Richard S. and Benice F. Roberts - Page 3

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          reversed a longstanding practice of excluding Social Security               
          benefits from income.  See S. Rept. 98-23, at 25 (1983), 1983-2             
          C.B. 326, 327.  Congress concluded that “social security benefits           
          are in the nature of benefits received under other retirement               
          systems,” and like other retirement benefits, should be taxed to            
          the extent “they exceed a worker’s after-tax contributions”.                
          Id. at 25-26, 1983-2 C.B. at 328.  The maximum portion of taxable           
          benefits was set at one-half in recognition of the fact the                 
          Social Security benefits are partially financed by the after-tax            
          contributions of employees and self-employed individuals.  Id.              
               In short, by taxing only a portion of the benefits, Congress           
          intended to allow taxpayers some cost recovery for their                    
          contributions (i.e., for the taxes they pay into the Social                 
          Security system).  Section 86 was amended for 1994 and succeeding           
          years to require that if the sum of a taxpayer’s modified                   
          adjusted gross income plus one-half of Social Security benefits             
          exceeds $44,000, the taxpayer must include in income up to 85               
          percent of the Social Security benefits.  Omnibus Budget                    
          Reconciliation Act of 1993 (OBRA), Pub. L. 103-66, sec. 13215(b),           
          107 Stat. 476.                                                              
               The method chosen by Congress to tax Social Security                   
          benefits differs from the manner in which other retirement                  
          benefits are taxed; viz, allowing taxpayers to exclude from                 
          retirement benefits an amount representing an aliquot share of              
          their investment in the retirement plan.  See, e.g., sec. 72.               

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