"Last week, with my support, Congress passed a tax cut for Long Island seniors collecting Social Security benefits. This legislation repeals an 85 percent tax, originally enacted to help reduce the enormous budget deficit in 1993, on Social Security recipients whose combined income exceeds $34,000.

Until 1983, all Social Security benefits were exempt from federal income taxes. However, in an attempt to preserve the long-term solvency of the Social Security system, President Reagan signed into law legislation that taxes up to 50 percent of Social Security benefits for single beneficiaries with income over $25,000, and married couples filing jointly with income over $32,000. The revenue derived from this tax is transferred to the Social Security Trust Fund.

In 1993, Congress enacted legislation increasing a portion of the benefits subject to taxation from 50 percent to 85 percent. This tax applied only for single filers with income over $34,000, and married couples filing jointly with income over $44,000. This tax was part of a package to reduce the massive budget deficit.

Listed below is an example of how this tax is calculated for a single filer receiving Social Security benefits. (Note: under current law, income = adjusted gross income plus one-half of Social Security benefits.)

* Adjusted gross income: $32,000

* One-half Social Security benefit: $5,000

* Total income: $37,000

* (85 percent tax) $37,000-$34,000 x 85 percent: $2,550

* (50 percent tax) 50 percent of benefits or $4,500 $4,500**

* Total tax: $7,050

** If income is subject to the 85 percent tax, the amount of benefits subject to the 50 percent tax is the lesser of $4,500 (single) or $6,000 (couple); or 50 percent of Social Security benefits.

This legislation repeals the provision of the 1993 law that increased from 50 percent to 85 percent the portion of Social Security benefits subject to taxation. However, the 50 percent tax still remains. Thus, under the bill, up to 50 percent of Social Security benefits for single taxpayers with incomes over $25,000, and couples filing jointly with incomes over $32,000, would still be subject to taxation.

In addition, this bill guarantees that any revenue lost from the Medicare Trust Fund with the repeal of this tax is replaced from the general budget fund. This guarantees a continued source of revenue into the Medicare Trust Fund. Therefore, Medicare would not be affected by this bill.

Why Repeal This Tax?

It is important to realize this tax was proposed to reduce the budget deficit. Well, fiscal prudence has paid off and the federal government now runs a budget surplus - thereby eliminating the need for this tax.

More importantly, given the cost of living on Long Island, many retired couples rely upon two incomes to survive, usually exceeding $44,000. However, with insufficient prescription drug coverage and escalating medical costs, many seniors continue to struggle. This tax cut will put more money in seniors' pockets to help pay for these unexpected costs."