HR175

WHEREAS, prior to 1983, Social Security benefits were not taxed as income; and

WHEREAS, Social Security benefits include monthly survivor and disability benefits, but not supplemental security income payments, which are not taxable; and

WHEREAS, generally, if Social Security benefits constitute a person's only income, benefits are not taxable; and

WHEREAS, however, currently, up to fifty per cent of Social Security benefits may be taxable as income for a filer who is:

(1) Single;

(2) Head of household;

(3) Qualifying widow;

(4) Widower with a dependent child; or

(5) Married filing separately, who did not live with the filer's or her spouse during the year,

and who has a provisional annual income between $25,000 and $34,000; and for married couples filing jointly who have a provisional annual income between $32,000 and $44,000; and

WHEREAS, the percentage of Social Security benefits subject to income tax rises to eighty-five per cent for these same single and joint filers if their provisional annual incomes exceed $34,000 and $44,000, respectively; and

WHEREAS, in 1983, when Social Security benefits were first taxed, incomes between $25,000 to $34,000 and between $32,000 to $44,000 for single and joint filers, respectively, were targeted as "high incomes"; and

WHEREAS, these income levels have not been adjusted for inflation over the years and can no longer be considered high for retirees; and

WHEREAS, in 2007, the $25,000 threshold for individual filers in 1983 would have been $50,807 and the $32,000 threshold for joint filers would have been $65,003, if adjusted for inflation using the consumer price index according to the Bureau of Labor Statistics of the Department of Labor; and

WHEREAS, according to the same source, to have up to eighty-five per cent of Social Security benefits subject to income tax, single filers making more than $34,000 in 1983 would have had to make more than $69,098 in 2007 and more than $89,421 for joint filers; and

WHEREAS, the federal tax on Social Security benefits is even more inequitable for retirees living in Hawaii because the cost of living in Hawaii is higher than on the United States mainland, and

WHEREAS, the federal government provides a twenty-five per cent cost of living allowance in this State for federal employees but does not provide a comparable allowance for social security recepients; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2007, that the President and the Congress of the United States are urged to enact legislation to increase, for Social Security beneficiaries, the levels of provisional income, which include Social Security benefits, by an amount equal to the federal cost of living allowance granted to federal employees in Hawaii; and

BE IT FURTHER RESOLVED that Hawaii's Congressional delegation is requested to introduce legislation to this effect; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the President of the United States, the President of the United States Senate pro tem, the Speaker of the United States House of Representatives, Hawaii's Congressional delegation, the Secretary of the Treasury through the Commissioner of the Internal Revenue Service, and the Director of Taxation.

	OFFERED BY:	_____________________________

Report Title:

Social Security Benefits; Increase Provisional Income Limits

HOUSE OF REPRESENTATIVES	H.R. NO.	175
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII