I

103D CONGRESS

1ST SESSION H. R. 2263

To amend the Internal Revenue Code of 1986 to reduce the burden of

social security taxes on lower and middle income individuals by allowing

a refundable credit for a portion of such taxes, and to repeal the limit

on the amount of wages subject to the employee OASDI taxes.

IN THE HOUSE OF REPRESENTATIVES

MAY 25, 1993

Mr. WHEAT 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 reduce

the burden of social security taxes on lower and middle

income individuals by allowing a refundable credit for

a portion of such taxes, and to repeal the limit on

the amount of wages subject to the employee OASDI

taxes.

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 Fairness Act of 1993’’.
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1 SEC. 2. CREDIT FOR PORTION OF EMPLOYEE OASDI TAXES.

2 (a) GENERAL RULE.—Subpart C of part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code of

4 1986 (relating to refundable credits) is amended by redes5 ignating section 35 as section 36 and by inserting after

6 section 34 the following new section:

7 ‘‘SEC. 35. CREDIT FOR PORTION OF EMPLOYEE OASDI

8 TAXES.

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in10 dividual, there shall be allowed as a credit against the tax

11 imposed by this subtitle for the taxable year an amount

12 equal to the lesser of—

13 ‘‘(1) such individual’s employee OASDI taxes

14 for the taxable year, or

15 ‘‘(2) the tax credit limitation amount for the

16 calendar year in which such taxable year begins.

17 ‘‘(b) TAX CREDIT LIMITATION AMOUNT.—For pur18 poses of subsection (a)—

19 ‘‘(1) IN GENERAL.—Except as otherwise pro20 vided in this subsection, the tax credit limitation

21 amount for any calendar year is the amount which

22 the Secretary estimates will result in a reduction of

23 revenues to the Federal Old-Age and Survivors In24 surance Trust Fund for such calendar year equal to

25 the increase in revenues for such year attributable to

26 the application of—
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1 ‘‘(A) the tax imposed by section 3101(a) to

2 wages in excess of the contribution and benefit

3 base for such year, and

4 ‘‘(B) the last sentence of section 1402(b).

5 ‘‘(2) RAILROAD RETIREMENT.—In the case of

6 an individual all of whose employee OASDI taxes for

7 the taxable year are described in subparagraphs (B)

8 and (D) of subsection (c)(1), the tax credit limita9 tion amount for any calendar year is the amount

10 which the Railroad Retirement Board estimates will

11 result in a reduction of revenues to the Railroad Re12 tirement Account for such calendar year equal to the

13 increase in revenues for such year attributable to the

14 application of the taxes described in such subpara15 graphs to compensation in excess of the contribution

16 and benefit base for such year.

17 ‘‘(3) ADJUSTMENTS.—The Secretary of the

18 Treasury and the Railroad Retirement Board, as the

19 case may be, shall make proper adjustments in the

20 determination of the tax credit limitation amounts to

21 the extent prior estimates were in excess of or less

22 than the correct amounts for the purpose of ensur23 ing that the balances of the Federal Old-Age and

24 Survivors Insurance Trust Fund and the Railroad

25 Retirement Account are not eroded by reason of the
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1 credits allowed under this section, thereby maintain2 ing the long-term stability of such Trust Fund and

3 Account.

4 ‘‘(c) EMPLOYEE OASDI TAXES.—For purposes of

5 this section—

6 ‘‘(1) IN GENERAL.—The term ‘employee

7 OASDI taxes’ means, with respect to any taxpayer

8 for any taxable year—

9 ‘‘(A) the amount of the taxes imposed by

10 section 3101(a) on amounts received by the tax11 payer during the calendar year in which the

12 taxable year begins,

13 ‘‘(B) so much of the tax imposed by sec14 tion 3201(a) as is determined at a rate not

15 greater than the rate in effect under section

16 3101(a) on amounts received by the taxpayer

17 during the calendar year in which the taxable

18 year begins,

19 ‘‘(C) 50 percent of the taxes imposed by

20 section 1401(a) on the self-employment income

21 of the taxpayer for the taxable year, and

22 ‘‘(D) so much of the tax imposed by sec23 tion 3211(a)(1) as is determined at a rate not

24 greater than the rate in effect under section

25 3101(a) on amounts received by the taxpayer
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1 during the calendar year in which the taxable

2 year begins.

3 ‘‘(2) SPECIAL RULE.—Any amounts paid pursu4 ant to an agreement under section 3121(l) (relating

5 to agreements entered into by American employers

6 with respect to foreign affiliates) which are equiva7 lent to the taxes referred to in paragraph (1)(A)

8 shall be treated as taxes referred to in such para9 graph.

10 ‘‘(3) CONTRIBUTION AND BENEFIT BASE.—The

11 term ‘contribution and benefit base’ means the con12 tribution and benefit base determined under section

13 230 of the Social Security Act.’’

14 (b) COST OF CREDIT BORNE BY RETIREMENT

15 FUNDS.—

16 (1) OASDI TRUST FUND.—The Secretary of

17 the Treasury shall pay, from time to time, from the

18 Federal Old-Age and Survivors Insurance Trust

19 Fund to the general fund of the Treasury amounts

20 equivalent to the credits allowed under section 35 of

21 the Internal Revenue Code of 1986 which are attrib22 utable to taxes described in subparagraphs (A) and

23 (C) of section 35(c)(1) of such Code.

24 (2) RAILROAD RETIREMENT ACCOUNT.—The

25 Railroad Retirement Board shall pay, from time to
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1 time, from the Railroad Retirement Account to the

2 general fund of the Treasury amounts equivalent to

3 the credits allowed under section 35 of the Internal

4 Revenue Code of 1986 which are attributable to

5 taxes described in subparagraphs (B) and (D) of

6 section 35(c)(1) of such Code.

7 (3) TRANSFERS.—Such amounts shall be trans8 ferred on the basis of estimates by the Secretary of

9 the Treasury or the Railroad Retirement Board, as

10 the case may be, and proper adjustments shall be

11 made in amounts subsequently transferred to the ex12 tent prior estimates were in excess of or less than

13 the credits allowed.

14 (c) TECHNICAL AMENDMENTS.—

15 (1) Paragraph (2) of section 1324(b) of title

16 31, United States Code, is amended by inserting be17 fore the period ‘‘or from section 35 of such Code’’.

18 (2) The table of sections for subpart C of part

19 IV of subchapter A of chapter 1 of such Code is

20 amended by striking the item relating to section 35

21 and inserting the following:

‘‘Sec. 35. Credit for portion of employee OASDI taxes.

‘‘Sec. 36. Overpayments of tax.’’

22 (d) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years beginning after

24 December 31, 1993.
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1 SEC. 3. REPEAL OF DOLLAR LIMITATION ON AMOUNT OF

2 WAGES SUBJECT TO EMPLOYEE OASDI TAX.

3 (a) OASDI TAX.—

4 (1) Paragraph (1) of section 3121(a) of the In5 ternal Revenue Code of 1986 (defining wages) is

6 amended by inserting ‘‘except in the case of the tax

7 imposed by section 3101(a),’’ after ‘‘(1)’’.

8 (2) Paragraph (1) of section 3121(x) of such

9 Code is amended—

10 (A) by striking ‘‘sections 3101(a) and

11 3111(a)’’ and inserting ‘‘section 3111(a)’’, and

12 (B) by inserting ‘‘EMPLOYER TAX FOR’’

13 before ‘‘OLD-AGE’’ in the heading.

14 (b) SELF-EMPLOYMENT TAX.—Subsection (b) of sec15 tion 1402 of such Code is amended by adding at the end

16 thereof the following new sentence: ‘‘Paragraph (1) shall

17 not apply to so much of the rate applicable under section

18 1401(a) as does not exceed the rate of tax in effect under

19 section 3101(a).’’

20 (c) RAILROAD RETIREMENT TAX.—Subparagraph

21 (A) of section 3231(e)(2) of such Code is amended by add22 ing at the end thereof the following new clause:

23 ‘‘(iii) EMPLOYEE OASDI TAXES.—

24 Clause (i) shall not apply to—

25 ‘‘(I) so much of the rate applica26 ble under section 3201(a) as does not
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1 exceed the rate of tax in effect under

2 section 3101(a), and

3 ‘‘(II) so much of the rate applica4 ble under section 3211(a)(1) as does

5 not exceed the rate of tax in effect

6 under section 3101(a).’’

7 (d) TECHNICAL AMENDMENTS.—

8 (1) Paragraph (1) of section 6413(c) of such

9 Code is amended—

10 (A) by striking ‘‘the contribution and bene11 fit base (as determined under section 230 of the

12 Social Security Act)’’ and inserting ‘‘the appli13 cable contribution base determined under sec14 tion 3121(x)(2)’’, and

15 (B) by striking ‘‘section 3101 or section

16 3201’’ and inserting ‘‘section 3101(b) or section

17 3201(a) (to the extent the rate applicable under

18 section 3201(a) as does not exceed the rate of

19 tax in effect under section 3101(b))’’.

20 (2) Subparagraphs (B) and (C) of section

21 6413(c)(2) of such Code are each amended by strik22 ing ‘‘section 3101’’ each place it appears and insert23 ing ‘‘section 3101(b)’’.

24 (3) Subsection (c) of section 6413 of such Code

25 is amended by striking paragraph (3).
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to 1994 and later calendar years.

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