To amend the Internal Revenue Code of 1986 to provide tax credits for hiring workers retrained in Trade Adjustment Assistance programs.

Summary: Worker Retraining Incentive Act of 2002 - Amends the Internal Revenue Code to provide credits for portions of social security taxes borne by employees and employers with respect to training programs under Trade Act of 1974.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Worker Retraining Incentive Act of 
2002''.

SEC. 2. REFUNDABLE CREDIT FOR PORTION OF SOCIAL SECURITY TAXES BORNE BY 
              EMPLOYEES WHO COMPLETE TRAINING PROGRAM UNDER TRADE ACT 
              OF 1974.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 (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 SOCIAL SECURITY TAXES BORNE BY 
              EMPLOYEES WHO COMPLETE TRAINING PROGRAM UNDER TRADE ACT 
              OF 1974.

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the individual's 
social security taxes attributable to service rendered during the 1-
year period beginning with the day the individual begins work for the 
employer.
    ``(b) Limitation.--No credit shall be allowed under subsection (a) 
with respect to an individual for a taxable year if the sum of the 
wages (as defined in section 3121(a)) and compensation (as defined in 
section 3231(e)) of such individual for such 1-year period is $60,000 
or greater.
    ``(c) Eligible Individual.--
            ``(1) In general.--For purposes of this section, the term 
        `eligible individual' means an individual who--
                    ``(A) successfully completes a Trade Adjustment 
                Assistance program under chapter 2 of title II of the 
                Trade Act of 1974, and
                    ``(B) within 1 year after the completion of such 
                program begins work with an employer in a position 
                requiring skills which are taught in such program.
            ``(2) Exception.--For purposes of paragraph (1), an 
        individual shall not be treated as an eligible individual if 
        such individual is reemployed with the same employer (or 
        successor thereto) in the same or similar position in which 
        such individual last served before beginning such program.
            ``(3) Aggregation rule.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
        subsection (n) or (o) of section 414, shall be treated as a 
        single employer for purposes of this subsection.
    ``(d) Social Security Taxes.--For purposes of this section--
            ``(1) In general.--The term `social security 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) the amount of the taxes determined using so 
                much of the rate applicable under section 3201(a) as 
                does not exceed the rate of tax in effect under section 
                3101(a) which is imposed by section 3201(a) on amounts 
                received by the taxpayer during the calendar year in 
                which the taxable year begins, and
                    ``(C) the amount of the taxes determined using 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) which is imposed by section 3211(a)(1) on 
                amounts received by the taxpayer during the calendar 
                year in which the taxable year begins.
            ``(2) Coordination with special refund of social security 
        taxes.--The term `social security taxes' shall not include any 
        taxes to the extent the taxpayer is entitled to a special 
refund of such taxes under section 6413(c).
            ``(3) 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.
    ``(e) Denial of Credit to Dependents.--No credit shall be allowed 
under this section to any individual with respect to whom a deduction 
under section 151 is allowable to another taxpayer for a taxable year 
beginning in the calendar year in which such individual's taxable year 
begins.''.
    (b) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``or from section 35 of 
        such Code'' before the period at the end.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 is amended by striking the item 
        relating to section 35 and inserting the following:

                              ``Sec. 35. Credit for portion of social 
                                        security taxes borne by 
                                        employees who complete training 
                                        program under Trade Act of 
                                        1974.
                              ``Sec. 36. Overpayments of tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 3. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID WITH 
              RESPECT TO EMPLOYEES HIRED AFTER COMPLETING TRAINING 
              PROGRAMS UNDER TRADE ACT OF 1974.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following:

``SEC. 45G. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID 
              WITH RESPECT TO EMPLOYEES HIRED AFTER COMPLETING TRAINING 
              PROGRAMS UNDER TRADE ACT OF 1974.

    ``(a) General Rule.--For purposes of section 38, the employer trade 
adjustment assistance hiring credit determined under this section for 
the taxable year is an amount equal to the aggregate of the qualified 
social security taxes paid or incurred which are attributable to 
service of an eligible employee rendered during the 1-year period 
beginning on the day the employee begins work for the employer.
    ``(b) Limitation.--No credit shall be allowed under subsection (a) 
with respect to an employee for a taxable year if the sum of the wages 
(as defined in section 3121(a)) and compensation (as defined in section 
3231(e)) of such employee for such 1-year period is $60,000 or greater.
    ``(c) Qualified Social Security Tax.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified social security tax' means, with respect to any 
        eligible employee for any taxable year--
                    ``(A) the amount of the taxes imposed by section 
                3111(a) on amounts paid with respect to such employee 
                by the taxpayer during the calendar year in which the 
                taxable year begins, and
                    ``(B) the amount of the taxes determined using so 
                much of the rate applicable under section 3221(a) as 
                does not exceed the rate of tax in effect under section 
                3111(a) which is imposed by section 3221(a) on amounts 
                paid with respect to such employee by the taxpayer 
                during the calendar year in which the taxable year 
                begins.
            ``(2) Coordination with special refund of social security 
        taxes.--The term `social security taxes' shall not include any 
        taxes to the extent the taxpayer is entitled to a special 
        refund of such taxes under section 6413(c).
            ``(3) 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.
    ``(d) Eligible Employee.--For purposes of this section, the term 
`eligible employee' means an individual who is an eligible individual 
(as defined in section 35(c)).
    ``(e) Denial of Double Benefit.--No deduction or other credit shall 
be allowed under this chapter for any amount taken into account in 
determining the credit under this section.
    ``(f) Election Not To Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.''.
    (b) Conforming Amendments.--
            (1) Section 38(b) of such Code is amended by striking 
        ``plus'' at the end of paragraph (14), by striking the period 
        at the end of paragraph (15) and inserting ``, plus'', and by 
        adding at the end the following:
            ``(16) the trade adjustment assistance hiring credit 
        determined under section 45G.''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following:

                              ``Sec. 45G. Credit for portion of 
                                        employer social security taxes 
                                        paid with respect to employees 
                                        hired after completing training 
                                        programs under Trade Act of 
                                        1974.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.