Lawmakers OK Legislation to Fix ‘Nanny Tax’
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WASHINGTON — Congressional negotiators agreed late Wednesday to update and simplify the “nanny tax,” the Social Security law that sank Zoe Baird’s nomination for attorney general and turned thousands of household employers into tax cheats.
“We have decriminalized baby-sitting,” Sen. Daniel Patrick Moynihan (D-N.Y.) said in announcing the compromise. The legislation now goes to the House and Senate for final votes and is expected to be signed into law by President Clinton.
The agreement would require household employers to pay Social Security and Medicare taxes on any worker earning at least $1,000 a year, up from the current threshold of $50 a quarter, or $200 a year. Teen-age baby-sitters would be exempt.
By raising the threshold and requiring employers to file taxes once a year, instead of quarterly, lawmakers believe more people will pay taxes for their employees, allowing them to qualify for benefits from Social Security when they retire or become disabled.
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