The House Ways and Means Committee yesterday voted to roll back most of the increase in Social Security taxes that Congress enacted in December for 1979 and 1980, and use income-tax revenues temporarily to make up the difference.
By a 19-to-18 vote the committee approved legislation that would reduce payroll taxes to 1977 levels for Americans to earn less than $16,500 a year and would cut the currently scheduled tax increases in half for those who earn above that level.
The cutback in payroll tax revenues would be made up by transferring money raised by the general income tax to the hospital insurance portion of the Social Security account. The bill would not affect the retirement or disability insurance portions.
The action, came at the end of a long afternoon of wrangling in which the committee considered - and rejected - eight alternative proposals, marked the first formal step Congress has taken to reverse December's payroll tax boost in the face of voter protest.
Voter anger over higher payroll taxes has caused a flurry in Congress that has set many members clamoring for a rollback of last December's measure would affect payroll tax rates for 1979 and 1980 but not this year's rate, which was raised in January.
The Ways and Means measure was designed as a stopgap, to mollify voter ire over the payroll tax increases untill the lawmakers can review the question of how to bolster the financial integrity of Social Security.
Yesterday's legislation would cut payroll taxes by $6.2 billion in 1979 and $8.3 billion in 1980. In effect, the bill would establish a new emergency fund from general income-tax revenues.
The committee's legislation would make these changes in the Social Security tax rates and wage bases now scheduled:
For 1979, the bill would cut the payroll tax rate to 5.85 percent - the same rate that prevailed in 1977 - from the 6.13 percent rate that has been scheduled under present law. It also would reduce the amount of wages subject to the tax from the scheduled $22,900 to $21,900.
For 1980, the payroll tax rate would remain at 5.85 percent, instead of scheduled 6.13 percent, and the wage base would rise to $23,900 instead of the $25,900 level now on the books for that year.
The combination of action would cut the maximum amount the government can collect in payroll taxes from any one person to $1,281.15 in 1979, instead of $1,403.77, and to $1,398.15 in 1980, down from $1,587.67. In both cases, the reductions would cut the scheduled boost in half.
For those earning less than $16,500 - the maximum wage base in 1977 - the measure effectively would roll Social Security taxes back to last year's levels. By comparison, the payroll tax this year amounts to 6.05 percent of the first $17,700 in wages.
The flailing by the committee before it approved the measure reflected sharply differing views by members over how to roll back last year's increase - specifically whether to take the money out of the hospital insurance fund, the disability fund or the retirement program.
Most members appeared to oppose tampering with the retirement portion of the Social Security fund, for fear of disturbing what they view as the "link" between the taxes a worker pays and the old-age benefit he or she receives. Republicans had similar misgivings about the disability fund.
Among the proposals the committee rejected was a plan by Chairman Al Ullman (D-ore.) that would have rolled taxes back somewhat less sharply and used income tax money throughout, even to bolster the retirement porition, if needed.
Committee members are to decide next week when to send the measure to the House floor.Passage there appears likely, since the legislation was formally requested by the House Democratic Caucus. The outlook is the Senate is less certain.