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(2) Section 219(f) of such Code is amended by
striking paragraph (7).
(c) EXCESS DISTRIBUTIONS TAX NOT TO APPLY.—
Subparagraph (B) of section 4980A(e)(1) of such Code
is amended by inserting ‘‘other than an ADS account (as
defined in section 408A(b))’’ after ‘‘retirement plan’’.
(d) CLERICAL AMENDMENT.—The table of sections
for subpart A of part I of subchapter D of chapter 1 of
such Code is amended by inserting after the item relating
to section 408 the following new item:
‘‘Sec. 408A. American Dream Savings Accounts.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997.
SEC. 4. REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY
BENEFITS.
(a) IN GENERAL.—Subsection (a) of section 86 of the
Internal Revenue Code of 1986 (relating to Social Security
and tier 1 railroad retirement benefits) is amended by
adding at the end the following new paragraph:
‘‘(3) PHASEOUT OF ADDITIONAL AMOUNT.—In
the case of any taxable year beginning in a calendar
year after 1997 and before 2002, paragraph (2)
shall be applied by substituting the percentage deter-
mined under the following table for ‘85 percent’ each
place it appears:
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‘‘In the case of a taxable year
beginning in calendar year:
The percentage is:
1998 ..................................................................................
75 percent
1999 ..................................................................................
65 percent
2000 ..................................................................................
60 percent
2001 ..................................................................................
55 percent.’’
(b) TERMINATION OF ADDITIONAL AMOUNT.—Para-
graph (2) of section 86(a) of such Code is amended by
adding at the end the following new flush sentence:
‘‘This paragraph shall not apply to any taxable year
beginning after December 31, 2001.’’
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 871(a) of such
Code is amended—
(A) by striking ‘‘85 percent’’ in subpara-
graph (A) and inserting ‘‘50 percent’’, and
(B) by inserting before the last sentence
the following new flush sentence:
‘‘In the case of any taxable year beginning in a cal-
endar year after 1997 and before 2002, subpara-
graph (A) shall be applied by substituting the per-
centage determined for such calendar year under
section 86(a)(3) for ‘50 percent’.’’
(2)(A) Subparagraph (A) of section 121(e)(1)
of the Social Security Amendments of 1983 (Public
Law 98–21) is amended—
(i) by striking ‘‘(A) There’’ and inserting
‘‘There’’;
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(ii) by striking ‘‘(i)’’ immediately following
‘‘amounts equivalent to’’; and
(iii) by striking ‘‘, less (ii)’’ and all that
follows and inserting a period.
(B) Paragraph (1) of section 121(e) of such Act
is amended by striking subparagraph (B).
(C) Paragraph (3) of section 121(e) of such Act
is amended by striking subparagraph (B) and by re-
designating subparagraph (C) as subparagraph (B).
(D) Paragraph (2) of section 121(e) of such
Act is amended in the first sentence by striking
‘‘paragraph (1)(A)’’ and inserting ‘‘paragraph (1)’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to taxable years beginning after Decem-
ber 31, 1997.
(2) SUBSECTION (c)(2).—The amendments made
by subsection (c)(2) shall apply to tax liabilities for
taxable years beginning after December 31, 1995.
SEC. 5. REVENUE REDUCTIONS OFFSET BY REDUCTIONS IN
FUNDING FOR DEPARTMENT OF COMMERCE
AND DEPARTMENT OF ENERGY.
Any reduction in revenues to the Federal Government
by reason of the amendments made by this Act should be
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offset by reductions in the funds available for the Depart-
ment of Commerce and the Department of Energy.
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