I
107TH CONGRESS
1ST SESSION
H. R. 1573
To amend the Internal Revenue Code of 1986 to provide more revenue
for the Social Security system by imposing a tax on certain unearned
income and to provide tax relief for more than 80,000,000 individuals
and families who pay more in Social Security taxes than income taxes
by reducing the rate of the old age, survivors, and disability insurance
Social Security payroll tax.
IN THE HOUSE OF REPRESENTATIVES
APRIL 24, 2001
Mr. OWENS 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
more revenue for the Social Security system by imposing
a tax on certain unearned income and to provide tax
relief for more than 80,000,000 individuals and families
who pay more in Social Security taxes than income taxes
by reducing the rate of the old age, survivors, and dis-
ability insurance Social Security payroll tax.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
‘‘SEC. 59B. SOCIAL SECURITY TAX ON CERTAIN UNEARNED
INCOME.
‘‘(a) IMPOSITION OF TAX.—In the case of an indi-
vidual, there is hereby imposed (in addition to any other
tax imposed by this subtitle) for each taxable year a tax
equal to 12 percent of such individual’s social security tax-
able income for such taxable year.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) SOCIAL SECURITY TAXABLE INCOME.—The
term ‘social security taxable income’ means adjusted
gross income reduced by the greater of—
‘‘(A) the sum of—
‘‘(i) the standard deduction applicable
to the taxpayer (or which would be applica-
ble if the taxpayer did not elect to itemize
deductions for the taxable year), and
‘‘(ii) the deduction for personal ex-
emptions under section 151 (determined
without regard to subsection (d)(3) there-
of), or
‘‘(B) the aggregate exempt income of the
taxpayer for the taxable year.
‘‘(2) EXEMPT INCOME.—The term ‘exempt in-
come’ means the following amounts to the extent in-
cluded in gross income:
‘‘(A) Amounts received as a pension or an-
nuity from a qualified plan (as defined in sec-
tion 4980(c)(1)).
‘‘(B) Amounts received as a social security
benefit (as defined in section 86(d)).
‘‘(C) Amounts received as earned income
(within the meaning of section 911(d)).
‘‘(c) CREDITS NOT ALLOWED, ETC.—The tax im-
posed by this section shall not be treated as a tax imposed
by this chapter for purposes of determining—
‘‘(1) the amount of any credit allowable under
this chapter, or
‘‘(2) the amount of the minimum tax imposed
by section 55.’’.
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end the following new item:
‘‘Part VIII. Social security tax on certain unearned income.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
(d) TRANSFERS TO TRUST FUNDS.—
(1) IN
GENERAL.—There are hereby appro-
priated to the payor funds amounts equivalent to the
tax imposed by section 59B of such Code (as added
by this section). The Secretary of the Treasury shall
make appropriate allocations of revenue received in
the general fund of the Treasury to each payor fund.
(2) TRANSFERS.—The amounts appropriated
by paragraph (1) to any payor fund shall be trans-
ferred from time to time (but not less frequently
than quarterly) from the general fund of the Treas-
ury on the basis of estimates made by the Secretary
of the Treasury of the amounts referred to in such
paragraph. Any such quarterly payment shall be
made on the first day of such quarter and shall take
into account revenue estimated to be received during
such quarter. Proper adjustments shall be made in
amounts subsequently transferred to the extent prior
estimates were in excess of or less than the amounts
required to be transferred.
(3) 
DEFINITIONS.—For 
purposes 
of 
this
subsection—
(A) PAYOR
FUND.—The term ‘‘payor
fund’’ means any trust fund or account from
which payments of social security benefits are
made.
(B) SOCIAL
SECURITY
BENEFITS.—The
term ‘‘social security benefits’’ has the meaning
given such term by section 86(d) of the Internal
Revenue Code of 1986.
SEC. 4. CHANGE IN RATES OF SOCIAL SECURITY TAXES.
(a) DECREASE IN RATE OF OASDI TAX ON EMPLOY-
EES.—The table in section 3101(a) of the Internal Rev-
enue Code of 1986 is amended by striking the last item
and inserting the following:
‘‘1990 or any year before 2002 ...............................................
6.2 percent
‘‘2002 or thereafter ..................................................................4.95 percent.’’
(b) DECREASE IN RATE OF OASDI TAX ON EMPLOY-
ERS.—The table in section 3111(a) of such Code is
amended by striking the last item and inserting the fol-
lowing:
‘‘1990 or any year before 2002 ...............................................
6.2 percent
‘‘2002 or thereafter ..................................................................4.95 percent.’’
(c) DECREASE IN RATE OF OASDI TAX ON SELF-
EMPLOYMENT INCOME.—The table in section 1401(a) of
such Code is amended by striking the last item and insert-
ing the following:
‘‘December 31, 1989 ..................
January 1, 2002 ........................
12.4
‘‘December 31, 2001 ..................
....................................................
9.9.’’
Æ