The Senate Finance Committee appears disposed to kill one of President Carter's major proposals for shoring up the financially ailing Social Security system, but to approve a second proposal. The committee may vote today.
The Carter proposal expected to be killed would shift income tax revenues - at least $14.1 billion over the next five years - from the Treasury into the Social Security trust funds to help meet benefit costs.
The Carter request that could receive committee endorsement would require an employer to pay Social Security payroll taxes on all the earnings of his employees, not just the first $16,500 a year, as at present. The worker, however, would continue to pay only on his earnings up to the wage base cutoff.
Committee Chairman Russel B. Long (D-La.), who opposes the income tax fund shift but favors the second provision, said yesterday, "Some of the Republicans are reluctant to tax all of an employer's payroll - but I think the committee will do it." Long asserting he favors this payroll tax change said, "Not that I'm all that enthusiastic, but the government needs the money."
Long made clear yesterday that he wants to vote on ways to add revenues to the Social Security trust funds as soon as possible, even though the House hasn't acted yet. Other senators said they expect a vote today.
However, Gaylord Nelson (D-Wis.) said he would rather wait a while to vote, "look at a whole package" of options and have time for more study and analysis before voting.
He said, however, discussing the Carter plan to shift general revenue income tax funds to the Social Security trust fund, "I don't think that will fly" - a view shared by Long, Bob Dole (R-Kan) and several other members of the committee.
Using income tax funds, he said, could create "an open-ended Treasury" to tap for benefits instead of keeping the system reasonably self-financing.
He said he would probably support the administration recommendation for taxing an employer on his entire payroll to help finance benefits but only as part of an integrated package.
The Social Security system still has some reserves left, but the old-age fund is expected to be exhausted in 1983 and the disability fund in 1979.
Legislation is needed this year or next to increase revenues and put them back on a sound basis. Using some income-tax revenues and removing the ceiling on the taxable wagebase for employers were two of the President's key proposals.
Yesterday, the Finance Committee staff distributed an alternative proposal to raise what is needed over the five years, and for longer-term, but without using income-tax money.
Taxing employers on the entire salary of an employee for Social Security purposes, starting in 1978. (Carter 1979-81).
Increasing the taxable ceiling for employers by $2,400, in four steps from 1979-85, as Carter proposed.
Raising the Social Security tax on self-employed persons from the current 7 per cent to 7.5 per cent.
Diverting some additional revenues from the health-insurance fund.
Increasing the Social Security tax ployers and employees, starting in 1981 instead of 1985 as proposed by Carter, and making certain other tax increases take place in 1990 instead of 2011.
Altering the benefit formulas so that by 2050, a worker would get back in benefits only 31 per cent of the wages he had earned monthly before retirement, instead of the 44 per cent average proposed by Carter.