I
105TH CONGRESS
1ST SESSION
H. R. 2860
To amend the Internal Revenue Code of 1986 to use 50 percent of any
Federal budget surplus in the general fund for reductions in Social
Security taxes and to provide that the remainder of the surplus shall
be used to increase discretionary nondefense spending and to reduce
the outstanding public debt.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 6, 1997
Mr. SCHUMER introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on the
Budget, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to use 50
percent of any Federal budget surplus in the general
fund for reductions in Social Security taxes and to pro-
vide that the remainder of the surplus shall be used
to increase discretionary nondefense spending and to re-
duce the outstanding public debt.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Budget Surplus Divi-
dend Act of 1997’’.
SEC. 2. 50 PERCENT OF FEDERAL BUDGET SURPLUS TO RE-
IMBURSE EMPLOYERS AND EMPLOYEES FOR
A PORTION OF THEIR SOCIAL SECURITY
TAXES.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. CREDIT FOR PORTION OF SOCIAL SECURITY
TAXES.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
able year to which this section applies, there shall be al-
lowed as a credit against the tax imposed by this subtitle
for the taxable year an amount equal to the applicable per-
centage of the taxpayer’s social security taxes for the tax-
able year.
‘‘(b) TAXABLE YEARS
TO WHICH SECTION AP-
PLIES.—This section shall apply to any taxable year be-
ginning in the first calendar year beginning after a fiscal
year if there is a Federal budget surplus for such fiscal
year of more than $1,000,000,000.
‘‘(1) IN GENERAL.—The term ‘social security
taxes’ means, with respect to any taxpayer for any
taxable year—
‘‘(A) the taxes imposed by sections 3101
and 3201(a) (relating to taxes on employees) on
amounts received by the taxpayer during the
calendar year in which the taxable year begins,
‘‘(B) the taxes imposed by sections 3111
and 3221(a) (relating to taxes on employers) on
amounts paid by the taxpayer during the cal-
endar year in which the taxable year begins,
‘‘(C) the taxes imposed by section 1401 on
the self-employment income of the taxpayer for
the taxable year, and
‘‘(D) 
the 
taxes 
imposed 
by 
section
3211(a)(1) on amounts received by the taxpayer
during the calendar year in which the taxable
year begins.
‘‘(2) COORDINATION WITH SPECIAL REFUND OF
SOCIAL SECURITY TAXES.—The term ‘social security
taxes’ shall not include any taxes to the extent the
taxpayer is entitled to a special refund of such taxes
under section 6413(c).
‘‘(3) SPECIAL RULE.—Any amounts paid pursu-
ant to an agreement under section 3121(l) (relating
to agreements entered into by American employers
with respect to foreign affiliates) which are equiva-
lent to the taxes referred to in paragraph (1)(A)
shall be treated as taxes referred to in such para-
graph.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart C of part IV of subchapter A of chapter 1
of such Code is amended by striking the item relating to
section 35 and inserting the following:
‘‘Sec. 35. Credit for portion of social security taxes.
‘‘Sec. 36. Overpayments of tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997.
SEC. 3. APPROPRIATION TO USE 25 PERCENT OF FEDERAL
BUDGET SURPLUS TO REDUCE OUTSTAND-
ING PUBLIC DEBT.
There is hereby appropriated for the first fiscal year
following each fiscal year for which there is a Federal
budget surplus an amount equal to 25 percent of such sur-
plus for purpose of paying at maturity, or to redeem or
buy before maturity, obligations of the Government in-
cluded in the public debt. An obligation of the Government
that is paid, redeemed, or bought with funds appropriated
by the preceding sentence shall be canceled and retired
and may not be reissued.
SEC. 4. USE 25 PERCENT OF FEDERAL BUDGET SURPLUS
TO INCREASE NONDEFENSE DISCRETIONARY
SPENDING LIMITS.
For the first fiscal year following each fiscal year for
which there is a Federal budget surplus, the Director of
the Office of Management and Budget shall increase (on
a pro rata basis between the applicable nondefense cat-
egories for that fiscal year) the discretionary spending
limit for new budget authority under section 251(c) of the
Balanced Budget and Emergency Deficit Control Act of
1985 by an amount equal to 25 percent of such surplus
and shall adjust the outlays flowing from that budget au-
thority accordingly.
Æ