay taxes on their benefits, according to federal officials. The average tax on those benefits will be $1,180 next year, according to Congress’ Joint Committee on Taxation.

The bill passed Thursday would not affect the 1984 law, under which seniors are required to pay taxes on as much as 50% of their benefits if their annual income exceeds $25,000 for an individual and $32,000 for couples. That law, Democrats pointed out Thursday, was signed by President Reagan to bolster the Social Security system.

All of the California House delegation’s 25 Republican members supported the bill reducing the tax on Social Security benefits. Five of the delegation’s 27 Democrats also voted for it: Lois Capps of Santa Barbara, Gary A. Condit of Ceres, Calvin M. Dooley of Visalia, Loretta Sanchez of Garden Grove and Ellen O. Tauscher of Pleasanton.

The vote came as Democrats and Republicans staged rallies in Washington aimed at driving home their arguments in the ongoing debate over tax cuts.

At the Capitol, GOP leaders sent congressional aides dressed as a bride and groom off to the White House to deliver the bill to cut taxes for married couples. The bill is designed to eliminate the tax code’s so-called marriage penalty, under which some couples pay more in taxes than they would if they filed individual returns.

But at the White House, Clinton spokesman Joe Lockhart scoffed at the bill as “the worst contrived marriage since our friends Darva Conger and Rick Rockwell got together--except this one should be called, under the Republican plan, ‘Who Wants to Help a Millionaire?’ ”

Clinton is expected to veto it sometime within the next two weeks.

At the GOP rally, House Speaker J. Dennis Hastert (R-Ill.) referred to the various GOP-sponsored tax-cut proposals as “good, common-sense tax cuts for the American people. They ought to be signed. There’s no excuse.”

He added: “We have a great record to leave town on. We’ve changed how America works.”

Democratic congressional leaders joined Clinton at a White House rally to press their case that Republicans have been ignoring the country’s real needs.

“The congressional Republican leadership is leaving town with a trunk full of unfinished business vital to the health of our economy and the well-being of our people,” the president said.

The bill to repeal inheritance taxes also has cleared both houses of Congress and is ready to be sent to Clinton, but GOP leaders decided to wait until later in the year--and closer to the November election--to do so.

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Times staff writer James Gerstenzang contributed to this story.