NOBODY likes being singled out for a tax increase, and it's no surprise that most higher-income Social Security beneficiaries oppose President Clinton's plan to tax more of their benefits.
Nevertheless, it is a good idea. It is only fair.
Why should Social Security -- by far our biggest pension system -- be taxed differently from private pensions and government career pensions?
Retirees under these other plans pay income tax on the part of their benefit that exceeds what they paid in. They don't pay on their own contributions because those have already been taxed, but the rest of the benefit is income with no more special claim to exemption than other income, like workers' wages.
The president has proposed to tax 85 percent of Social Security benefits for higher-income retirees, as against the 50 percent now taxed.
Mr. Clinton proposed a fixed percentage because it just isn't worth doing (and explaining) the complicated individual calculations necessary to apply the exact rules for private pensions to millions of Social Security beneficiaries.
Anyway, virtually every beneficiary will be better off with the 85 percent figure. Employees' contributions to Social Security are almost always less than 15 percent of the expected lifetime benefit because while benefits are indexed to wages and prices, employees pay Social Security taxes as they earn their wages, unaffected by subsequent inflation.
I favor the president's plan not only because it would make the tax code more equitable but because I believe it would strengthen Social Security as an institution.
Identifying Social Security with all other earned retirement income would emphasize that it is not welfare. Taxing Social Security like other pensions would show that it is an earned right and help hold off proposals to cut benefits.
Social Security was tax-free until 1983, not because of a specific exemption but because of an interpretation of its benefits as a government grant, really a gratuity, and not an earned right.
When the Social Security law was drafted in 1935, some feared the Supreme Court might rule it unconstitutional because of its unprecedented linkage of levying taxes and granting benefits in a social insurance system.
So the parts of the law granting benefits were kept entirely separate from the parts imposing taxes.
But if the benefits weren't connected to the taxes, what were they?
One Treasury ruling said Social Security was "considered a payment in promotion of the general welfare and is not taxed," while the taxable portion of a civil service pension was "considered to be in the nature of deferred compensation paid by the employer."
This distinction is damaging to Social Security, which also grows out of employment and is paid for by employees and by employer contributions, a deferred wage.
Besides reinforcing the program's philosophical basis, taxing Social Security benefits would end up costing the elderly less than the benefit cuts proposed as an alternative.
Since the proposed tax (like the current tax) exempts single taxpayers making less than $25,000 a year and couples making under $32,000, only 22 percent of beneficiaries would pay. And those taxes would most affect the elderly early on, when they can best afford it.
Total income, including work earnings and private pension income, which is not indexed for inflation, often declines over the years. Tax rate brackets and exemptions increase with inflation.
So over time, a larger share of income falls into a lower bracket or becomes exempt, allowing retirees to keep more of their benefits in old age.
By contrast, cutbacks in cost-of-living adjustments or an across-the-board reduction in benefits would affect lower-income people as well as higher-income people and would tend to hit harder as retirees grew older.
Ultimately, Social Security should be taxed as regular income, without special low-income exemptions. But eliminating exemptions now would cut too deeply into what many pensioners count on.
Instead, inflation will eventually make today's low-income thresholds obsolete, while regular income tax exemptions will ensure that about 40 percent of recipients will still pay no taxes on benefits.
The president's proposal would reduce the deficit some $32 billion in five years.
But the major virtues of this particular plan are philosophical: to promote tax equity and to emphasize working people's earned right to Social Security by treating it like any other earned pension.
Robert M. Ball was commissioner of Social Security from 1962 to 1973.