II

104TH CONGRESS

2D SESSION S. 1741

To amend the Internal Revenue Code of 1986 to allow a deduction for

the old-age, survivors, and disability insurance taxes paid by employees

and self-employed individuals, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 9, 1996

Mr. ASHCROFT (for himself, Mr. LOTT, Mr. DEWINE, Mr. MACK, Mr. HATCH,

Mr. SMITH, Mr. CRAIG, and Mr. SHELBY) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to allow a

deduction for the old-age, survivors, and disability insurance taxes paid by employees and self-employed individuals, and for other purposes.

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.

4 This Act may be cited as the ‘‘Working Americans

5 Wage Restoration Act’’.
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1 SEC. 2. DEDUCTION FOR OLD-AGE, SURVIVORS, AND DIS2 ABILITY INSURANCE TAXES OF EMPLOYEES

3 AND SELF-EMPLOYED INDIVIDUALS.

4 (a) TAXES OF EMPLOYEES.—

5 (1) DEDUCTION ALLOWED IN ARRIVING AT AD6 JUSTED GROSS INCOME.—Section 62(a) of the Inter7 nal Revenue Code of 1986 (defining adjusted gross

8 income) is amended by inserting after paragraph

9 (15) the following new paragraph:

10 ‘‘(16) EMPLOYEES’ OASDI TAXES.—The deduc11 tion allowed by section 164(g).’’

12 (2) DETERMINATION OF DEDUCTION.—Section

13 164 of such Code (relating to deduction for taxes)

14 is amended by redesignating subsection (g) as sub15 section (h) and by inserting after subsection (f) the

16 following new subsection:

17 ‘‘(g) EMPLOYEES’ OASDI TAXES.—

18 ‘‘(1) IN GENERAL.—In the case of an individ19 ual, in addition to the taxes described in subsection

20 (a), there shall be allowed as a deduction for the

21 taxable year an amount equal to the sum of—

22 ‘‘(A) the taxes imposed by section 3101(a)

23 for the taxable year, and

24 ‘‘(B) the taxes imposed by section 3201(a)

25 for the taxable year but only to the extent at-
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1 tributable to the percentage in effect under sec2 tion 3101(a).

3 ‘‘(2) SPECIAL RULE FOR CERTAIN AGREE4 MENTS.—For purposes of paragraph (1), taxes im5 posed by section 3101(a) shall include amounts

6 equivalent to such taxes imposed with respect to re7 muneration covered by an agreement under section

8 218 of the Social Security Act.

9 ‘‘(3) COORDINATION WITH EARNED INCOME

10 CREDIT.—No deduction shall be allowed under para11 graph (1) for any taxable year if the individual

12 elects to claim the earned income credit under sec13 tion 32 for the taxable year.’’

14 (3) CONFORMING AMENDMENT.—The next to

15 last sentence of section 275(a) of such Code is

16 amended by inserting ‘‘or 164(g)’’ after ‘‘164(f)’’.

17 (b) DEDUCTION FOR SELF-EMPLOYED INDIVID18 UALS.—

19 (1) IN GENERAL.—Paragraph (1) of section

20 164(f) of the Internal Revenue Code of 1986 (relat21 ing to deduction for one-half of self-employment

22 taxes) is amended to read as follows:

23 ‘‘(1) IN GENERAL.—In the case of an individ24 ual, in addition to the taxes described in subsection
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1 (a), there shall be allowed as a deduction for the

2 taxable year an amount equal to the sum of—

3 ‘‘(A) the taxes imposed by section 1401(a)

4 for such taxable year, plus

5 ‘‘(B) 50 percent of the taxes imposed by

6 section 1401(b) for such taxable year.

7 In the case of an individual who elects to claim the

8 earned income credit under section 32 for the tax9 able year, only 50 percent of the taxes described in

10 subparagraph (A) shall be taken into account.’’

11 (2) CONFORMING AMENDMENTS.—

12 (A) Section 32(a)(1) of such Code is

13 amended by inserting ‘‘who elects the applica14 tion of this section’’ after ‘‘eligible individual’’.

15 (B) The heading for section 164(f) of such

16 Code is amended by striking ‘‘ONE-HALF’’ and

17 inserting ‘‘PORTION’’.

18 (C) Section 1402(a)(12) of such Code is

19 amended—

20 (i) by striking ‘‘one-half’’ the first

21 place it appears and inserting ‘‘portion’’,

22 and

23 (ii) by striking subparagraph (B) and

24 inserting:
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1 ‘‘(B) a percentage equal to the sum for

2 such year of the rate of tax under section

3 1401(a) and one-half of the rate of tax under

4 section 1401(b);’’.

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

6 this section shall apply to taxable years beginning after

7 December 31, 1996.

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