Railroad Retirement Reform Act of 2000

Summary: Directs the labor and management members of the Railroad Retirement Board to transmit a plan to the Secretary of Labor for a (private) multiemployer pension plan for individuals who would otherwise be covered by the Railroad Retirement Act of 1974.
Amends IRC to: (1) repeal the 4.3-cent special motor fuel excise tax on railroads and inland waterway transportation; and (2) subject diesel fuel used in trains to the additional tax for the Leaking Underground Storage Tank Trust Fund.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Railroad Retirement Reform Act of 
2000''.

SEC. 2. PROTECTION OF SOCIAL SECURITY FUNDS.

    (a) In General.--Section 15A(d)(2) of the Railroad Retirement Act 
of 1974 (45 U.S.C. 231n-1(d)(2)) is amended to read as follows:
    ``(2) No funds may be transferred from the Social Security 
Equivalent Benefit Account to the Railroad Retirement Account or the 
Railroad Retirement Trust Fund, and such funds may only be used for the 
purposes described in subsection (c)(1).''.
    (b) Conforming Amendment.--Section 15A(c)(1) of the Railroad 
Retirement Act of 1974 (45 U.S.C. 231n-1(c)(1)) is amended by striking 
``Except as otherwise provided in this section, amounts'' and inserting 
``Amounts''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2000.

SEC. 3. TRANSITION TO FULL SOCIAL SECURITY COVERAGE OF RAILROAD 
              EMPLOYMENT.

    (a) Railroad Workers in Social Security System.--
            (1) In general.--Section 210(a)(9) of the Social Security 
        Act (42 U.S.C. 410(a)(9)) is amended by inserting ``before 
        January 1, 2002'' after ``performed''.
            (2) Payment of fica taxes.--
                    (A) In general.--Section 3121(b)(9) of the Internal 
                Revenue Code of 1986 (defining employment) is amended 
                by inserting ``before January 1, 2002'' after 
                ``performed''.
                    (B) No imposition of tier 1 taxes.--
                            (i) Section 3201(a) of such Code is amended 
                        by adding at the end the following: ``This 
                        subsection shall not apply to service performed 
                        in calendar years after 2001.''.
                            (ii) Section 3211(a)(1) of such Code is 
                        amended by adding at the end the following: 
                        ``This paragraph shall not apply to service 
                        performed in calendar years after 2001.''.
                            (iii) Section 3221(a) of such Code is 
                        amended by adding at the end the following: 
                        ``This subsection shall not apply to service 
                        performed in calendar years after 2001.''.
    (b) Railroad Retirees in Social Security System.--
            (1) Receipt of social security benefits.--Notwithstanding 
        any other provision of law, with respect to any individual who 
        applies for a benefit under the Railroad Retirement Act of 1974 
        after December 31, 2002, based on such individual's railroad 
        employment or another individual's railroad employment, such 
        individual shall receive a corresponding benefit (or an 
        increased benefit) under the Social Security Act determined by 
        treating such employment as included in the term ``employment'' 
        as defined in the Social Security Act.
            (2) Corresponding reduction in railroad retirement 
        benefit.--With respect to any individual described in paragraph 
        (1), any benefit otherwise receivable under the Railroad 
        Retirement Act of 1974 shall be reduced by the benefit (or the 
        increase in the benefit) described in such paragraph.
            (3) Effect on financial interchange.--In calculating any 
        financial interchange between the social security system and 
        the railroad retirement system, the Commissioner of Social 
        Security and the Railroad Retirement Board shall take into 
        account the provisions of, and the amendments made by, this 
        section.
            (4) Optional payment of social security benefits by 
        railroad retirement board.--
                    (A) In general.--Subject to subparagraph (B), at 
                the election of Railroad Retirement Board, social 
                security benefits described in paragraph (1) for 
                railroad retirees may be paid by the Board on behalf of 
the Social Security Administration.
                    (B) Requirements for annual elections.--The 
                Railroad Retirement Board may elect annually to 
                continue making benefit payments described in 
                subparagraph (A), if the Commissioner of Social 
                Security certifies that the Board is paying such 
                benefits on-time and is providing high quality customer 
                service to all new retirees.
            (5) Technical and conforming changes.--The Commissioner of 
        Social Security, the Railroad Retirement Board, and the 
        Secretary of the Treasury, as soon as practicable but in any 
        event not later than 180 days after the date of enactment of 
        this Act, submit to the Committee on Ways and Means of the 
        House of Representatives and the Committee on Finance of the 
        Senate a draft of any technical and conforming changes in the 
        Social Security Act, the Railroad Retirement Act of 1974, and 
        the Internal Revenue Code of 1986 which are necessary to 
        reflect throughout such Acts and Code the changes in the 
        substantive provisions of law made by this section.

SEC. 4. REPEAL OF GENERAL FUND SUBSIDY TO RAILROAD RETIREMENT ACCOUNT.

    (a) Repeal.--Subsection (c)(1)(A) of section 224 of the Railroad 
Retirement Solvency Act of 1983 is repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall take 
effect on October 1, 2000.

SEC. 5. EMPLOYER, EMPLOYEE REPRESENTATIVE, AND EMPLOYEE TIER 2 TAX RATE 
              ADJUSTMENTS.

    (a) Rate of Tax on Employers.--Subsection (b) of section 3221 of 
the Internal Revenue Code of 1986 is amended to read as follows:
    ``(b) Tier 2 Tax.--
            ``(1) In general.--In addition to other taxes, there is 
        hereby imposed on every employer an excise tax, with respect to 
        having individuals in his employ, equal to the applicable 
        percentage of the compensation paid during any calendar year by 
        such employer for services rendered to such employer.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the term `applicable percentage' means the percentage 
        determined under section 3241 for such calendar year.''.
    (b) Rate of Tax on Employee Representatives.--Paragraph (2) of 
section 3211(a) of the Internal Revenue Code of 1986 is amended to read 
as follows:
            ``(2) Tier 2 tax.--
                    ``(A) In general.--In addition to other taxes, 
                there is hereby imposed on the income of each employee 
                representative a tax equal to the applicable percentage 
                of the compensation received during any calendar year 
                by such employee representatives for services rendered 
                by such employee representative.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the term `applicable percentage' 
                means the percentage determined under section 3241 for 
                such calendar year.''.
    (c) Rate of Tax on Employees.--Subsection (b) of section 3201 of 
the Internal Revenue Code of 1986 is amended to read as follows:
    ``(b) Tier 2 Tax.--
            ``(1) In general.--In addition to other taxes, there is 
        hereby imposed on the income of each employee a tax equal to 
        the applicable percentage of the compensation received during 
        any calendar year by such employee for services rendered by 
        such employee.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the term `applicable percentage' means the percentage 
        determined under section 3241 for such calendar year.''.
    (d) Determination of Rate.--Chapter 22 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new subchapter:

             ``Subchapter E--Tier 2 Tax Rate Determination

                              ``Sec. 3241. Determination of tier 2 tax 
                                        rate based on average account 
                                        benefits ratio.

``SEC. 3241. DETERMINATION OF TIER 2 TAX RATE BASED ON AVERAGE ACCOUNT 
              BENEFITS RATIO.

    ``(a) In General.--For purposes of sections 3201(b), 3211(a)(2), 
and 3221(b), the applicable percentage for any calendar year is the 
percentage determined in accordance with the table in subsection (b).
    ``(b) Tax Rate Schedule.--


------------------------------------------------------------------------
  Average account benefits ratio        Applicable
-----------------------------------   percentage for       Applicable
                                     sections 3211(b)    percentage for
    At least        But less than      and 3221(b)      section 3201(b)
------------------------------------------------------------------------
                            1.0                31.1                4.9
          1.0               1.5                28.1                4.9
          1.5               2.0                25.1                4.9
          2.0               2.5                22.1                4.9
          2.5               3.0                18.1                4.9
          3.0               3.5                15.1                4.9
          3.5               4.0                14.1                4.9
          4.0               6.1                13.1                4.9
          6.1               6.5                12.6                4.4
          6.5               7.0                12.1                3.9
          7.0               7.5                11.6                3.4
          7.5               8.0                11.1                2.9
          8.0               8.5                10.1                1.9
          8.5               9.0                 9.1                0.9
          9.0                                   8.2                  0
------------------------------------------------------------------------

    ``(c) Definitions Related to Determination of Rates of Tax.--
            ``(1) Average account benefits ratio.--For purposes of this 
        section, the term `average account benefits ratio' means, with 
        respect to any calendar year, the average determined by the 
        Secretary of the account benefits ratios for the 10 most recent 
        fiscal years ending before such calendar year. If the amount 
        determined under the preceding sentence is not a multiple of 
        0.1, such amount shall be increased to the next highest 
        multiple of 0.1.
            ``(2) Account benefits ratio.--For purposes of this 
        section, the term `account benefits ratio' means, with respect 
        to any fiscal year, the amount determined by the Railroad 
        Retirement Board by dividing the fair market value of the 
        assets in the Railroad Retirement Account as of the close of 
        such fiscal year by the total benefits and administrative 
        expenses paid from the Railroad Retirement Account during such 
        fiscal year.
    ``(d) Notice.--No later than December 1 of each calendar year, the 
Secretary shall publish a notice in the Federal Register of the rates 
of tax determined under this section which are applicable for the 
following calendar year.''.
    (e) Conforming Amendment.--The table of subchapters for chapter 22 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new item:

                              ``Subchapter E. Tier 2 tax rate 
                                        determination.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after December 31, 2002.

SEC. 6. TRANSITION TO A PRIVATE RAILROAD PENSION FUND.

    (a) Transmission of Proposal.--The labor and management members of 
the Railroad Retirement Board shall transmit a plan by June 1, 2001, to 
the Secretary of Labor for a multiemployer pension plan for individuals 
who would otherwise be covered by the Railroad Retirement Act of 1974.
    (b) Funding of Plan.--If the plan described in subsection (a) is 
certified by the Secretary of Labor by October 1, 2001, as a bona fide 
plan--
            (1) the Secretary of the Treasury shall make an annual 
        payment (on or before December 31, beginning with 2001) from 
        the Railroad Retirement Account to the fund relating to such 
        plan in an amount specified by the Secretary of Labor (on or 
        before December 1, beginning with 2001) as being the minimum 
        amount necessary (taking into consideration any funding 
        deposited into such fund pursuant to subsection (e)) to 
        assure--
                    (A) full funding for all new entrants using 
                Employee Retirement Income Security Act funding 
                standards;
                    (B) full funding of all accruing pension 
                obligations for benefits elected to be included in the 
                plan under subsection (d)(1) (if any) using Employee 
                Retirement Income Security Act funding standards; and
                    (C) adequate funding to meet the on-going pension 
                payments for any Railroad Retirement Act pension 
                obligations that have been transferred to the plan 
                under subsection (d)(2) (if any); and
            (2) notwithstanding any other provision of law, the new 
        entrants shall no longer be entitled to benefits under the 
        Railroad Retirement Act of 1974.
    (c) Certification Requirements.--
            (1) In general.--For purposes of subsection (b), to be 
        certified by the Secretary of Labor as a bona fide plan, the 
        plan must
                    (A) provide a defined benefit pension plan for all 
                new entrants; and
                    (B) meet fiduciary and other requirements of the 
                Employee Retirement Income Security Act of 1974 deemed 
                necessary and applicable by the Secretary of Labor.
            (2) New entrant.--For purposes of this section, a new 
        entrant is a person hired after December 31, 2001, who would 
        otherwise be covered by the Railroad Retirement Act of 1974 and 
        who has never previously been covered by such Act.
    (d) Optional Elements of Plan.--
            (1) Additional benefits.--The plan submitted to the 
        Secretary of Labor may include provision of pension benefits 
        for persons other than new entrants (and auxiliary 
        beneficiaries of new entrants), if such benefits are fully 
        funded under the standards of the Employee Retirement Income 
        Security Act of 1974.
            (2) Transfer of existing obligations.--The plan may also 
        include the transfer of existing Railroad Retirement Act 
        pension obligations (other than social security equivalent 
        benefit obligations). To transfer these pensions obligations, 
        the Railroad Retirement Board must certify to the Secretary of 
        Labor, for each individual beneficiary affected by such 
        transfer, that the beneficiary will get his or her pension 
payment from the plan in lieu of a payment from the Railroad Retirement 
Account.
    (e) Agreed Plan Deposits.--Employers and employees covered by the 
multiemployer pension plan certified under this section may directly 
deposit pension fund contributions into the fund and such deposits 
shall be taken into consideration by the Secretary of Labor for 
purposes of the payment amount specified in subsection (b).

SEC. 7. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND 
              INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN GENERAL 
              FUND.

    (a) Taxes on Trains.--
            (1) In general.--Subparagraph (A) of section 4041(a)(1) of 
        the Internal Revenue Code of 1986 is amended by striking ``or a 
        diesel-powered train'' each place it appears and by striking 
        ``or train''.
            (2) Conforming amendments.--
                    (A) Subparagraph (C) of section 4041(a)(1) of such 
                Code is amended by striking clause (ii) and by 
                redesignating clause (iii) as clause (ii).
                    (B) Subparagraph (C) of section 4041(b)(1) of such 
                Code is amended by striking all that follows ``section 
                6421(e)(2)'' and inserting a period.
                    (C) Subsection (d) of section 4041 of such Code is 
                amended by redesignating paragraph (3) as paragraph (4) 
                and by inserting after paragraph (2) the following new 
                paragraph:
            ``(3) Diesel fuel used in trains.--There is hereby imposed 
        a tax of 0.1 cent per gallon on any liquid other than gasoline 
        (as defined in section 4083)--
                    ``(A) sold by any person to an owner, lessee, or 
                other operator of a diesel-powered train for use as a 
                fuel in such train, or
                    ``(B) used by any person as a fuel in a diesel-
                powered train unless there was a taxable sale of such 
                fuel under subparagraph (A).
        No tax shall be imposed by this paragraph on the sale or use of 
        any liquid if tax was imposed on such liquid under section 
        4081.''
                    (D) Subsection (f) of section 4082 of such Code is 
                amended by striking ``section 4041(a)(1)'' and 
                inserting ``subsections (d)(3) and (a)(1) of section 
                4041, respectively''.
                    (E) Paragraph (3) of section 4083(a) of such Code 
                is amended by striking ``or a diesel-powered train''.
                    (F) Paragraph (3) of section 6421(f) of such Code 
                is amended to read as follows:
            ``(3) Gasoline used in trains.--In the case of gasoline 
        used as a fuel in a train, this section shall not apply with 
        respect to the Leaking Underground Storage Tank Trust Fund 
        financing rate under section 4081.''
                    (G) Paragraph (3) of section 6427(l) of such Code 
                is amended to read as follows:
            ``(3) Refund of certain taxes on fuel used in diesel-
        powered trains.--For purposes of this subsection, the term 
        `nontaxable use' includes fuel used in a diesel-powered train. 
        The preceding sentence shall not apply to the tax imposed by 
        section 4041(d) and the Leaking Underground Storage Tank Trust 
        Fund financing rate under section 4081 except with respect to 
        fuel sold for exclusive use by a State or any political 
        subdivision thereof.''
    (b) Fuel Used on Inland Waterways.--
            (1) In general.--Paragraph (1) of section 4042(b) of such 
        Code is amended by adding ``and'' at the end of subparagraph 
        (A), by striking ``, and'' at the end of subparagraph (B) and 
        inserting a period, and by striking subparagraph (C).
            (2) Conforming amendment.--Paragraph (2) of section 4042(b) 
        of such Code is amended by striking subparagraph (C).
    (c) Effective Date.--The amendments made by this section shall take 
effect on October 1, 2000.