I 

108TH CONGRESS 

2D SESSION H. R. 3868

To amend the Internal Revenue Code of 1986 to phaseout the 1993 income 

tax increase on Social Security benefits. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 2, 2004

Mr. SMITH of New Jersey introduced the following bill; which was referred 

to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to phaseout 

the 1993 income tax increase on Social Security benefits.

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 ‘‘Social Security Tax 

5 Hike Phaseout Act of 2004’’. 

6 SEC. 2. PHASEOUT OF 1993 INCOME TAX INCREASE ON SO7 CIAL SECURITY BENEFITS. 

8 (a) IN GENERAL.—Paragraph (2) of section 86(a) of 

9 the Internal Revenue Code of 1986 is amended—
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1 (1) by inserting ‘‘of taxable years beginning be2 fore January 1, 2009,’’ after ‘‘In the case’’, and 

3 (2) by striking ‘‘85 percent’’ each place it ap4 pears and inserting ‘‘the applicable percentage’’. 

5 (b) APPLICABLE PERCENTAGE.—Subsection (c) of 

6 section 86 of such Code is amended by adding at the end 

7 the following new paragraph: 

8 ‘‘(3) APPLICABLE PERCENTAGE.—The term 

9 ‘applicable percentage’ means the percentage deter10 mined in accordance with the following table:

‘‘For taxable years beginning The applicable 

in calendar year— percentage is— 

2005 ................................................................................................... 75

2006 ................................................................................................... 70

2007 ................................................................................................... 65

2008 ................................................................................................... 60’’.

11 (c) CONFORMING AMENDMENTS.—

12 (1) Subparagraph (A) of section 871(a)(3) of 

13 such Code is amended by striking ‘‘85 percent’’ and 

14 inserting ‘‘50 percent (in the case of calendar years 

15 2005 through 2008, the applicable percentage deter16 mined under section 86(c)(3) with respect to such 

17 calendar year)’’. 

18 (2) Subparagraph (A) of section 121(e)(1) of 

19 the Social Security Amendments of 1983 (Public 

20 Law 98–21) is amended by inserting ‘‘(as modified 

21 by the amendments made by the Social Security Tax 
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1 Hike Phaseout Act of 2004)’’ before the period at 

2 the end. 

3 (3) The heading of subsection (c) of section 86 

4 of such Code is amended to read as follows: ‘‘DEFI5 NITIONS.—’’. 

6 (d) EFFECTIVE DATES.—

7 (1) IN GENERAL.—Except as otherwise pro8 vided in this subsection, the amendments made by 

9 this section shall apply to taxable years beginning 

10 after December 31, 2004. 

11 (2) SUBSECTION (C)(1).—The amendment 

12 made by subsection (c)(1) shall apply to benefits 

13 paid after December 31, 2004. 

14 (3) SUBSECTION (C)(2).—The amendment 

15 made by subsection (c)(2) shall apply to tax liabil16 ities for taxable years beginning after December 31, 

17 2004. 

18 SEC. 3. MAINTENANCE OF TRANSFERS TO HOSPITAL IN19 SURANCE TRUST FUND. 

20 (a) IN GENERAL.—There are hereby appropriated to 

21 the Federal Hospital Insurance Trust Fund established 

22 under section 1817 of the Social Security Act amounts 

23 equal to the reduction in revenues to the Treasury by rea24 son of the enactment of this Act. Amounts appropriated 

25 by the preceding sentence shall be transferred from the 
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1 general fund at such times and in such manner as to rep2 licate to the extent possible the transfers which would have 

3 occurred to such Trust Fund had this Act not been en4 acted. 

5 (b) REPORTS.—The Secretary of the Treasury or the 

6 Secretary’s delegate shall annually report to the Com7 mittee on Ways and Means of the House of Representa8 tives and the Committee on Finance of the Senate the 

9 amounts and timing of the transfers under this section.

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