Social Security Tax Fairness Act of 1993

Summary: Social Security Tax Fairness Act of 1993 - Amends the Internal Revenue Code to allow a refundable credit for a portion of an individual's employee OASDI taxes.  Requires payment for the costs of such credit to the general fund of the Treasury from amounts in the Federal Old-Age and Survivors Insurance Trust Fund and the Railroad Retirement Account. 
Repeals the dollar limitation on the amount of wages subject to employee OASDI taxes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Social Security Tax Fairness Act of 
1993''.

SEC. 2. CREDIT FOR PORTION OF EMPLOYEE OASDI TAXES.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. CREDIT FOR PORTION OF EMPLOYEE OASDI TAXES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to the lesser of--
            ``(1) such individual's employee OASDI taxes for the 
        taxable year, or
            ``(2) the tax credit limitation amount for the calendar 
        year in which such taxable year begins.
    ``(b) Tax Credit Limitation Amount.--For purposes of subsection 
(a)--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the tax credit limitation amount for any calendar 
        year is the amount which the Secretary estimates will result in 
        a reduction of revenues to the Federal Old-Age and Survivors 
        Insurance Trust Fund for such calendar year equal to the 
        increase in revenues for such year attributable to the 
        application of--
                    ``(A) the tax imposed by section 3101(a) to wages 
                in excess of the contribution and benefit base for such 
                year, and
                    ``(B) the last sentence of section 1402(b).
            ``(2) Railroad retirement.--In the case of an individual 
        all of whose employee OASDI taxes for the taxable year are 
        described in subparagraphs (B) and (D) of subsection (c)(1), 
        the tax credit limitation amount for any calendar year is the 
        amount which the Railroad Retirement Board estimates will 
        result in a reduction of revenues to the Railroad Retirement 
        Account for such calendar year equal to the increase in 
        revenues for such year attributable to the application of the 
        taxes described in such subparagraphs to compensation in excess 
        of the contribution and benefit base for such year.
            ``(3) Adjustments.--The Secretary of the Treasury and the 
        Railroad Retirement Board, as the case may be, shall make 
        proper adjustments in the determination of the tax credit 
        limitation amounts to the extent prior estimates were in excess 
        of or less than the correct amounts for the purpose of ensuring 
        that the balances of the Federal Old-Age and Survivors 
        Insurance Trust Fund and the Railroad Retirement Account are 
        not eroded by reason of the credits allowed under this section, 
        thereby maintaining the long-term stability of such Trust Fund 
        and Account.
    ``(c) Employee OASDI Taxes.--For purposes of this section--
            ``(1) In general.--The term `employee OASDI taxes' means, 
        with respect to any taxpayer for any taxable year--
                    ``(A) the amount of the taxes imposed by section 
                3101(a) on amounts received by the taxpayer during the 
                calendar year in which the taxable year begins,
                    ``(B) so much of the tax imposed by section 3201(a) 
                as is determined at a rate not greater than the rate in 
                effect under section 3101(a) on amounts received by the 
                taxpayer during the calendar year in which the taxable 
                year begins,
                    ``(C) 50 percent of the taxes imposed by section 
                1401(a) on the self-employment income of the taxpayer 
                for the taxable year, and
                    ``(D) so much of the tax imposed by section 
                3211(a)(1) as is determined at a rate not greater than 
                the rate in effect under section 3101(a) on amounts 
                received by the taxpayer during the calendar year in 
                which the taxable year begins.
            ``(2) Special rule.--Any amounts paid pursuant to an 
        agreement under section 3121(l) (relating to agreements entered 
        into by American employers with respect to foreign affiliates) 
        which are equivalent to the taxes referred to in paragraph 
        (1)(A) shall be treated as taxes referred to in such paragraph.
            ``(3) Contribution and benefit base.--The term 
        `contribution and benefit base' means the contribution and 
        benefit base determined under section 230 of the Social 
        Security Act.''
    (b) Cost of Credit Borne By Retirement Funds.--
            (1) OASDI trust fund.--The Secretary of the Treasury shall 
        pay, from time to time, from the Federal Old-Age and Survivors 
        Insurance Trust Fund to the general fund of the Treasury 
        amounts equivalent to the credits allowed under section 35 of 
        the Internal Revenue Code of 1986 which are attributable to 
        taxes described in subparagraphs (A) and (C) of section 
        35(c)(1) of such Code.
            (2) Railroad retirement account.--The Railroad Retirement 
        Board shall pay, from time to time, from the Railroad 
        Retirement Account to the general fund of the Treasury amounts 
        equivalent to the credits allowed under section 35 of the 
        Internal Revenue Code of 1986 which are attributable to taxes 
        described in subparagraphs (B) and (D) of section 35(c)(1) of 
        such Code.
            (3) Transfers.--Such amounts shall be transferred on the 
        basis of estimates by the Secretary of the Treasury or the 
        Railroad Retirement Board, as the case may be, and proper 
        adjustments shall be made in amounts subsequently transferred 
        to the extent prior estimates were in excess of or less than 
        the credits allowed.
    (c) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the item relating to section 35 and inserting the following:

                              ``Sec. 35. Credit for portion of employee 
                                        OASDI taxes.
                              ``Sec. 36. Overpayments of tax.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 3. REPEAL OF DOLLAR LIMITATION ON AMOUNT OF WAGES SUBJECT TO 
              EMPLOYEE OASDI TAX.

    (a) OASDI Tax.--
            (1) Paragraph (1) of section 3121(a) of the Internal 
        Revenue Code of 1986 (defining wages) is amended by inserting 
        ``except in the case of the tax imposed by section 3101(a),'' 
        after ``(1)''.
            (2) Paragraph (1) of section 3121(x) of such Code is 
        amended--
                    (A) by striking ``sections 3101(a) and 3111(a)'' 
                and inserting ``section 3111(a)'', and
                    (B) by inserting ``Employer Tax for'' before ``Old-
                Age'' in the heading.
    (b) Self-Employment Tax.--Subsection (b) of section 1402 of such 
Code is amended by adding at the end thereof the following new 
sentence: ``Paragraph (1) shall not apply to so much of the rate 
applicable under section 1401(a) as does not exceed the rate of tax in 
effect under section 3101(a).''
    (c) Railroad Retirement Tax.--Subparagraph (A) of section 
3231(e)(2) of such Code is amended by adding at the end thereof the 
following new clause:
                            ``(iii) Employee oasdi taxes.--Clause (i) 
                        shall not apply to--
                                    ``(I) so much of the rate 
                                applicable under section 3201(a) as 
                                does not exceed the rate of tax in 
                                effect under section 3101(a), and
                                    ``(II) so much of the rate 
                                applicable under section 3211(a)(1) as 
                                does not exceed the rate of tax in 
                                effect under section 3101(a).''
    (d) Technical Amendments.--
            (1) Paragraph (1) of section 6413(c) of such Code is 
        amended--
                    (A) by striking ``the contribution and benefit base 
                (as determined under section 230 of the Social Security 
                Act)'' and inserting ``the applicable contribution base 
                determined under section 3121(x)(2)'', and
                    (B) by striking ``section 3101 or section 3201'' 
                and inserting ``section 3101(b) or section 3201(a) (to 
                the extent the rate applicable under section 3201(a) as 
                does not exceed the rate of tax in effect under section 
                3101(b))''.
            (2) Subparagraphs (B) and (C) of section 6413(c)(2) of such 
        Code are each amended by striking ``section 3101'' each place 
        it appears and inserting ``section 3101(b)''.
            (3) Subsection (c) of section 6413 of such Code is amended 
        by striking paragraph (3).
    (e) Effective Date.--The amendments made by this section shall 
apply to 1994 and later calendar years.