‘‘(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 sub-
paragraph (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 In-
ternal 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 pre-
ceding subsection, there is hereby imposed on 
every taxpayer (other than a corporation, es-
tate, 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— 
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‘‘(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 sepa-
rate return, 1⁄2 of the dollar amount deter-
mined under subparagraph (A), and 
‘‘(iii) in any other case, $400,000. 
‘‘(B) COORDINATION
WITH
FICA.—The 
amounts under clause (i), (ii), or (iii) (which-
ever 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 re-
spect 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 
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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-employ-
ment 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 IN-
COME INDIVIDUALS.— 
‘‘(1) INCLUSION OF SPECIFIED NET INCOME.— 
‘‘(A) IN GENERAL.—In the case of any in-
dividual whose modified adjusted gross income 
for the taxable year exceeds the high income 
threshold amount, subsection (a)(1) shall be ap-
plied by substituting ‘the greater of specified 
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net income or net investment income’ for ‘net 
investment income’ in subparagraph (A) there-
of. 
‘‘(B) PHASE-IN
OF
INCREASE.—The in-
crease in the tax imposed under subsection 
(a)(1) by reason of the application of subpara-
graph (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 subpara-
graph (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 in-
come 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 in-
come or net investment income for the taxable 
year, or 
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‘‘(B) the excess (if any) of— 
‘‘(i) the modified adjusted gross in-
come 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 sur-
viving spouse (as defined in section 2(a)), 
$500,000, and 
‘‘(iii) in the case of a married tax-
payer (as defined in section 7703) filing a 
separate return, 1⁄2 of the dollar amount 
determined under clause (ii). 
‘‘(B) SPECIFIED NET INCOME.—For pur-
poses of this section, the term ‘specified net in-
come’ means net investment income deter-
mined— 
‘‘(i) without regard to the phrase 
‘other than such income which is derived in 
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the ordinary course of a trade or business 
not described in paragraph (2),’ in sub-
section (c)(1)(A)(i), 
‘‘(ii) without regard to the phrase ‘de-
scribed 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 pro-
vided in regulations,’ in such paragraph 
(6)) as applying for purposes of subsection 
(c) of this section.’’. 
(b) APPLICATION TO TRUSTS AND ESTATES.—Sec-
tion 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 
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