July 18, 2000 - Issue: Vol. 146, No. 93 — Daily Edition106th Congress (1999 - 2000) - 2nd Session

[Pages H6380-H6382]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   RIGHT-TO-KNOW NATIONAL PAYROLL ACT

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I move to suspend the rules 
and pass the bill (H.R. 1264) to amend the Internal Revenue Code of 
1986 to require that each employer show on the W-2 form of each 
employee the employer's share of taxes for old age, survivors, and 
disability insurance and for hospital insurance for the employee as 
well as the total amount of such taxes for such employee.
  The Clerk read as follows:

                               H.R. 1264

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Right-To-Know National 
     Payroll Act''.

     SEC. 2. DISCLOSURE OF FICA AND MEDICARE TAX ON W-2 FORM.

       (a) In General.--Subsection (a) of section 6051 of the 
     Internal Revenue Code of 1986 (relating to requirement of 
     receipts for employees) is amended by striking ``and'' at the 
     end of paragraph (10), by striking the period at the end of 
     paragraph (11) and inserting a comma, and by inserting after 
     paragraph (11) the following new paragraphs:
       ``(12) the total amount of tax with respect to the employee 
     imposed on such person under--
       ``(A) section 3111(a),
       ``(B) section 3111(b),
       ``(C) so much of the tax imposed under section 3221(a) as 
     relates to section 3111(a), and
       ``(D) so much of the tax imposed under section 3221(a) as 
     relates to section 3111(b), and
       ``(13) the total amount of tax with respect to the employee 
     for old-age, survivors, and disability insurance and for 
     hospital insurance, which is the sum of--
       ``(A) each of the amounts shown under subparagraphs (A) 
     through (D) of paragraph (12), plus
       ``(B) the amount shown under paragraph (6).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to remuneration paid after December 
     31, 2000.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas (Mr. Sam Johnson) and the gentleman from California (Mr. Matsui) 
each will control 20 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Sam Johnson).


                             General Leave

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I ask unanimous consent that 
all Members may have 5 legislative days within which to revise and 
extend their remarks and include extraneous material on H.R. 1264.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I think every Member would agree that our American 
workers pay too much in taxes, and with a $2.2 trillion surplus it is 
time for Washington to give our workers relief from a crushing tax 
burden. Unlike most Democrats, I believe our workers have earned a tax 
refund. I also think they are entitled to know the whole truth about 
how Washington secretly takes more of their hard-earned money than they 
might realize.
  Many workers simply do not realize the actual tax burden that 
Washington imposes on them. For instance, as every working American 
probably knows, each January we get a W-2 form. This W-2 form shows how 
much money we made and how much we paid in taxes during the previous 
year. But the W-2 simply does not show the whole picture. It fails to 
show how much tax your employer pays to Washington on your behalf.

                              {time}  1115

  Many people are not aware that half of all of their payroll taxes, 
which are separate from their income taxes, are paid by the employers. 
In fact, yesterday I met with communications workers in my district who 
complained that their payroll taxes were too high and yet they did not 
realize that Washington takes the same amount from their employer, too. 
That is because current W-2s do not show the employer's share of the 
payroll tax burden.
  This is a typical Washington sleight of hand. The money they take 
from an employer is money that could have gone to the employee, either 
by increasing their take-home pay or providing better retirement or 
health benefits.
  Why does one think they hide it? Because they know that once the 
truth is out, bureaucrats cannot keep spending everyone's money to 
increase the size of government. This bill will change that by showing 
America the whole truth.
  In this legislation, the Right-to-Know National Payroll Act, 
employers will disclose their share of Social Security and Medicare 
taxes on each of our annual W-2s. This common sense legislation should 
have been law last year but the President vetoed it, along with much-
needed other tax relief.
  So I am pleased that we are able to address this issue once again. 
Working Americans have a right to know the total amount of their 
paycheck that goes to Washington and they have a right to know the true 
extent of their payroll tax burden. It is clear that Washington takes 
too much money from our workers and it is time to let the sunshine 
shine on Washington's book of tricks.
  Mr. Speaker, I yield such time as he may consume to my friend, the 
gentleman from Michigan (Mr. Hoekstra), the sponsor of this bill.
  Mr. HOEKSTRA. Mr. Speaker, I thank my colleague, the gentleman from 
Texas (Mr. Sam Johnson), for yielding me this time.
  Mr. Speaker, for 7 out of 10 households, the FICA tax, also known as 
the payroll tax, is the greatest of all taxes that they pay. Yet half 
of the payroll tax is hidden from the employee's view.
  Current law requires employers to annually issue all of their 
employees a W-2 form, a written statement that shows their total wages 
and the amount withheld in taxes for the previous year. However, the 
information

[[Page H6381]]

on American workers' W-2s does not tell the whole story. The 12.4 
percent Social Security tax and the 2.9 percent Medicare tax are split 
equally between employers and employees. Current W-2s disclose only the 
employee's half of the cost of these programs.
  Many workers are probably unaware of this employer contribution to 
Social Security and Medicare, which my colleague from Texas just 
pointed out, which also makes them unaware of how much their employment 
actually costs. It is possible that if the employer were not required 
to pay payroll taxes, or if the payroll tax was reduced, a portion of 
this money might go to the employee. Not only does this lack of 
information hide from employees the true cost of their employment but 
it also makes them uninformed about how much of their paycheck funds 
two government programs which are vital for their retirement security, 
Social Security and Medicare.
  The Right-to-Know National Payroll Act would require employers to 
simply disclose their share of both Social Security and Medicare taxes 
on each employee's annual W-2. Implementing the right-to-know payroll 
form is as simple as changing the format of a current W-2 form because 
employers actually calculate these costs annually. For employers, the 
right-to-know payroll form helps workers understand the constraints 
employers face when seeking to create jobs, increase pay and compete 
effectively in a global economy, and shatters the myth that taxes and 
mandates can be placed on employers without affecting the workers 
themselves.
  For workers, the right-to-know payroll form allows them to compare 
the benefits and costs of various government programs and helps to 
raise the awareness of employment-related public policy and how it 
affects their jobs.
  Language from the Right-to-Know National Payroll Act was included in 
the Financial Freedom Act of 1999. The concept has been endorsed by the 
Cato Institute and The Heritage Foundation. I thank the Committee on 
Ways and Means for bringing it back up today.
  The Right-to-Know National Payroll Act came out of discussions I had 
several years ago with the Mackinac Center of Public Policy in 
Michigan. The Mackinac Center thought it was important for workers to 
know the total cost of taxes and government programs and developed the 
right-to-know payroll form for use by employers. The right-to-know 
payroll form is now being used by hundreds of businesses across the 
country and by the State of Michigan.
  The purpose of this legislation is simple. For too long, the 
government has taken taxes from employers and hidden this information 
from employees. It is time to give employees information about the full 
cost of their Federal benefits. I urge my colleagues to support H.R. 
1264.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield such time as he may 
consume to the gentleman from Colorado (Mr. Tancredo).
  Mr. TANCREDO. Mr. Speaker, I rise in support of H.R. 1264, the Right-
to-Know National Payroll Act, offered by my friend, the gentleman from 
Michigan (Mr. Hoekstra).
  In Colorado, there was an employer who at one point in time opened 
two windows giving his employees payments in cash at one window for all 
the time. They went to the next window and he took from them the taxes 
they had to pay back. The fact is that IRS made him stop that practice 
because it was too truthful. They had to know exactly what was being 
paid. The employer wanted the employees to know how much they were 
making, how much it was costing him to employ them so he gave them 
their total payment in cash. They moved to the next window, as I say, 
and they had to pay back their income taxes, their State taxes and 
their Social Security taxes so that they would have a sense of exactly 
what it was that taxes were costing them.
  Now, this only went on for a relatively short time until, as I say, 
the IRS stepped in and said this cannot be done. They disallowed it. 
But from my point of view, this proposal, the proposal of the gentleman 
from Michigan (Mr. Hoekstra), H.R. 1264, is in the vein of full 
disclosure.
  As the previous speakers have alluded to, this will help workers 
understand the constraints employers face when seeking to create jobs, 
increase pay and compete effectively in a global economy, and it 
shatters the myth that taxes and mandates can be placed on employers 
without affecting workers themselves.
  More importantly, it allows workers to compare the benefits and costs 
of various government programs and helps raise awareness of employment-
related public policy and how it affects their jobs.
  I want to stop there, for the previous speakers have talked about the 
merits of the legislation. The support and the news articles that it 
has received from those around the country speak for itself, but I want 
to turn to the problem of hidden taxes.
  Today, the average Federal tax burden is around 20 percent but, of 
course, it is not the true cost of taxation. We still have State and 
local taxes, as well as thousands of dollars in so-called hidden taxes; 
taxes the Americans pay but never see, primarily because they have been 
added to the cost of goods and services or resulted in a reduction in 
pay.
  These include hotel taxes added to the cost of the hotel room; 
stadium taxes included in the price of a baseball or football ticket; 
highway and airport taxes added to the cost of gas and airline tickets.
  It also includes the employee's burden of financing Social Security 
and the Medicare system, for workers are being deceived when taxes are 
imposed on business. A careful employee can look at the pay stub and 
figure out that Social Security and Medicare payroll taxes consume 7.65 
percent of his income, but will he or she know that another 7.65 
percent is being paid on his behalf by his employer?
  This is money that otherwise would go to the employee's paycheck. 
Sadly, the worker never knows it exists in the first place. It is 
because of this and some estimate that the average taxpayer, in 
reality, pays over 40 percent of his or her income in taxes. This is an 
abomination. As many of my colleagues here in the House know, and I 
know, I was elected to Congress in an effort to reduce the tax burden 
on the American families and to reduce the size of government. We are 
all making strides in this regard.
  A great deal of work certainly remains to be done in the area of 
hidden taxes. The bill we are considering today starts the process of 
informing the public about hidden taxes and lets them know that both 
themselves and their employers contribute to the solvency of the Social 
Security and Medicare funds. I urge my colleagues to support this good 
government legislation, and I thank my good friend, the gentleman from 
Michigan (Mr. Hoekstra) for bringing the bill to the floor.
  Mr. MATSUI. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I was asked about 15 minutes ago to manage this bill. We 
apparently on this committee could not find anyone to manage this piece 
of legislation. No one thought it was significant enough to take the 
time to manage so I kind of am stuck with this responsibility. My 
understanding of this legislation is that right now on the W-2 forms 
there is an aggregate number of the FICA tax and the HI tax, and what 
this basically will do will break it up into employer/employee taxes.
  Now, bear in mind that the information is already provided by the 
Social Security Administration. Beginning this year, the Social 
Security Administration will be sending out, on an annual basis, to 
everybody that pays the payroll tax the aggregate amount over the 
lifetime of the individual of both the HI tax and the payroll tax, the 
FICA tax, and broken down from management, or the employer and employee 
side.
  So that information is provided. There is no secrecy involved in it. 
It will be provided to every taxpayer, every employee, on a lifetime 
basis every year. So there is no secret to it.
  In fact, what this will do is probably put an additional small burden 
on the employer, because now the employer perhaps will have to go back 
to the computers and make some adjustments, but I guess that is not an 
unfunded mandate although I am not quite sure. It could be an unfunded 
mandate, but I do not think anybody will object to it because it is not 
that big of a deal. Most employers will probably be able to do it.

[[Page H6382]]

  I might also say, just to have no misunderstandings about this, that 
we are not going to oppose this legislation. The more information to 
the public, the better off we are, and if breaking it down from 
employer, employee side gives more information to the average citizen, 
more to it.
  The only problem is that I did hear on the other side, as I was 
coming in, that the whole issue of true costs, then people will be able 
to figure out the real true costs, and obviously rate of return they 
are going to get but this really will not have any relevance to that 
because I have done a lot of studies on Social Security. And the fact 
of the matter is that right now the overhead costs on one's Social 
Security benefits, the money coming in and going out, is about 1 
percent. We have done some studies, had some hearings in the Committee 
on Ways and Means, the Subcommittee on Social Security, and we find 
that actually the costs of maintenance, if one privatizes and actually 
invests in the private market, is about 20 percent, because there are 
fund managers and all of that, and we are not going to put that on that 
W-2 form because that would be too much trouble. Then once there are 
the aggregate benefits in the trust fund and one is ready to retire 
then they have to amortize the account. That will cost another 20 
percent. So we are talking anywhere from 35, 40, maybe even 45 percent, 
in terms of the overall cost if the Social Security system is 
privatized; whereas the overall cost is 1 percent in terms of the 
current Social Security system.
  So this does not give anybody any comparison. Again, as I said, the 
more information the better off we are and so we are not going to 
oppose this.
  Just in conclusion, it would be my hope that we begin to focus on the 
real issue of Social Security, is that how do we deal over the next 35 
years with the fact that we are going to have a 25 to 30 percent 
shortfall in the Social Security system? That is a big issue, and we 
need, on a bipartisan basis, to come up with a solution to that, 
because that is going to hit us much sooner than we expected. The 
reality is that we cannot leave the uncertainty in the system that we 
currently have.

                              {time}  1130

  Mr. Speaker, I urge a yea vote on this resolution, and I yield back 
the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume to just remind my colleagues that we are trying to put 
sunshine on the issue, and it was a Republican Congress that started 
this by making the Social Security Administration report at all.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Michigan (Mr. Hoekstra) for closing.
  Mr. HOEKSTRA. Mr. Speaker, just to make sure there is no 
misunderstanding between us and our colleague from California, 
currently a W-2 form does not require the employer's share to be 
reported, so the W-2 form only lists the employee's share.
  What this legislation will require is that on the W-2 form, both the 
employer and the employee's share of the FICA tax will be listed. This 
will allow employees to fully understand the true cost of their 
employment. This is a process that a number of people have already 
taken steps toward; that this is good government. Hundreds of companies 
are doing this. The State of Michigan has added this in.
  Mr. Speaker, I thank my colleague from the other side of the aisle 
for encouraging a ``yes'' vote in support of this.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore (Mr. Isakson). The question is on the motion 
offered by the gentleman from Texas (Mr. Sam Johnson) that the House 
suspend the rules and pass the bill, H.R. 1264.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________