II

106TH CONGRESS

1ST SESSION S. 807

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

APRIL 15, 1999

Mr. ASHCROFT 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 (17) the following new paragraph:

10 ‘‘(18) 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 indi19 vidual, in addition to the taxes described in sub20 section (a), there shall be allowed as a deduction for

21 the 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—

8 ‘‘(A) an agreement under section 218 of

9 the Social Security Act, or

10 ‘‘(B) an agreement under section 3121(l)

11 (relating to agreements entered into by Amer12 ican employers with respect to foreign affili13 ates).

14 ‘‘(3) COORDINATION WITH SPECIAL REFUND OF

15 SOCIAL SECURITY TAXES.—Taxes shall not be taken

16 into account under paragraph (1) to the extent the

17 taxpayer is entitled to a special refund of such taxes

18 under section 6413(c).

19 ‘‘(4) COORDINATION WITH EARNED INCOME

20 CREDIT.—No deduction shall be allowed under para21 graph (1) for any taxable year if the individual

22 elects to claim the earned income credit under sec23 tion 32 for the taxable year.’’
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1 (3) CONFORMING AMENDMENT.—The next to

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

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

4 (b) DEDUCTION FOR SELF-EMPLOYED INDIVID5 UALS.—

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

7 164(f) of the Internal Revenue Code of 1986 (relat8 ing to deduction for one-half of self-employment

9 taxes) is amended to read as follows:

10 ‘‘(1) IN GENERAL.—In the case of an indi11 vidual, in addition to the taxes described in sub12 section (a), there shall be allowed as a deduction for

13 the taxable year an amount equal to the sum of—

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

15 for such taxable year, plus

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

17 section 1401(b) for such taxable year.

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

19 earned income credit under section 32 for the tax20 able year, only 50 percent of the taxes described in

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

22 (2) CONFORMING AMENDMENTS.—

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

24 amended by inserting ‘‘who elects the applica25 tion of this section’’ after ‘‘eligible individual’’.
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1 (B) The heading for section 164(f) of such

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

3 inserting ‘‘PORTION’’.

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

5 amended—

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

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

8 and

9 (ii) by striking subparagraph (B) and

10 inserting:

11 ‘‘(B) a percentage equal to the sum for

12 such year of the rate of tax under section

13 1401(a) and one-half of the rate of tax under

14 section 1401(b);’’.

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

16 this section shall apply to taxable years beginning after

17 December 31, 1999.

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