Vote Targets Domestic Help Tax House Hopes to Simplify Social Security Law for Household Employees

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The House voted Thursday to simplify Social Security tax law affecting household help. The current statute has turned thousands of household employers into tax cheats and deprived many housekeepers of their retirement benefits.

By a vote of 420-0, the House agreed to update the "nanny tax" made famous by Zoe Baird. Her failure to pay Social Security for her domestic help cost her the chance to become President Bill Clinton's attorney general.

The bill also bans Social Security payments to the criminally insane who are in a mental institution, and infuses Social Security's disability insurance trust fund with enough cash to keep it from going broke next year.

The Senate Finance Committee has approved a similar version, which has not yet been considered by the full Senate.

Enacted in 1950, the nanny tax has never been adjusted for inflation. It requires household employers to pay Social Security and Medicare taxes on domestic workers who earn more than $50 over three months, or $200 a year. The law includes the occasional teen-age baby sitter or yard worker.

"Congress never intended to make tax cheats out of law-abiding households who occasionally hire a teen-ager to baby-sit their children," said Rep. Jim Bunning, R-Ky., during Tuesday's debate on the bill. …