- 5 - of benefits in excess of a certain base amount), the Committee’s bill assures that lower-income individuals, many of whom rely upon their benefits to afford basic necessities, will not be taxed on their benefits. The maximum proportion of benefits taxed is one-half in recognition of the fact that social security benefits are partially financed by after-tax employee contributions. The bill’s method for taxing benefits assures that only those taxpayers who have substantial taxable income from other sources will be taxed on a portion of the benefits they receive. [S. Rept. 98-23, supra at 26, 1983-2 C.B. at 328.] Subsequently the relevant committee report in connection with the amendment to section 86 in OBRA section 13215(b) further explains the congressional purpose: The committee desires to more closely conform the income tax treatment of Social Security benefits and private pension benefits by increasing the maximum amount of Social Security benefits included in gross income for certain higher-income beneficiaries. Reducing the exclusion for Social Security benefits for these beneficiaries will enhance both the horizontal and vertical equity of the individual income tax system by treating all income in a more similar manner. To limit the effect of this provision to taxpayers with a greater ability to pay taxes, the present-law income thresholds are maintained. * * * [H. Rept. 103-111, at 654 (1993), 1993-3 C.B. 167, 230.] We recognize that “‘No scheme of taxation, whether the tax is imposed on property, income, or purchases of goods and services, has yet been devised which is free of all discriminatory impact.’” Druker v. Commissioner, 77 T.C. 867, 872 (1981) (quoting San Antonio Indep. Sch. Dist. v. Rodriguez, 411 U.S. 1, 41 (1973)), affd. in part on this issue and revd. in part on another issue 697 F.2d 46 (2d Cir. 1982). Petitioner’s argument stems from the fact that he continued to work after qualifying for Social Security benefits, earned aPage: Previous 1 2 3 4 5 6 Next
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