Nethercutt Offers Option To Wage Hike Lawmaker Wants To Make Social Security Deductions Tax Exempt

American workers currently pay a tax on a tax because their Social Security payments are subject to the income tax. And that’s not fair, U.S. Rep. George Nethercutt argued Friday.

The Spokane Republican is proposing a major change to the tax law that would exempt payroll deductions for Social Security. He’s offering it as a better way to stimulate the economy than a boost to the minimum wage, which he opposes.

“This affects a lot more people, between 77 million and 100 million,” he said during an interview with The Spokesman-Review editorial board.

Dubbed the Working American Wage Restoration Act, the law would make Social Security payments an “above the line” deduction,” he said. That is, a taxpayer would be able to subtract those payments from income totals before figuring his or her taxes.

It would not be like other tax deductions which must be listed on a separate form, and meet a certain threshold before affecting income totals.

But budget hawks could have a problem with it. Some projections suggest it could reduce federal revenues by as much as $220 billion over the next five years.

At a time when Congress is struggling to eliminate the deficit over the next six years, that could put a major bump in the “glide path” Republicans talk about to a balanced budget.

Nethercutt argues that putting extra money in taxpayers’ pockets will stimulate the economy and actually generate tax revenue.

“You address the debt and deficit by stimulating the economy,” he said. “But if someone could prove it will put the economy in the tank or create more debt, I’d take another hard look at it.”

The proposal will get a hearing in the House and Senate in coming months. Several conservative groups such as the Heritage Foundation and Citizens Against Government Waste are supporting it.

One of the toughest deficit reduction groups, the Concord Coalition, is still studying it and has not yet taken a position, a spokesman said Friday.

, DataTimes