I 
108TH CONGRESS 
2D SESSION 
H. R. 3868
To amend the Internal Revenue Code of 1986 to phaseout the 1993 income 
tax increase on Social Security benefits. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 2, 2004
Mr. SMITH of New Jersey 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 phaseout 
the 1993 income tax increase on Social Security benefits.
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 ‘‘Social Security Tax 
Hike Phaseout Act of 2004’’. 
SEC. 2. PHASEOUT OF 1993 INCOME TAX INCREASE ON SO-
CIAL SECURITY BENEFITS. 
(a) IN GENERAL.—Paragraph (2) of section 86(a) of 
the Internal Revenue Code of 1986 is amended—
(1) by inserting ‘‘of taxable years beginning be-
fore January 1, 2009,’’ after ‘‘In the case’’, and 
(2) by striking ‘‘85 percent’’ each place it ap-
pears and inserting ‘‘the applicable percentage’’. 
(b) APPLICABLE PERCENTAGE.—Subsection (c) of 
section 86 of such Code is amended by adding at the end 
the following new paragraph: 
‘‘(3) APPLICABLE
PERCENTAGE.—The term 
‘applicable percentage’ means the percentage deter-
mined in accordance with the following table:
‘‘For taxable years beginning 
The applicable 
in calendar year— 
percentage is— 
2005 ...................................................................................................
2006 ...................................................................................................
2007 ...................................................................................................
2008 ...................................................................................................
60’’.
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 871(a)(3) of 
such Code is amended by striking ‘‘85 percent’’ and 
inserting ‘‘50 percent (in the case of calendar years 
2005 through 2008, the applicable percentage deter-
mined under section 86(c)(3) with respect to such 
calendar year)’’. 
(2) Subparagraph (A) of section 121(e)(1) of 
the Social Security Amendments of 1983 (Public 
Law 98–21) is amended by inserting ‘‘(as modified 
by the amendments made by the Social Security Tax
Hike Phaseout Act of 2004)’’ before the period at 
the end. 
(3) The heading of subsection (c) of section 86 
of such Code is amended to read as follows: ‘‘DEFI-
NITIONS.—’’. 
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2004. 
(2) 
SUBSECTION
(C)(1).—The 
amendment 
made by subsection (c)(1) shall apply to benefits 
paid after December 31, 2004. 
(3) 
SUBSECTION
(C)(2).—The 
amendment 
made by subsection (c)(2) shall apply to tax liabil-
ities for taxable years beginning after December 31, 
2004. 
SEC. 3. MAINTENANCE OF TRANSFERS TO HOSPITAL IN-
SURANCE TRUST FUND. 
(a) IN GENERAL.—There are hereby appropriated to 
the Federal Hospital Insurance Trust Fund established 
under section 1817 of the Social Security Act amounts 
equal to the reduction in revenues to the Treasury by rea-
son of the enactment of this Act. Amounts appropriated 
by the preceding sentence shall be transferred from the
general fund at such times and in such manner as to rep-
licate to the extent possible the transfers which would have 
occurred to such Trust Fund had this Act not been en-
acted. 
(b) REPORTS.—The Secretary of the Treasury or the 
Secretary’s delegate shall annually report to the Com-
mittee on Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate the 
amounts and timing of the transfers under this section.
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