I

103D CONGRESS

2D SESSION H. R. 4245

To amend title II of the Social Security Act and the Internal Revenue

Code of 1986 to provide for the long-range solvency of the old-age,

survivors, and disability insurance program.

IN THE HOUSE OF REPRESENTATIVES

APRIL 19, 1994

Mr. ROSTENKOWSKI introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend title II of the Social Security Act and the Internal

Revenue Code of 1986 to provide for the long-range

solvency of the old-age, survivors, and disability insurance program.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

4 This Act may be cited as the ‘‘Social Security Long5 Range Solvency Act of 1994’’.

TABLE OF CONTENTS

Sec. 1. Short title and table of contents.

TITLE I—PROVISIONS RELATING TO FUTURE ENTITLEMENTS

Sec. 101. Adjustments in formula for determining primary insurance amount.

Sec. 102. Gradual increase in retirement age to age 67 by the year 2011.
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TITLE II—PROVISIONS RELATING TO CURRENT AND FUTURE

ENTITLEMENTS

Sec. 201. Reduction in cost-of-living adjustment payable in 1995.

Sec. 202. Thresholds for income taxation of social security benefits.

TITLE III—COVERAGE OF NEWLY HIRED STATE AND LOCAL

EMPLOYEES

Sec. 301. Amendments to the Social Security Act.

Sec. 302. Amendments to the Internal Revenue Code of 1986.

Sec. 303. Effective date of title.

TITLE IV—SOCIAL SECURITY PAYROLL TAX

Sec. 401. Level of OASDI tax.

Sec. 402. Level of self-employment tax.

1 TITLE I—PROVISIONS RELATING

2 TO FUTURE ENTITLEMENTS

3 SEC. 101. ADJUSTMENTS IN FORMULA FOR DETERMINING

4 PRIMARY INSURANCE AMOUNT.

5 (a) ADDITIONAL EARNINGS BRACKET.—Section

6 215(a)(1)(A) of the Social Security Act (42 U.S.C.

7 415(a)(1)(A)) is amended—

8 (1) in clause (ii), by striking ‘‘and’’;

9 (2) in clause (iii), by striking ‘‘clause (ii),’’ and

10 inserting the following: ‘‘clause (ii), but, in the case

11 of an individual who initially becomes eligible for

12 old-age or disability insurance benefits, or who dies

13 (before becoming eligible for such benefits), after

14 calendar year 2001, do not exceed the amount estab15 lished for purposes of this clause by subparagraph

16 (B), and’’; and

17 (3) by inserting after clause (iii) the following

18 new clause:
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1 ‘‘(iv) in the case of an individual who initially

2 becomes eligible for old-age or disability insurance

3 benefits, or who dies (before becoming eligible for

4 such benefits), after calendar year 2001, 10 percent

5 of the individual’s average indexed monthly earnings

6 to the extent that such earnings exceed the amount

7 established for purposes of clause (iii),’’.

8 (b) BEND POINT AMOUNTS.—Section 215(a)(1)(B)

9 of such Act (42 U.S.C. 415(a)(1)(B)) is amended—

10 (1) in clause (ii), by inserting ‘‘and before

11 2002’’ after ‘‘1979’’ the first place it appears, and

12 by striking ‘‘by dividing—’’ and all that follows and

13 inserting ‘‘under clause (ix) of this subparagraph.’’;

14 (2) by redesignating clause (iii) as clause (xii);

15 (3) by inserting after clause (ii) the following

16 new clauses:

17 ‘‘(iii) For individuals who initially become eligible for

18 old-age or disability insurance benefits, or who die (before

19 becoming eligible for such benefits), in any calendar year

20 after 2001, the amount established for purposes of clause

21 (i) of subparagraph (A) shall be an amount equal to the

22 product of the following factors:

23 ‘‘(I) the amount established with respect to cal24 endar year 1979 under clause (i) of this subpara-
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1 graph for purposes of clause (i) of subparagraph

2 (A), and

3 ‘‘(II) the quotient obtained under clause (ix) of

4 this subparagraph.

5 ‘‘(iv) For individuals who initially become eligible for

6 old-age or disability insurance benefits, or who die (before

7 becoming eligible for such benefits), in any calendar year

8 after 2001 and before 2052, the amount established for

9 purposes of clause (ii) of subparagraph (A) shall be an

10 amount equal to the product of the following factors:

11 ‘‘(I) the amount established with respect to the

12 preceding calendar year under this subparagraph for

13 purposes of clause (ii) of subparagraph (A),

14 ‘‘(II) the quotient obtained under clause (x) of

15 this subparagraph, and

16 ‘‘(III) 0.99.

17 ‘‘(v) For individuals who initially become eligible for

18 old-age or disability insurance benefits, or who die (before

19 becoming eligible for such benefits), in any calendar year

20 after 2051, the amount established for purposes of clause

21 (ii) of subparagraph (A) shall be an amount equal to the

22 product of the following factors:

23 ‘‘(I) the amount established with respect to the

24 calendar year 2051 under clause (iv) of this sub-
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1 paragraph for purposes of clause (ii) of subpara2 graph (A), and

3 ‘‘(II) the quotient obtained under clause (xi) of

4 this subparagraph.

5 ‘‘(vi) For individuals who initially become eligible for

6 old-age or disability insurance benefits, or who die (before

7 becoming eligible for such benefits), in the calendar year

8 2002, the amount established for purposes of clause (iii)

9 of subparagraph (A) shall be an amount equal to the

10 quotient derived by dividing—

11 ‘‘(I) the amount established with respect to the

12 calendar year 2002 under clause (iv) of this sub13 paragraph for purposes of clause (ii) of subpara14 graph (A), by

‘‘(II) 0.9950 15 .

16 ‘‘(vii) For individuals who initially become eligible for

17 old-age or disability insurance benefits, or who die (before

18 becoming eligible for such benefits), in any calendar year

19 after 2002 and before 2052, the amount established for

20 purposes of clause (iii) of subparagraph (A) shall be an

21 amount equal to the product of the following factors:

22 ‘‘(I) the amount established with respect to the

23 preceding calendar year under this subparagraph for

24 purposes of clause (iii) of subparagraph (A),
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1 ‘‘(II) the quotient obtained under clause (x) of

2 this subparagraph, and

3 ‘‘(III) 0.99.

4 ‘‘(viii) For individuals who initially become eligible for

5 old-age or disability insurance benefits, or who die (before

6 becoming eligible for such benefits), in any calendar year

7 after 2051, the amount established for purposes of clause

8 (iii) of subparagraph (A) shall be an amount equal to the

9 product of the following factors:

10 ‘‘(I) the amount established with respect to cal11 endar year 2051 under clause (vii) of this subpara12 graph for purposes of clause (iii) of subparagraph

13 (A), and

14 ‘‘(II) the quotient obtained under clause (xi) of

15 this subparagraph.

16 ‘‘(ix) The quotient obtained under this clause is the

17 quotient obtained by dividing—

18 ‘‘(I) the deemed average total wages (as defined

19 in section 209(k)(1)) for the second calendar year

20 preceding the calendar year for which the determina21 tion is made, by

22 ‘‘(II) the average of the total wages (as defined

23 in regulations of the Secretary and computed with24 out regard to the limitations specified in section
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1 209(a)(1)) reported to the Secretary of the Treasury

2 or his delegate for the calendar year 1977.

3 ‘‘(x) The quotient obtained under this clause is the

4 quotient obtained by dividing—

5 ‘‘(I) the deemed average total wages (as defined

6 in section 209(k)(1)) for the second calendar year

7 preceding the calendar year for which the determina8 tion is made, by

9 ‘‘(II) the deemed average total wages (as de10 fined in section 209(k)(1)) for the third calendar

11 year preceding the calendar year for which the de12 termination is made.

13 ‘‘(xi) The quotient obtained under this clause is the

14 quotient obtained by dividing—

15 ‘‘(I) the deemed average total wages (as defined

16 in section 209(k)(1)) for the second calendar year

17 preceding the calendar year for which the determina18 tion is made, by

19 ‘‘(II) the average of the total wages (as defined

20 in regulations of the Secretary and computed with21 out regard to the limitations specified in section

22 209(a)(1)) reported to the Secretary of the Treasury

23 or his delegate for the calendar year 2049.’’; and
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1 (4) in clause (xii) (as redesignated), by striking

2 ‘‘clause (ii)’’ and inserting ‘‘the preceding clauses of

3 this subparagraph’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply with respect to individuals who ini6 tially become eligible (within the meaning of section

7 215(a)(3)(B) of the Social Security Act) for old-age or dis8 ability insurance benefits under title II of the Social Secu9 rity Act, or who die (before becoming eligible for such ben10 efits), in any calendar year after 2001.

11 SEC. 102. GRADUAL INCREASE IN RETIREMENT AGE TO

12 AGE 67 BY THE YEAR 2011.

13 (a) IN GENERAL.—Section 216(l) of the Social Secu14 rity Act (42 U.S.C. 416(l)) is amended—

15 (1) by striking subparagraphs (C) and (D) of

16 paragraph (1) and by redesignating subparagraph

17 (E) as subparagraph (C);

18 (2) in subparagraph (B) of paragraph (1), by

19 striking ‘‘January 1, 2005,’’ and inserting ‘‘January

20 1, 2011,’’;

21 (3) in subparagraph (C) of paragraph (1) (as

22 redesignated), by striking ‘‘December 31, 2021,’’

23 and inserting ‘‘December 31, 2010,’’; and

24 (4) by striking paragraph (3) and inserting the

25 following:
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1 ‘‘(3) The age increase factor for any individual who

2 attains early retirement age in the 11-year period consist3 ing of calendar years 2000 through 2010 shall be equal

to 2 4 ⁄12 of the number of months in the period beginning

5 with January 2000 and ending with December of the year

6 in which the individual attains early retirement age.’’.

7 (b) EFFECTIVE DATE.—The amendments made by

8 this section shall apply with respect to benefits of individ9 uals attaining early retirement age (as defined in section

10 216(l)(2) of the Social Security Act) after 1999.

11 TITLE II—PROVISIONS RELAT12 ING TO CURRENT AND FU13 TURE ENTITLEMENTS

14 SEC. 201. REDUCTION IN COST-OF-LIVING ADJUSTMENT

15 PAYABLE IN 1995.

16 (a) IN GENERAL.—For purposes of determining any

17 increase described in section 215(i)(2)(A)(ii) of the Social

18 Security Act (42 U.S.C. 415(i)(2)(A)(ii)) which is effective

19 for December 1994, the applicable increase percentage (as

20 defined in section 215(i)(1)(C) of such Act (42 U.S.C.

21 415(i)(1)(C))) shall be deemed to be the difference (not

22 less than zero) derived by subtracting 0.5 percent from

23 the applicable increase percentage (as so defined).

24 (b) INAPPLICABILITY TO PROVISIONS NOT RELATING

25 TO OASDI BENEFITS OR TIER I RAILROAD RETIREMENT
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1 BENEFITS.—Subsection (a) shall apply only with respect

2 to adjustments to social security benefits (as defined in

3 section 86(d) of the Internal Revenue Code of 1986) and

4 primary insurance amounts determined under title II of

5 the Social Security Act. For purposes of provisions of law

6 otherwise referring to section 215(i) of the Social Security

7 Act or otherwise basing adjustments on adjustments made

8 under such section 215(i), such section 215(i) shall be ap9 plied as if this section had not been enacted.

10 SEC. 202. THRESHOLDS FOR INCOME TAXATION OF SOCIAL

11 SECURITY BENEFITS.

12 (a) UNIFORM APPLICABILITY OF TAX.—Subsection

13 (a) of section 86 of the Internal Revenue Code of 1986

14 (relating to social security and tier 1 railroad retirement

15 benefits) is amended—

16 (1) by striking paragraph (2);

17 (2) by striking ‘‘(a) IN GENERAL.—’’ and all

18 that follows through ‘‘paragraph (2), gross’’ in para19 graph (1) and inserting ‘‘(a) IN GENERAL.—Gross’’;

20 and

21 (3) by redesignating subparagraphs (A) and

22 (B) of such subsection (as so amended) as para23 graphs (1) and (2), respectively.
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1 (b) CONFORMING AMENDMENTS.—Subsection (c) of

2 such section 86 (relating to base amount and adjusted

3 base amount) is amended—

4 (1) in the heading, by striking ‘‘AND ADJUSTED

5 BASE AMOUNT’’;

6 (2) by striking paragraph (2);

7 (3) by striking ‘‘section—’’ and all that follows

8 through ‘‘The term’’ in paragraph (1) and inserting

9 ‘‘section, the term’’;

10 (4) by redesignating subparagraphs (A), (B),

11 and (C) of such subsection (as so amended) as para12 graphs (1), (2), and (3), respectively; and

13 (5) by redesignating clauses (i) and (ii) of para14 graph (3) of such subsection (as so redesignated) as

15 subparagraphs (A) and (B), respectively.

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall apply with respect to taxable years begin18 ning after December 31, 1994.

19 TITLE III—COVERAGE OF NEWLY

20 HIRED STATE AND LOCAL EM21 PLOYEES

22 SEC. 301. AMENDMENTS TO THE SOCIAL SECURITY ACT.

23 (a) IN GENERAL.—Paragraph (7) of section 210(a)

24 of the Social Security Act (42 U.S.C. 410(a)(7)) is amend25 ed to read as follows:
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1 ‘‘(7) Excluded State or local government em2 ployment (as defined in subsection (r));’’.

3 (b) EXCLUDED STATE OR LOCAL GOVERNMENT EM4 PLOYMENT.—

5 (1) IN GENERAL.—Section 210 of such Act (42

6 U.S.C. 410) is amended by adding at the end the

7 following new subsection:

8 ‘‘Excluded State or Local Government Employment

9 ‘‘(r)(1) IN GENERAL.—The term ‘excluded State or

10 local government employment’ means any service per11 formed in the employ of a State, of any political subdivi12 sion thereof, or of any instrumentality of any one or more

13 of the foregoing which is wholly owned thereby, if—

14 ‘‘(A)(i) such service would be excluded from the

15 term ‘employment’ for purposes of this title if the

16 preceding provisions of this section as in effect in

17 March 1994 had remained in effect, and (ii) the re18 quirements of paragraph (2) are met with respect to

19 such service, or

20 ‘‘(B) the requirements of paragraph (3) are met

21 with respect to such service.

22 ‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT WHICH

23 CONTINUES.—
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1 ‘‘(A) IN GENERAL.—The requirements of this

2 paragraph are met with respect to service for any

3 employer if—

4 ‘‘(i) such service is performed by an indi5 vidual—

6 ‘‘(I) who was performing substantial

7 and regular service for remuneration for

8 that employer before January 1, 1995,

9 ‘‘(II) who is a bona fide employee of

10 that employer on December 31, 1994, and

11 ‘‘(III) whose employment relationship

12 with that employer was not entered into

13 for purposes of meeting the requirements

14 of this subparagraph, and

15 ‘‘(ii) the employment relationship with that

16 employer has not been terminated after Decem17 ber 31, 1994.

18 ‘‘(B) TREATMENT OF MULTIPLE AGENCIES AND

19 INSTRUMENTALITIES.—For purposes of subpara20 graph (A), under regulations (consistent with regula21 tions established under section 3121(t)(2)(B) of the

22 Internal Revenue Code of 1986)—

23 ‘‘(i) all agencies and instrumentalities of a

24 State (as defined in section 218(b)) or of the
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1 District of Columbia shall be treated as a single

2 employer, and

3 ‘‘(ii) all agencies and instrumentalities of a

4 political subdivision of a State (as so defined)

5 shall be treated as a single employer and shall

6 not be treated as described in clause (i).

7 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—

8 ‘‘(A) IN GENERAL.—The requirements of this

9 paragraph are met with respect to service if such

10 service is performed—

11 ‘‘(i) by an individual who is employed by a

12 State or political subdivison thereof to relieve

13 such individual from unemployment,

14 ‘‘(ii) in a hospital, home, or other institu15 tion by a patient or inmate thereof as an em16 ployee of a State or political subdivision thereof

17 or of the District of Columbia,

18 ‘‘(iii) by an individual, as an employee of

19 a State or political subdivision thereof or of the

20 District of Columbia, serving on a temporary

21 basis in case of fire, storm, snow, earthquake,

22 flood, or other similar emergency,

23 ‘‘(iv) by any individual as an employee in24 cluded under section 5351(2) of title 5, United

25 States Code (relating to certain interns, student
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1 nurses, and other student employees of hos2 pitals of the District of Columbia Government),

3 other than as a medical or dental intern or a

4 medical or dental resident in training,

5 ‘‘(v) by an election official or election

6 worker if the remuneration paid in a calendar

7 year for such service is less than $1,000 with

8 respect to service performed during 1995, and

9 the adjusted amount determined under sub10 paragraph (C) for any subsequent year with re11 spect to service performed during such subse12 quent year, except to the extent that service by

13 such election official or election worker is in14 cluded in employment under an agreement

15 under section 218, or

16 ‘‘(vi) by an employee in a position com17 pensated solely on a fee basis which is treated

18 pursuant to section 211(c)(2)(E) as a trade or

19 business for purposes of inclusion of such fees

20 in net earnings from self-employment.

21 ‘‘(B) DEFINITIONS.—As used in this para22 graph, the terms ‘State’ and ‘political subdivision’

23 have the meanings given those terms in section

24 218(b).
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1 ‘‘(C) ADJUSTMENTS TO DOLLAR AMOUNT FOR

2 ELECTION OFFICIALS AND ELECTION WORKERS.—

3 For each year after 1995, the Secretary shall adjust

4 the amount referred to in subparagraph (A)(v) at

5 the same time and in the same manner as is pro6 vided under section 215(a)(1)(B)(ii) with respect to

7 the amounts referred to in section 215(a)(1)(B)(i),

8 except that—

9 ‘‘(i) for purposes of this subparagraph,

10 1993 shall be substituted for the calendar year

11 referred to in section 215(a)(1)(B)(ii)(II), and

12 ‘‘(ii) such amount as so adjusted, if not a

13 multiple of $100, shall be rounded to the next

14 higher multiple of $100 where such amount is

15 a multiple of $50 and to the nearest multiple

16 of $100 in any other case.

17 The Secretary shall determine and publish in the

18 Federal Register each adjusted amount determined

19 under this subparagraph not later than November 1

20 preceding the year for which the adjustment is

21 made.’’.

22 (2) CONFORMING AMENDMENTS.—

23 (A) Subsection (k) of section 210 of such

24 Act (42 U.S.C. 410(k)) (relating to covered

25 transportation service) is repealed.
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1 (B) Section 210(p) of such Act (42 U.S.C.

2 410(p)) is amended—

3 (i) in paragraph (2), by striking

4 ‘‘service is performed’’ and all that follows

5 and inserting ‘‘service is service described

6 in subsection (r)(3)(A).’’; and

7 (ii) in paragraph (3)(A), by inserting

8 ‘‘under subsection (a)(7) as in effect in

9 March 1994’’ after ‘‘section’’.

10 (c) ADDITIONAL AMENDMENTS RELATING TO COV11 ERAGE AGREEMENTS.—

12 (1) AUTHORIZATION FOR ALL STATES TO EX13 TEND COVERAGE TO STATE AND LOCAL POLICEMEN

14 AND FIREMEN UNDER EXISTING COVERAGE AGREE15 MENTS.—

16 (A) IN GENERAL.—Section 218(l) of such

17 Act (42 U.S.C. 418(l)) is amended—

18 (i) in paragraph (1), by striking ‘‘(1)’’

19 after ‘‘(l)’’, and by striking ‘‘the State of’’

20 and all that follows through ‘‘prior to the

21 date of enactment of this subsection’’ and

22 inserting ‘‘a State entered into pursuant to

23 this section’’; and

24 (ii) by striking paragraph (2).
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1 (B) CONFORMING AMENDMENT.—Section

2 218(d)(8)(D) of such Act (42 U.S.C.

3 418(d)(8)(D)) is amended by striking ‘‘agree4 ments with the States named in’’ and inserting

5 ‘‘State agreements modified as provided in’’.

6 (C) EFFECTIVE DATE.—The amendments

7 made by this paragraph shall apply with respect

8 to modifications filed by States after the date of

9 the enactment of this Act.

10 (2) CONFORMING AMENDMENTS.—Section

11 218(c)(6) of such Act (42 U.S.C. 418(c)(6)) is

12 amended—

13 (A) by striking subparagraph (C);

14 (B) by redesignating subparagraphs (D)

15 and (E) as subparagraphs (C) and (D), respec16 tively; and

17 (C) by striking subparagraph (F) and in18 serting the following:

19 ‘‘(E) service which is included as employment

20 under section 210(a).’’

21 (d) AUTHORITY FOR STATES TO MODIFY COVERAGE

22 AGREEMENTS WITH RESPECT TO ELECTION OFFICIALS

23 AND ELECTION WORKERS.—Section 218(c)(8) of such

24 Act (42 U.S.C. 418(c)(8)) is amended—
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1 (1) by striking ‘‘on or after January 1, 1968,’’

2 and inserting ‘‘at any time’’;

3 (2) by striking ‘‘$100’’ and inserting ‘‘$1,000

4 with respect to service performed during 1995, and

5 the adjusted amount determined under section

6 210(r)(3)(C) for any subsequent year with respect to

7 service performed during such subsequent year’’;

8 and

9 (3) by striking the last sentence and inserting

10 the following new sentence: ‘‘Any modification of an

11 agreement pursuant to this paragraph shall be effec12 tive with respect to services performed in and after

13 the calendar year in which the modification is mailed

14 or delivered by other means to the Secretary.’’.

15 SEC. 302. AMENDMENTS TO THE INTERNAL REVENUE CODE

16 OF 1986.

17 (a) IN GENERAL.—Paragraph (7) of section 3121(b)

18 of the Internal Revenue Code of 1986 (relating to employ19 ment) is amended to read as follows:

20 ‘‘(7) excluded State or local government em21 ployment (as defined in subsection (t));’’.

22 (b) EXCLUDED STATE OR LOCAL GOVERNMENT EM23 PLOYMENT.—Section 3121 of such Code is amended by

24 inserting after subsection (s) the following new subsection:
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1 ‘‘(t) EXCLUDED STATE OR LOCAL GOVERNMENT EM2 PLOYMENT.—

3 ‘‘(1) IN GENERAL.—For purposes of this chap4 ter, the term ‘excluded State or local government

5 employment’ means any service performed in the

6 employ of a State, of any political subdivision there7 of, or of any instrumentality of any one or more of

8 the foregoing which is wholly owned thereby, if—

9 ‘‘(A)(i) such service would be excluded

10 from the term ‘employment’ for purposes of this

11 chapter if the provisions of subsection (b)(7) as

12 in effect in March 1994 had remained in effect,

13 and (ii) the requirements of paragraph (2) are

14 met with respect to such service, or

15 ‘‘(B) the requirements of paragraph (3)

16 are met with respect to such service.

17 ‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT

18 WHICH CONTINUES.—

19 ‘‘(A) IN GENERAL.—The requirements of

20 this paragraph are met with respect to service

21 for any employer if—

22 ‘‘(i) such service is performed by an

23 individual—

24 ‘‘(I) who was performing sub25 stantial and regular service for remu-
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1 neration for that employer before Jan2 uary 1, 1995,

3 ‘‘(II) who is a bona fide employee

4 of that employer on December 31,

5 1994, and

6 ‘‘(III) whose employment rela7 tionship with that employer was not

8 entered into for purposes of meeting

9 the requirements of this subpara10 graph, and

11 ‘‘(ii) the employment relationship with

12 that employer has not been terminated

13 after December 31, 1994.

14 ‘‘(B) TREATMENT OF MULTIPLE AGENCIES

15 AND INSTRUMENTALITIES.—For purposes of

16 subparagraph (A), under regulations—

17 ‘‘(i) all agencies and instrumentalities

18 of a State (as defined in section 218(b) of

19 the Social Security Act) or of the District

20 of Columbia shall be treated as a single

21 employer, and

22 ‘‘(ii) all agencies and instrumen23 talities of a political subdivision of a State

24 (as so defined) shall be treated as a single
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1 employer and shall not be treated as de2 scribed in clause (i).

3 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—

4 ‘‘(A) IN GENERAL.—The requirements of

5 this paragraph are met with respect to service

6 if such service is performed—

7 ‘‘(i) by an individual who is employed

8 by a State or political subdivison thereof to

9 relieve such individual from unemployment,

10 ‘‘(ii) in a hospital, home, or other in11 stitution by a patient or inmate thereof as

12 an employee of a State or political subdivi13 sion thereof or of the District of Columbia,

14 ‘‘(iii) by an individual, as an employee

15 of a State or political subdivision thereof

16 or of the District of Columbia, serving on

17 a temporary basis in case of fire, storm,

18 snow, earthquake, flood, or other similar

19 emergency,

20 ‘‘(iv) by any individual as an employee

21 included under section 5351(2) of title 5,

22 United States Code (relating to certain in23 terns, student nurses, and other student

24 employees of hospitals of the District of

25 Columbia Government), other than as a
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1 medical or dental intern or a medical or

2 dental resident in training,

3 ‘‘(v) by an election official or election

4 worker if the remuneration paid in a cal5 endar year for such service is less than

6 $1,000 with respect to service performed

7 during 1995, and the adjusted amount de8 termined under section 210(r)(3)(C) of the

9 Social Security Act for any subsequent

10 year with respect to service performed dur11 ing such subsequent year, except to the ex12 tent that service by such election official or

13 election worker is included in employment

14 under an agreement under section 218 of

15 the Social Security Act, or

16 ‘‘(vi) by an employee in a position

17 compensated solely on a fee basis which is

18 treated pursuant to section 1402(c)(2)(E)

19 as a trade or business for purposes of in20 clusion of such fees in net earnings from

21 self-employment.

22 ‘‘(B) DEFINITIONS.—As used in this para23 graph, the terms ‘State’ and ‘political subdivi24 sion’ have the meanings given those terms in

25 section 218(b) of the Social Security Act.’’.
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1 (c) CONFORMING AMENDMENTS.—

2 (1) Subsection (j) of such section 3121 (relat3 ing to covered transportation service) is repealed.

4 (2) Paragraph (2) of section 3121(u) of such

5 Code (relating to application of hospital insurance

6 tax to Federal, State, and local employment) is

7 amended—

8 (A) in subparagraph (B), by striking

9 ‘‘service is performed’’ in clause (ii) and all that

10 follows through the end of such subparagraph

11 and inserting ‘‘service is service described in

12 subsection (t)(3)(A).’’; and

13 (B) in subparagraph (C)(i), by inserting

14 ‘‘under subsection (b)(7) as in effect in March

15 1994’’ after ‘‘chapter’’.

16 SEC. 303. EFFECTIVE DATE OF TITLE.

17 Except as otherwise provided in this title, the amend18 ments made by this title shall apply with respect to service

19 performed after December 31, 1994.

20 TITLE IV—SOCIAL SECURITY

21 PAYROLL TAX

22 SEC. 401. LEVEL OF OASDI TAX.

23 (a) TAX ON EMPLOYEES.—Subsection (a) of section

24 3101 of the Internal Revenue Code of 1986 (relating to
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1 tax on employees for old-age, survivors, and disability in2 surance) is amended in the table—

3 (1) by striking the following:

‘‘1990 or thereafter .................................................................. 6.2 percent.’’;

4 and

5 (2) by inserting the following:

‘‘1990 through 2019 ................................................................ 6.2 percent

2020 .......................................................................................6.43 percent

2021 .......................................................................................6.66 percent

2022 .......................................................................................6.89 percent

2023 .......................................................................................7.12 percent

2024 through 2054 ................................................................7.35 percent

2055 .......................................................................................7.55 percent

2056 .......................................................................................7.75 percent

2057 .......................................................................................7.95 percent

2058 or thereafter ..................................................................8.15 percent.’’

6 (b) TAX ON EMPLOYERS.—Subsection (a) of section

7 3111 of such Code (relating to tax on employers for old8 age, survivors, and disability insurance) is amended in the

9 table—

10 (1) by striking the following:

‘‘1990 or thereafter .................................................................. 6.2 percent.’’;

11 and

12 (2) by inserting the following:

‘‘1990 through 2019 ................................................................ 6.2 percent

2020 .......................................................................................6.43 percent

2021 .......................................................................................6.66 percent

2022 .......................................................................................6.89 percent

2023 .......................................................................................7.12 percent

2024 through 2054 ................................................................7.35 percent

2055 .......................................................................................7.55 percent

2056 .......................................................................................7.75 percent

2057 .......................................................................................7.95 percent

2058 or thereafter ..................................................................8.15 percent.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply with respect to remuneration paid

3 after December 31, 1994.

4 SEC. 402. LEVEL OF SELF-EMPLOYMENT TAX.

5 (a) IN GENERAL.—Subsection (a) of section 1401 of

6 the Internal Revenue Code of 1986 (relating to rate of

7 tax on self-employment income for old-age, survivors, and

8 disability insurance) is amended in the table—

9 (1) by striking the following:

‘‘December 31, 1989 ......... ........................................... 12.40’’;

10 and

11 (2) by inserting the following:

‘‘December 31, 1989 ......... January 1, 2020 ............... 12.40

December 31, 2019 ......... January 1, 2021 ............... 12.86

December 31, 2020 ......... January 1, 2022 ............... 13.32

December 31, 2021 ......... January 1, 2023 ............... 13.78

December 31, 2022 ......... January 1, 2024 ............... 14.24

December 31, 2023 ......... January 1, 2055 ............... 14.70

December 31, 2054 ......... January 1, 2056 ............... 15.10

December 31, 2055 ......... January 1, 2057 ............... 15.50

December 31, 2056 ......... January 1, 2058 ............... 15.90

December 31, 2057 ......... ........................................... 16.30.’’

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section shall apply with respect to taxable years begin14 ning after December 31, 1994.

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