I

103D CONGRESS

1ST SESSION H. R. 255

To amend the Internal Revenue Code of 1986 to provide for floating social

security tax rates for old-age, survivors, and disability insurance.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. NEAL of North Carolina 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 provide

for floating social security tax rates for old-age, survivors, and disability insurance.

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 Long5 Term Protection Act of 1993’’.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—Congress hereby finds that—

8 (1) public confidence in the old-age, survivors,

9 and disability insurance program under the Social

10 Security Act has been undermined by the nature of
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1 the political debate which attends the major deci2 sions affecting the program; and

3 (2) that the treatment of the old-age, survivors,

4 and disability insurance program under the Social

5 Security Act as a political issue is of grave concern

6 to—

7 (A) working Americans who bear the ever8 increasing social security tax burden and have

9 growing doubts about the program’s stability;

10 and

11 (B) young Americans, who object to the

12 social security tax altogether because they do

13 not believe it will survive long enough for them

14 to derive any benefits from it.

15 (b) ADDITIONAL FINDINGS.—Congress further finds

16 that—

17 (1) under current projections through the year

18 2025, surplus income for the old-age, survivors, and

19 disability insurance program will grow to an amount

20 equal to two years of outlays by the year 2000, and

21 to an amount equal to three and one-third years of

22 outlays by 2015;

23 (2) at the current rate of social security out24 lays, a reserve of three and one-third years would

25 total over $1,000,000,000,000;
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1 (3) a reserve in that amount would be unneces2 sary, and would be viewed by both the Congress and

3 the American people as excessive taxation.

4 (c) PURPOSES.—The purposes of this Act are—

5 (1) to permanently ensure the viability and cer6 tainty of the old-age, survivors, and disability insur7 ance program;

8 (2) to guarantee that social security taxes be no

9 more than necessary to meet the program’s current

10 obligations, plus an appropriate reserve.

11 SEC. 3. FLOATING OASDI TAX RATES AFTER 1994.

12 (a) RATE OF TAX ON EMPLOYEES.—Subsection (a)

13 of section 3101 of the Internal Revenue Code of 1986 (re14 lating to rate of tax on employees) is amended to read

15 as follows:

16 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR17 ANCE.—

18 ‘‘(1) GENERAL RULE.—In addition to other

19 taxes, there is hereby imposed on the income of

20 every individual a tax equal to the percentage deter21 mined under this subsection of the wages (as defined

22 in section 3121(a)) received by any individual during

23 any calendar year with respect to employment (as

24 defined in section 3121(b)). The percentage deter25 mined under this subsection is—
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1 ‘‘(A) in cases of wages received during

2 1994, 6.2 percent, and

3 ‘‘(B) in cases of wages received during any

4 calendar year after 1994, the percentage deter5 mined under this subsection for the prior cal6 endar year, unless paragraph (2) or (3) applies

7 with respect to such wages.

8 ‘‘(2) PERCENTAGE IN THE CASE OF AT LEAST

9 A 60-PERCENT OASDI TRUST FUND RESERVE.—

10 ‘‘(A) RULE GOVERNING APPLICABILITY OF

11 PARAGRAPH.—This paragraph applies with re12 spect to wages received during any calendar

13 year (after 1994) if the OASDI trust fund re14 serve on September 30 of the prior calendar

15 year is—

16 ‘‘(i) not less than 60.0 percent of the

17 total amount of the OASDI trust fund ex18 penditures during the fiscal year ending

19 with such September 30, and

20 ‘‘(ii) not less than the OASDI trust

21 fund reserve on the last preceding Septem22 ber 30.

23 ‘‘(B) DETERMINATION OF PERCENTAGE.—

24 If this paragraph applies with respect to wages

25 received during any calendar year, the percent-
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1 age determined under this subsection with re2 spect to such wages shall be equal to the excess

3 of—

4 ‘‘(i) the percentage determined under

5 this subsection for the prior calendar year,

6 over

7 ‘‘(ii) 0.4 percent.

8 ‘‘(3) PERCENTAGE IN THE CASE OF LESS THAN

9 A 55-PERCENT OASDI TRUST FUND RESERVE.—

10 ‘‘(A) RULE GOVERNING APPLICABILITY OF

11 PARAGRAPH.—This paragraph applies with re12 spect to wages received during any calendar

13 year (after 1994) if the OASDI trust fund re14 serve on September 30 of the prior calendar

15 year is less than 55.0 percent of the total

16 amount of the OASDI trust fund expenditures

17 during the fiscal year ending with such Septem18 ber 30.

19 ‘‘(B) DETERMINATION OF PERCENTAGE.—

20 The percentage determined for any calendar

21 year under this paragraph shall be equal to the

22 sum of—

23 ‘‘(i) the percentage determined under

24 this subsection for the prior calendar year,

25 plus
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1 ‘‘(ii) 0.4 percent.’’.

2 (b) RATE OF TAX ON EMPLOYERS.—Subsection (a)

3 of section 3111 of such Code (relating to rate of tax on

4 employers) is amended to read as follows:

5 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR6 ANCE.—

7 ‘‘(1) GENERAL RULE.—In addition to other

8 taxes, there is hereby imposed on every employer an

9 excise tax, with respect to having individuals in his

10 employ, equal to the percentage determined under

11 this subsection of the wages (as defined in section

12 3121(a)) paid by him during any calendar year with

13 respect to employment (as defined in section

14 3121(b)). The percentage determined under this

15 subsection is—

16 ‘‘(A) in cases of wages paid during 1994,

17 6.2 percent, and

18 ‘‘(B) in cases of wages paid during any

19 calendar year after 1994, the percentage deter20 mined under this subsection for the prior cal21 endar year, unless paragraph (2) or (3) applies

22 with respect to such wages.

23 ‘‘(2) PERCENTAGE IN THE CASE OF AT LEAST

24 A 60-PERCENT OASDI TRUST FUND RESERVE.—
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1 ‘‘(A) RULE GOVERNING APPLICABILITY OF

2 PARAGRAPH.—This paragraph applies with re3 spect to wages paid during any calendar year

4 (after 1994) if the OASDI trust fund reserve

5 on September 30 of the prior calendar year is—

6 ‘‘(i) not less than 60.0 percent of the

7 total amount of the OASDI trust fund ex8 penditures during the fiscal year ending

9 with such September 30, and

10 ‘‘(ii) not less than the OASDI trust

11 fund reserve on the last preceding Septem12 ber 30.

13 ‘‘(B) DETERMINATION OF PERCENTAGE.—

14 If this paragraph applies with respect to wages

15 paid during any calendar year, the percentage

16 determined under this subsection with respect

17 to such wages shall be equal to the excess of—

18 ‘‘(i) the percentage determined under

19 this subsection for the prior calendar year,

20 over

21 ‘‘(ii) 0.4 percent.

22 ‘‘(3) PERCENTAGE IN THE CASE OF LESS THAN

23 A 55-PERCENT OASDI TRUST FUND RESERVE.—

24 ‘‘(A) RULE GOVERNING APPLICABILITY OF

25 PARAGRAPH.—This paragraph applies with re-
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1 spect to wages paid during any calendar year

2 (after 1994) if the OASDI trust fund reserve

3 on September 30 of the prior calendar year is

4 less than 55.0 percent of the total amount of

5 the OASDI trust fund expenditures during the

6 fiscal year ending with such September 30.

7 ‘‘(B) DETERMINATION OF PERCENTAGE.—

8 The percentage determined for any calendar

9 year under this paragraph shall be equal to the

10 sum of—

11 ‘‘(i) the percentage determined under

12 this subsection for the prior calendar year,

13 plus

14 ‘‘(ii) 0.4 percent.’’.

15 (c) RATE OF SELF-EMPLOYMENT TAX.—Subsection

16 (a) of section 1401 of such Code (relating to rate of tax

17 on self-employment income for old-age, survivors, and dis18 ability insurance) is amended to read as follows:

19 ‘‘(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR20 ANCE.—

21 ‘‘(1) GENERAL RULE.—In addition to other

22 taxes, there shall be imposed for each taxable year,

23 on the self-employment income for such taxable year,

24 a tax equal to the percentage determined under this

25 subsection of the self-employment income for such
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1 taxable year. The percentage determined under this

2 subsection is—

3 ‘‘(A) in cases of self-employment income

4 for the first taxable year beginning after De5 cember 31, 1993, 12.4 percent, and

6 ‘‘(B) in cases of self-employment income

7 for each subsequent taxable year, the percent8 age determined under this subsection for the

9 prior taxable year, unless paragraph (2) or (3)

10 applies with respect to such self-employment in11 come.

12 ‘‘(2) PERCENTAGE IN THE CASE OF AT LEAST

13 A 60-PERCENT OASDI TRUST FUND RESERVE.—

14 ‘‘(A) RULE GOVERNING APPLICABILITY OF

15 PARAGRAPH.—This paragraph applies with re16 spect to self-employment income for any taxable

17 year (referred to in paragraph (1)(B)) if the

18 OASDI trust fund reserve on September 30 of

19 the calendar year preceding such taxable year

20 is—

21 ‘‘(i) not less than 60.0 percent of the

22 total amount of the OASDI trust fund ex23 penditures during the fiscal year ending

24 with such September 30, and
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1 ‘‘(ii) not less than the OASDI trust

2 fund reserve on the last preceding Septem3 ber 30.

4 ‘‘(B) DETERMINATION OF PERCENTAGE.—

5 If this paragraph applies with respect to self6 employment income for any taxable year, the

7 percentage determined under this subsection

8 with respect to such self-employment income

9 shall be equal to the excess of—

10 ‘‘(i) the percentage determined under

11 this subsection for the prior taxable year,

12 over

13 ‘‘(ii) 0.8 percent.

14 ‘‘(3) PERCENTAGE IN THE CASE OF LESS THAN

15 A 55-PERCENT OASDI TRUST FUND RESERVE.—

16 ‘‘(A) RULE GOVERNING APPLICABILITY OF

17 PARAGRAPH.—This paragraph applies with re18 spect to self-employment income for any taxable

19 year (referred to in paragraph (1)(B)) if the

20 OASDI trust fund reserve on September 30 of

21 the calendar year preceding such taxable year is

22 less than 55.0 percent of the total amount of

23 the OASDI trust fund expenditures during the

24 fiscal year ending with such September 30.
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1 ‘‘(B) DETERMINATION OF PERCENTAGE.—

2 The percentage determined for any calendar

3 year under this paragraph shall be equal to the

4 sum of—

5 ‘‘(i) the percentage determined under

6 this subsection for the prior calendar year,

7 plus

8 ‘‘(ii) 0.8 percent.’’.

9 (d) DEFINITIONS.—

10 (1) AMENDMENT TO FICA PROVISIONS.—Sec11 tion 3121 of such Code (relating to definitions) is

12 amended by adding at the end thereof the following

13 new subsections:

14 ‘‘(y) OASDI TRUST FUND RESERVE.—For purposes

15 of this chapter, the term ‘OASDI trust fund reserve’, on

16 September 30 of any calendar year, means the sum of—

17 ‘‘(1) the balance in the Federal Old-Age and

18 Survivors Insurance Trust Fund as of such date,

19 and

20 ‘‘(2) the balance in the Federal Disability In21 surance Trust Fund as of such date.

22 ‘‘(z) OASDI TRUST FUND EXPENDITURES.—For

23 purposes of this chapter, the term ‘OASDI trust fund ex24 penditures’, during any fiscal year, means the sum of—
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1 ‘‘(1) the total amount which was paid from the

2 Federal Old-Age and Survivors Insurance Trust

3 Fund during such fiscal year for all purposes au4 thorized by section 201 of the Social Security Act,

5 but excluding any transfer payments between such

6 Trust Fund and the Federal Disability Insurance

7 Trust Fund and reducing the amount of any trans8 fers to the Railroad Retirement Account by the

9 amount of any transfers into such Trust Fund from

10 that Account, and

11 ‘‘(2) the total amount which was paid from the

12 Federal Disability Insurance Trust Fund during

13 such fiscal year for all purposes authorized by sec14 tion 201 of such Act, but excluding any transfer

15 payments between such Trust Fund and the Federal

16 Old-Age and Survivors Insurance Trust Fund and

17 reducing the amount of any transfers to the Rail18 road Retirement Account by the amount of any

19 transfers into such Trust Fund from that Account.’’.

20 (2) AMENDMENT TO SECA PROVISIONS—Section

21 1402 of such Code (relating to definitions) is

22 amended by adding at the end thereof the following

23 new subsections:
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1 ‘‘(k) OASDI TRUST FUND RESERVE.—The term

2 ‘OASDI trust fund reserve’, on September 30 of any cal3 endar year, means the sum of—

4 ‘‘(1) the balance in the Federal Old-Age and

5 Survivors Insurance Trust Fund, as of such date,

6 and

7 ‘‘(2) the balance in the Federal Disability In8 surance Trust Fund, as of such date.

9 ‘‘(l) OASDI TRUST FUND EXPENDITURES.—The

10 term ‘OASDI trust fund expenditures’, during any fiscal

11 year, means the sum of—

12 ‘‘(1) the total amount which was paid from the

13 Federal Old-Age and Survivors Insurance Trust

14 Fund during such fiscal year for all purposes au15 thorized by section 201 of the Social Security Act,

16 but excluding any transfer payments between such

17 Trust Fund and the Federal Disability Insurance

18 Trust Fund and reducing the amount of any trans19 fers to the Railroad Retirement Account by the

20 amount of any transfers into such Trust Fund from

21 that Account, and

22 ‘‘(2) the total amount which was paid from the

23 Federal Disability Insurance Trust Fund during

24 such fiscal year for all purposes authorized by sec25 tion 201 of such Act, but excluding any transfer
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1 payments between such Trust Fund and the Federal

2 Old-Age and Survivors Insurance Trust Fund and

3 reducing the amount of any transfers to the Rail4 road Retirement Account by the amount of any

5 transfers into such Trust Fund from that Account.’’.

6 (e) EFFECTIVE DATE.—The amendments made by

7 this section shall apply with respect to wages received and

8 wages paid during calendar years after 1993 and self-em9 ployment income for taxable years beginning after Decem10 ber 31, 1993.

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