Medicare and Social Security Fair Share Act

Subjects: Taxation


<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1174 Introduced in Senate (IS)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                S. 1174

  To amend the Internal Revenue Code of 1986 to increase funding for 
                     Social Security and Medicare.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 18, 2023

Mr. Whitehouse 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 increase funding for 
                     Social Security and Medicare.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare and Social Security Fair 
Share Act''.

SEC. 2. MODIFICATION OF PAYROLL TAXES.

    (a) Wage Base for Taxes Funding Social Security.--
            (1) In general.--Paragraph (1) of section 3121(a) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
            ``(1) in the case of taxes imposed by sections 3101(a) and 
        3111(a), for any calendar year in which the contribution and 
        benefit base (as determined under section 230 of the Social 
        Security Act) is less than $400,000, so much of the 
        remuneration (other than remuneration referred to in the 
        succeeding paragraphs of this subsection) with respect to 
        employment that has been paid to an individual by an employer 
        during the calendar year as exceeds such contribution and 
        benefit base but does not exceed $400,000;''.
            (2) Conforming amendments.--
                    (A) Successor employers.--Section 3121 of the 
                Internal Revenue Code of 1986 is amended by adding at 
                the end the following new subsection:
    ``(aa) Special Rules for Successor Employers.--For purposes of 
subsection (a)(1), if an employer (hereinafter referred to as successor 
employer) during any calendar year acquires substantially all the 
property used in a trade or business of another employer (hereinafter 
referred to as a predecessor), or used in a separate unit of a trade or 
business of a predecessor, and immediately after the acquisition 
employs in his trade or business an individual who immediately prior to 
the acquisition was employed in the trade or business of such 
predecessor, then, for the purpose of determining the amount of 
remuneration paid by the successor employer under such subsection, any 
remuneration (other than remuneration referred to in the paragraphs 
succeeding paragraph (1) of subsection (a)) with respect to employment 
paid (or considered under this subsection as having been paid) to such 
individual by such predecessor during such calendar year and prior to 
such acquisition shall be considered as having been paid by such 
successor employer.''.
                    (B) Application to railroad retirement taxes.--
                Clause (i) of section 3231(e)(2)(A) of such Code is 
                amended to read as follows:
                            ``(i) In general.--For any calendar year in 
                        which the applicable base is less than 
                        $400,000, the term `compensation' does not 
                        include so much of the remuneration paid during 
                        any calendar year to an individual by an 
                        employer for services rendered as an employee 
                        to such employer as exceeds the applicable base 
                        but does not exceed $400,000.''.
    (b) Further Additional Hospital Insurance Tax on Very High Income 
Taxpayers.--
            (1) In general.--Section 3101(b) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(3) Further additional tax.--In addition to the tax 
        imposed by paragraphs (1) and (2) and the preceding subsection, 
        there is hereby imposed on every taxpayer (other than a 
        corporation, estate, or trust) a tax equal to 1.2 percent of 
        wages which are received with respect to employment (as defined 
        in section 3121(b)) during the taxable year which are in excess 
        of--
                    ``(A) in the case of a joint return, $500,000,
                    ``(B) in the case of a married taxpayer (as defined 
                in section 7703) filing a separate return, \1/2\ of the 
                dollar amount determined under subparagraph (A), and
                    ``(C) in any other case, $400,000.''.
            (2) Collection of tax.--Section 3102 of such Code is 
        amended by adding at the end the following new subsection:
    ``(g) Special Rules for Further Additional Tax.--
            ``(1) In general.--In the case of any tax imposed by 
        section 3101(b)(3), subsection (a) shall only apply to the 
        extent to which the taxpayer receives wages from the employer 
        in excess of $400,000, and the employer may disregard the 
        amount of wages received by such taxpayer's spouse.
            ``(2) Collection of amounts not withheld.--To the extent 
        that the amount of any tax imposed by section 3101(b)(3) is not 
        collected by the employer, such tax shall be paid by the 
        employee.
            ``(3) Tax paid by recipient.--If an employer, in violation 
        of this chapter, fails to deduct and withhold the tax imposed 
        by section 3101(b)(3) and thereafter the tax is paid by the 
        employee, the tax so required to be deducted and withheld shall 
        not be collected from the employer, but this paragraph shall in 
        no case relieve the employer from liability for any penalties 
        or additions to tax otherwise applicable in respect of such 
        failure to deduct and withhold.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to remuneration paid, and taxable years beginning, on or after 
January 1 of the first calendar year that begins after the date of 
enactment of this Act.

SEC. 3. MODIFICATION OF TAXES ON SELF-EMPLOYMENT INCOME.

    (a) Tax on Net Earnings From Self-Employment up to Contribution and 
Benefit Base and More Than $400,000.--Paragraph (1) of section 1402(b) 
of the Internal Revenue Code of 1986 is amended to read as follows:
            ``(1) in the case of the tax imposed by section 1401(a) for 
        any taxable year beginning in a calendar year in which the 
        contribution and benefit base (as determined under section 230 
        of the Social Security Act) is less than $400,000, the excess 
        (if any) of--
                    ``(A) so much of the net earnings from self-
                employment which is in excess of--
                            ``(i) an amount equal to the contribution 
                        and benefit base (as determined under section 
                        230 of the Social Security Act) which is 
                        effective for the calendar year in which such 
                        taxable year begins, reduced (but not below 
                        zero) by
                            ``(ii) the amount of the wages paid to such 
                        individual during such taxable year, over
                    ``(B) the sum of--
                            ``(i) the excess (if any) of--
                                    ``(I) the net earnings from self-
                                employment reduced by the excess (if 
                                any) of subparagraph (A)(i) over 
                                subparagraph (A)(ii), over
                                    ``(II) $400,000, reduced by such 
                                contribution and benefit base, plus
                            ``(ii) the amount of the wages paid to such 
                        individual during such taxable year in excess 
                        of such contribution and benefit base and not 
                        in excess of $400,000; or''.
    (b) Further Additional Hospital Insurance Tax on Very High Income 
Taxpayers.--
            (1) In general.--Section 1401(b) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(3) Further additional tax.--
                    ``(A) In general.--In addition to the tax imposed 
                by paragraphs (1) and (2) and the preceding subsection, 
                there is hereby imposed on every taxpayer (other than a 
                corporation, estate, or trust) for each taxable year a 
                tax equal to 1.2 percent of the self-employment income 
                for such taxable year which is in excess of--
                            ``(i) in the case of a joint return, 
                        $500,000,
                            ``(ii) in the case of a married taxpayer 
                        (as defined in section 7703) filing a separate 
                        return, \1/2\ of the dollar amount determined 
                        under subparagraph (A), and
                            ``(iii) in any other case, $400,000.
                    ``(B) Coordination with fica.--The amounts under 
                clause (i), (ii), or (iii) (whichever is applicable) of 
                subparagraph (A) shall be reduced (but not below zero) 
                by the amount of wages taken into account in 
                determining the tax imposed under section 3101(b)(3) 
                with respect to the taxpayer.''.
            (2) No deduction for further additional tax.--
                    (A) In general.--Section 164(f) of such Code is 
                amended by striking ``section 1401(b)(2)'' and 
                inserting ``paragraphs (2) and (3) of section 
                1401(b)''.
                    (B) Deduction for net earnings from self-
                employment.--Section 1402(a)(12)(B) of such Code is 
                amended by striking ``the rate imposed under paragraph 
                (2) of section 1401(b)'' and inserting ``the rates 
                imposed under paragraphs (2) and (3) of section 
                1401(b)''.
            (3) Technical amendment.--Section 1401(b)(2)(B) of such 
        Code is amended by striking ``section 3121(b)(2)'' and 
        inserting ``section 3101(b)(2)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to net earnings from self-employment derived, and taxable years 
beginning, on or after January 1 of the first calendar year that begins 
after the date of enactment of this Act.

SEC. 4. TAXES ON UNEARNED INCOME.

    (a) Modifications to Tax on Net Investment Income.--
            (1) In general.--Section 1411 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(f) Additional Amount for Certain High Income Individuals.--
            ``(1) Inclusion of specified net income.--
                    ``(A) In general.--In the case of any individual 
                whose modified adjusted gross income for the taxable 
                year exceeds the high income threshold amount, 
                subsection (a)(1) shall be applied by substituting `the 
                greater of specified net income or net investment 
                income' for `net investment income' in subparagraph (A) 
                thereof.
                    ``(B) Phase-in of increase.--The increase in the 
                tax imposed under subsection (a)(1) by reason of the 
                application of subparagraph (A) (determined before 
                application of paragraph (2)) shall not exceed the 
                amount which bears the same ratio to the amount of such 
                increase (determined without regard to this paragraph) 
                as--
                            ``(i) the excess described in subparagraph 
                        (A), bears to
                            ``(ii) $100,000 (\1/2\ such amount in the 
                        case of a married taxpayer (as defined in 
                        section 7703) filing a separate return).
            ``(2) Additional rate bracket.--In the case of any 
        individual whose modified adjusted gross income for the taxable 
        year exceeds the high income threshold amount, the amount of 
        tax imposed under subsection (a)(1) shall be increased by an 
        amount equal to 13.6 percent of the lesser of--
                    ``(A) the greater of the specified net income or 
                net investment income for the taxable year, or
                    ``(B) the excess (if any) of--
                            ``(i) the modified adjusted gross income 
                        for such taxable year, over
                            ``(ii) the high income threshold amount.
            ``(3) Definitions.--
                    ``(A) High income threshold amount.--For purposes 
                of this subsection, the term `high income threshold 
                amount' means--
                            ``(i) except as provided in clause (ii) or 
                        (iii), $400,000,
                            ``(ii) in the case of a taxpayer making a 
                        joint return under section 6013 or a surviving 
                        spouse (as defined in section 2(a)), $500,000, 
                        and
                            ``(iii) in the case of a married taxpayer 
                        (as defined in section 7703) filing a separate 
                        return, \1/2\ of the dollar amount determined 
                        under clause (ii).
                    ``(B) Specified net income.--For purposes of this 
                section, the term `specified net income' means net 
                investment income determined--
                            ``(i) without regard to the phrase `other 
                        than such income which is derived in the 
                        ordinary course of a trade or business not 
                        described in paragraph (2),' in subsection 
                        (c)(1)(A)(i),
                            ``(ii) without regard to the phrase 
                        `described in paragraph (2)' in subsection 
                        (c)(1)(A)(ii),
                            ``(iii) without regard to the phrase `other 
                        than property held in a trade or business not 
                        described in paragraph (2)' in subsection 
                        (c)(1)(A)(iii),
                            ``(iv) without regard to paragraphs (2), 
                        (3), and (4) of subsection (c), and
                            ``(v) by treating paragraphs (5) and (6) of 
                        section 469(c) (determined without regard to 
                        the phrase `To the extent provided in 
                        regulations,' in such paragraph (6)) as 
                        applying for purposes of subsection (c) of this 
                        section.''.
    (b) Application to Trusts and Estates.--Section 1411(a)(2) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``3.8 percent'' and inserting ``17.4 
        percent'', and
            (2) in subparagraph (A) thereof, by striking 
        ``undistributed net investment income'' and inserting ``the 
        greater of undistributed specified net income or undistributed 
        net investment income''.
    (c) Clarifications With Respect to Determination of Net Investment 
Income.--
            (1) Certain exceptions.--Section 1411(c)(6) of the Internal 
        Revenue Code of 1986 is amended to read as follows:
            ``(6) Special rules.--Net investment income shall not 
        include--
                    ``(A) any item taken into account in determining 
                self-employment income for such taxable year on which a 
                tax is imposed by section 1401(b),
                    ``(B) wages received with respect to employment on 
                which a tax is imposed under section 3101(b) 
                (determined without regard to section 3101(c)) or 
                3201(a) (including amounts taken into account under 
                section 3121(v)(2)), and
                    ``(C) wages received from the performance of 
                services earned outside the United States for a foreign 
                employer.''.
            (2) Net operating losses not taken into account.--Section 
        1411(c)(1)(B) of such Code is amended by inserting ``(other 
        than section 172)'' after ``this subtitle''.
            (3) Inclusion of certain foreign income.--
                    (A) In general.--Section 1411(c)(1)(A) of such Code 
                is amended by striking ``and'' at the end of clause 
                (ii), by striking ``over'' at the end of clause (iii) 
                and inserting ``and'', and by adding at the end the 
                following new clause:
                            ``(iv) any amount includible in gross 
                        income under section 951, 951A, 1293, or 1296, 
                        over''.
                    (B) Proper treatment of certain previously taxed 
                earnings and profits.--Section 1411(c) of such Code is 
                amended by adding at the end the following new 
                paragraph:
            ``(7) Certain earnings and profits of foreign 
        corporations.--
                    ``(A) In general.--Except as otherwise provided by 
                the Secretary, a distribution of earnings and profits 
                that is not treated as a dividend for purposes of 
                chapter 1 by reason of section 959(d) or section 
                1293(c) shall not be treated as a dividend for purposes 
                of this section.
                    ``(B) Regulations and other guidance.--The 
                Secretary shall issue regulations or other guidance 
                providing for the treatment of distributions by a 
                foreign corporation after December 31, 2023, of 
                earnings and profits of such foreign corporation which 
                accrued before such date, but which have not been 
                previously subject to tax under this section.''.
    (d) Transfers of Revenues to Old-Age and Survivors, Disability 
Insurance, and Federal Hospital Insurance Trust Funds.--
            (1) Federal old-age and survivors trust fund.--
                    (A) In general.--Section 201(a) of the Social 
                Security Act (42 U.S.C. 401(a)) is amended--
                            (i) by striking ``100 per centum of'',
                            (ii) by inserting ``100 percent of'' before 
                        ``the taxes'' each place it appears in 
                        paragraphs (1), (2), (3), and (4), and
                            (iii) by striking ``and'' at the end of 
                        paragraph (3), by striking the period at the 
                        end of paragraph (4) and inserting ``; and'', 
                        and by inserting after paragraph (4) the 
                        following new paragraph:
            ``(5) 71.3 percent of the taxes imposed by section 1411 of 
        the Internal Revenue Code of 1986 for any taxable year 
        beginning after December 31, 2023, as determined by the 
        Secretary of the Treasury or the Secretary's delegate based on 
        tax returns under subtitle F of such Code, less the amounts 
        specified in paragraph (3) of subsection (b).''.
                    (B) Conforming amendment.--The fourth sentence of 
                section 201(a) of such Act (42 U.S.C. 401(a)) is 
                amended by striking ``clauses (3) and (4)'' each place 
                it appears and inserting ``paragraphs (3), (4), and 
                (5)''.
            (2) Federal disability insurance trust fund.--Section 
        201(b) of the Social Security Act (42 U.S.C. 401(b)) is 
        amended--
                    (A) by striking ``100 per centum of'', and
                    (B) by striking ``and'' at the end of paragraph 
                (1), by striking the period at the end of paragraph (2) 
                and inserting ``; and'', and by inserting after 
                paragraph (2) the following new paragraph:
            ``(3) 10.3 percent of the taxes imposed by section 1411 of 
        the Internal Revenue Code of 1986 for any taxable year 
        beginning after December 31, 2023, as determined by the 
        Secretary of the Treasury or the Secretary's delegate based on 
        tax returns under subtitle F of such Code.''.
            (3) Federal hospital insurance trust fund.--Section 1817(a) 
        of the Social Security Act (42 U.S.C. 1395i(a)) is amended--
                    (A) by striking ``100 per centum of'',
                    (B) by inserting ``100 percent of'' before ``the 
                taxes'' each place it appears in paragraphs (1) and 
                (2), and
                    (C) by striking ``and'' at the end of paragraph 
                (1), by striking the period at the end of paragraph (2) 
                and inserting ``; and'', and by inserting after 
                paragraph (2) the following new paragraph:
            ``(3) 28.7 percent of the taxes imposed by section 1411 of 
        the Internal Revenue Code of 1986 for any taxable year 
        beginning after December 31, 2023, as determined by the 
        Secretary of the Treasury or the Secretary's delegate based on 
        tax returns under subtitle F of such Code.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2023.
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