A House and Senate conference committee is attempting to reconcile two landmark bills which will dramatically increase Social Security taxes over the next 25 years in the attempt to assure the financial soundness of the system for the next half century and beyond.
The system today is paying out more in benefits each year than it takes in in taxes. The Carter administration's concern over the retirement provisions led to the passage of the House version in late October and the Senate approval of somewhat varied bill Nov. 4.
Sen Gaylord Nelson (D-Wis ), the floor manager of the legislation, said the Senate bill "assures everyone in the United States - 104 million persons who pay Social Security taxes and 33 million beneficiaries - that the fund will be secure for the next 75 years.um tax on the hightes paid workers would more than double under the Senate version to $2,279 by 1986. For the average worker in the $10,000-a-year bracket, the current $585 annual tax would reach $710 by 1986. The House bill would raise the maximum tax even higher and would an add an estimated $208 billion to the taxes of workers and employers combined over the next 10 years.
Officials said the Senate bill would raise Social Security taxes about $70 billion to $75 billion through 1983, on t top of increases already scheduled to take effect under existing legislation.
The Senate rejected a provision approved in the House version that would have removed the $3,000 ceiling on what a Social Security beneficiary 65 years or older can earn from a job without loss of benefits.
Sen. Barry Goldwater (R-Ariz) called the limit "outrageous discrimination" against elderly persons who want to work. Sen. Robert Dole (R.Kan) also defended the proposed amendment, but Sen. Frank Church (D-Idaho) opposed it. Church said the main beneficiaries of such a change would be professionals "the doctors, the lawyers, the business executives, the Wall Street financiers." In a crucial vote, Church forced the adoption of a substitute provision which would remove the earnings limitation totally only at the age of 70.
Other provisions of the Senate version would raise the limit for all beneficiaries from the current $3,000 to $4,500 next year and $6,000 in 1979.
Church supporters defended their package of the 70-year ceiling removal and the latter increase in the limitation as costing $700 million to $800 million a year less than the Goldwater-Dole plan to totally remove the ceiling at age 65.
Another amendment included in the bill would provide semi-annual instead of annual cost-of-living increases in Social Security benefits, but only if prices rise at least 4 per cent in a six-month period. Church and his supporters backed this proposal also as a safe-guard for pensioners against rapid inflationary changes.
One of the key points of the legislation shifts a higher tax burden onto employers than employees. Since 1935, workers and employers have paid the tax on a 50-50 basis, but Sen. Nelson inserted in the bill earlier approved by the Finance Committee a provision hitting the employers harder.
A hard-fought battle developed over this provision, leading to the dramatic 42-41 vote in which Vice President Mondale broke a tie with his first Senate vote.
At present worker and employer each pay the tax on the first $50,000 of an employee's annual salary from 1979 to 1984, and on the first $75,000 from 1965 on, while the employee pays the tax on a smaller maximum. The worker maximums would be $19,500 in 1979, rising to $30,000 by 1985 and gradually increasing to $75,000 but not until after the year 2000.
In 1986 a worker at the top taxable salary would pay $2,279, but his employer would pay $5,325.
Another provision approved by the Senate was one that has been passed several times before, but has been just in conference committee fights that is an amendment to remove the earnings limitation for blindpersons receiving disability insurance.
The Senate bill would raise Social Security tax rates from the 6.06 per cd for 1978 to 6.135 per cent in 1979-80, 6.6 per cent in 1981, 6.65 per cent from 1982-84, 7.05 per cent in 1985, 7.1 per cent in 1986-89, 7.55 per cent in 1990-94, 8.1 per cent from 1995-2000, per cent from 2001-10, and 9.2 percent from 2011 on.