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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 a
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