Payments Account to the disbursing
agent to make payments of benefits and
the Secretary of the Treasury shall trans-
fer those amounts;
‘‘(ii) to the Board of Trustees of the
Railroad Retirement Investment Trust
the amounts required to be transferred
from the Railroad Retirement Investment
Trust to the disbursing agent to make
payments of benefits and the Board of
Trustees shall transfer those amounts;
and
‘‘(iii) to the disbursing agent the
name and address of each individual en-
titled to receive a payment, the amount
of such payment, and the time at which
the payment should be made.’’.
(f) BENEFIT PAYMENTS.—Section 7(c)(1) of
the Railroad Retirement Act of 1974 is
amended—
(1) by striking ‘‘from the Railroad Re-
tirement Account’’ and inserting ‘‘by the
disbursing agent under subsection (b)(4)
from money transferred to it from the
Railroad Retirement Trust Fund or the
Social Security Equivalent Benefit Ac-
count, as the case may be’’; and
(2) by inserting ‘‘by the disbursing
agent under subsection (b)(4) from money
transferred to it’’ after ‘‘Public Law 93–
445 shall be made’’.
(g) TRANSITIONAL RULE FOR EXISTING OBLI-
GATION.—In making transfers under sub-
sections (a) and (c), the Board shall consult
with the Secretary of the Treasury to design
an appropriate method to transfer obligations
held as of the date of enactment or to convert
such obligations to cash prior to transfer. The
Railroad Retirement Trust may hold to matu-
rity any obligations so received or may re-
deem them prior to maturity, as the Trust
deems appropriate.
SEC. 108. ANNUAL RATIO PROJECTIONS AND CERTIFI-
CATIONS BY THE RAILROAD RETIREMENT
BOARD.
(a) PROJECTIONS.—Section 22(a)(1) of the
Railroad Retirement Act of 1974 is amended—
(1) by adding the following sentence
after the first sentence: ‘‘On or before
May 1 of each year beginning in 2002, the
Railroad Retirement Board shall compute
its projection of the account benefits
ratio and the average account benefits
ratio (as defined by section 3241(c) of the
Internal Revenue Code of 1986) for each
of the next succeeding five fiscal years.’’;
and
(2) by striking ‘‘the projection pre-
pared pursuant to the preceding sen-
tence’’ and inserting ‘‘the projections pre-
pared pursuant to the preceding two sen-
tences’’.
(b) CERTIFICATIONS.—The Railroad Retire-
ment Act of 1974 is amended by adding at the
end the following:
‘‘COMPUTATION AND CERTIFICATION OF ACCOUNT
BENEFIT RATIOS
‘‘SEC. 23. (a) On or before November 1,
2002, the Railroad Retirement Board shall—
‘‘(1) compute the account benefits ra-
tios for each of the most recent 10 pre-
ceding fiscal years, and
‘‘(2) certify the account benefits ratios
for each such fiscal year to the Secretary.
‘‘(b) On or before November 1 of each year
after 2002, the Railroad Retirement Board
shall—
‘‘(1) compute the account benefits
ratio for the fiscal year ending in such
year, and
‘‘(2) certify the account benefits ratio
for such fiscal year to the Secretary.
‘‘(c) DEFINITION.—As used in this section,
the term ‘account benefit ratio’ has the mean-
ing given that term in section 3241(c) of the
Internal Revenue Code of 1986.’’.
TITLE II—AMENDMENTS TO THE
INTERNAL 
REVENUE 
CODE
OF 1986
SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE
OF 1986.
Except as otherwise provided, whenever
in this title an amendment or repeal is ex-
pressed in terms of an amendment to, or re-
peal of, a section or other provision, the ref-
erence shall be considered to be made to a
section or other provision of the Internal Rev-
enue Code of 1986.
SEC. 202. EXEMPTION FROM TAX FOR RAILROAD RETIRE-
MENT INVESTMENT TRUST.
Subsection (c) of section 501 is amended
by adding at the end the following new para-
graph:
‘‘(28) The Railroad Retirement Invest-
ment Trust established under section
15(j) of the Railroad Retirement Act of
1974.’’
SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.
(a) REPEAL
OF TAX
ON EMPLOYEE REP-
RESENTATIVES.—Section 3211 is amended by
striking subsection (b).
(b) REPEAL OF TAX ON EMPLOYERS.—Sec-
tion 3221 is amended by striking subsections
(c) and (d).
(c) EFFECTIVE
DATE.—The amendments
made by this section shall apply to calendar
years beginning after December 31, 2000.
SEC. 204. EMPLOYER, EMPLOYEE REPRESENTATIVE, AND
EMPLOYEE TIER 2 TAX RATE ADJUSTMENTS.
(a) RATE
OF
TAX
ON
EMPLOYERS.—Sub-
section (b) of section 3221 is amended to read
as follows:
‘‘(b) TIER 2 TAX.—
‘‘(a) TIER 1 TAX.—In addition to other
taxes, there is hereby imposed on the income
of each employee representative a tax equal
to the applicable percentage of the compensa-
tion received during any calendar year by
such employee representative for services
rendered by such employee representative.
For purposes of the preceding sentence, the
term ‘applicable percentage’ means the per-
centage equal to the sum of the rates of tax
in effect under subsections (a) and (b) of sec-
tion 3101 and subsections (a) and (b) of sec-
tion 3111 for the calendar year.
‘‘(b) TIER 2 TAX.—
‘‘(1) IN GENERAL.—In addition to other
taxes, there is hereby imposed on the in-
come of each employee representative a
tax equal to the applicable percentage of
the compensation received during any
calendar year by such employee rep-
resentatives for services rendered by
such employee representative.
‘‘(2) 
APPLICABLE
PERCENTAGE.—For
purposes of paragraph (1), the term ‘ap-
plicable percentage’ means—
‘‘(A) 14.75 percent in the case of
compensation received during 2001,
‘‘(B) 14.20 percent in the case of
compensation received during 2002,
and
‘‘(C) in the case of compensation
received during any calendar year
after 2002, the percentage determined
under section 3241 for such calendar
year.
‘‘(c) CROSS REFERENCE.—
‘‘For application of different contribution bases
with respect to the taxes imposed by subsections (a)
and (b), see section 3231(e)(2).’’.
(c) RATE
OF
TAX
ON
EMPLOYEES.—Sub-
section (b) of section 3201 is amended to read
as follows:
‘‘(b) TIER 2 TAX.—
‘‘(1) IN GENERAL.—In addition to other
taxes, there is hereby imposed on the in-
come of each employee a tax equal to the
applicable percentage of the compensa-
tion received during any calendar year
by such employee for services rendered
by such employee.
‘‘(2) 
APPLICABLE
PERCENTAGE.—For
purposes of paragraph (1), the term ‘ap-
plicable percentage’ means—
‘‘(A) 4.90 percent in the case of
compensation received during 2001 or
2002, and
‘‘(B) in the case of compensation
received during any calendar year
after 2002, the percentage determined
under section 3241 for such calendar
year.’’.
(d) DETERMINATION OF RATE.—Chapter 22
is amended by adding at the end thereof the
following new subchapter:
‘‘Subchapter E—Tier 2 Tax Rate
Determination
‘‘Sec. 3241. Determination of tier 2 tax rate based on
average account benefits ratio.
‘‘SEC. 3241. DETERMINATION OF TIER 2 TAX RATE BASED
ON AVERAGE ACCOUNT BENEFITS RATIO.
‘‘(a) IN GENERAL.—For purposes of sections
3201(b), 3211(b), and 3221(b), the applicable
percentage for any calendar year is the per-
centage determined in accordance with the
table in subsection (b).
‘‘(b) TAX RATE SCHEDULE.—
Average account benefits ratio
Applicable per-
centage for sec-
tions 3211(b) and
3221(b)
Applicable per-
centage for sec-
tion 3201(b)
At least
But less than
2.5
22.1
4.9
2.5
3.0
18.1
4.9
3.0
3.5
15.1
4.9
3.5
4.0
14.1
4.9
4.0
6.1
13.1
4.9
6.1
6.5
12.6
4.4
6.5
7.0
12.1
3.9
7.0
7.5
11.6
3.4
7.5
8.0
11.1
2.9
8.0
8.5
10.1
1.9
8.5
9.0
9.1
0.9
9.0
8.2
‘‘(c) DEFINITIONS RELATED TO DETERMINA-
TION OF RATES OF TAX.—
‘‘(1) 
AVERAGE
ACCOUNT
BENEFITS
RATIO.—For purposes of this section, the
term ‘average account benefits ratio’
means, with respect to any calendar year,
the average determined by the Secretary
of the account benefits ratios for the 10
most recent fiscal years ending before
such calendar year. If the amount deter-
mined under the preceding sentence is
not a multiple of 0.1, such amount shall
be increased to the next highest multiple
of 0.1.
‘‘(2) ACCOUNT
BENEFITS
RATIO.—For
purposes of this section, the term ‘ac-
count benefits ratio’ means, with respect
to any fiscal year, the amount determined
by the Railroad Retirement Board by di-
viding the fair market value of the assets
in the Railroad Retirement Account and
of the Railroad Retirement Investment
Trust (and for the years before 2001, the
Social Security Equivalent Benefits Ac-
count) as of the close of such fiscal year
by the total benefits and administrative
expenses paid from the Railroad Retire-
ment Account and the Railroad Retire-
ment Investment Trust during such fiscal
year.
‘‘(d) NOTICE.—No later than December 1 of
each calendar year, the Secretary shall pub-
lish a notice in the Federal Register of the
rates of tax determined under this section
which are applicable for the following cal-
endar year.’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 24(d)(3)(A)(iii) is amended
by striking ‘‘section 3211(a)(1)’’ and in-
serting ‘‘section 3211(a)’’.
(2) Section 72(r)(2)(B)(i) is amended
by striking ‘‘section 3211(a)(2)’’ and in-
serting ‘‘section 3211(b)’’.
(3) 
Paragraphs 
(2)(A)(iii)(II) 
and
(4)(A) of section 3231(e) is amended by
striking 
‘‘3211(a)(1)’’ 
and 
inserting
‘‘3211(a)’’.
(4) 
Section 
3231(e)(2)(B)(ii)(I) 
is
amended by striking ‘‘3211(a)(2)’’ and in-
serting ‘‘3211(b)’’.
(5) The table of subchapters for chap-
ter 22 is amended by adding at the end
the following new item:
‘‘Subchapter E. Tier 2 tax rate determination.’’.
(f) EFFECTIVE
DATE.—The amendments
made by this section shall apply to calendar
years beginning after December 31, 2000.
TITLE III—REPEAL OF 4.3-CENT
MOTOR FUEL EXCISE TAXES
ON RAILROADS AND INLAND
WATERWAY 
TRANSPOR-
TATION WHICH REMAIN IN
GENERAL FUND
SEC. 301. REPEAL OF 4.3-CENT MOTOR FUEL EXCISE TAXES
ON RAILROADS AND INLAND WATERWAY
TRANSPORTATION WHICH REMAIN IN GEN-
ERAL FUND.
(a) TAXES ON TRAINS.—
(1) IN GENERAL.—Subparagraph (A) of
section 4041(a)(1) of the Internal Revenue
Code of 1986 is amended by striking ‘‘or
a diesel-powered train’’ each place it ap-
pears and by striking ‘‘or train’’.
(2) CONFORMING AMENDMENTS.—
(A) Subparagraph (C) of section
4041(a)(1) of such Code is amended by
striking clause (ii) and by redesig-
nating clause (iii) as clause (ii).
(B) Subparagraph (C) of section
4041(b)(1) of such Code is amended by
striking 
all 
that 
follows 
‘‘section
6421(e)(2)’’ and inserting a period.
(C) Subsection (d) of section 4041
of such Code is amended by redesig-
nating paragraph (3) as paragraph (4)
and by inserting after paragraph (2)
the following new paragraph:
‘‘(3) DIESEL
FUEL
USED
IN
TRAINS.—
There is hereby imposed a tax of 0.1 cent
per gallon on any liquid other than gaso-
line (as defined in section 4083)—
‘‘(A) sold by any person to an
owner, lessee, or other operator of a
diesel-powered train for use as a fuel
in such train, or
‘‘(B) used by any person as a fuel
in a diesel-powered train unless there
was a taxable sale of such fuel under
subparagraph (A).
No tax shall be imposed by this para-
graph on the sale or use of any liquid if
tax was imposed on such liquid under
section 4081.’’
(D) Subsection (f) of section 4082
of such Code is amended by striking
‘‘section 
4041(a)(1)’’ 
and 
inserting
‘‘subsections (d)(3) and (a)(1) of sec-
tion 4041, respectively’’.
(E) 
Paragraph 
(3) 
of 
section
4083(a) of such Code is amended by
striking ‘‘or a diesel-powered train’’.
(F) 
Paragraph 
(3) 
of 
section
6421(f) of such Code is amended to
read as follows:
‘‘(3) GASOLINE USED IN TRAINS.—In the
case of gasoline used as a fuel in a train,
this section shall not apply with respect
to the Leaking Underground Storage
Tank Trust Fund financing rate under
section 4081.’’
(G) 
Paragraph 
(3) 
of 
section
6427(l) of such Code is amended to
read as follows:
‘‘(3) REFUND OF CERTAIN TAXES ON FUEL
USED IN DIESEL-POWERED TRAINS.—For pur-
poses of this subsection, the term ‘non-
taxable use’ includes fuel used in a diesel-
powered train. The preceding sentence
shall not apply to the tax imposed by sec-
tion 4041(d) and the Leaking Under-
ground Storage Tank Trust Fund financ-
ing rate under section 4081 except with
respect to fuel sold for exclusive use by a
State or any political subdivision there-
of.’’
(b) FUEL USED ON INLAND WATERWAYS.—
(1) IN GENERAL.—Paragraph (1) of sec-
tion 4042(b) of such Code is amended by
adding ‘‘and’’ at the end of subparagraph
(A), by striking ‘‘, and’’ at the end of sub-
paragraph (B) and inserting a period, and
by striking subparagraph (C).
(2) CONFORMING
AMENDMENT.—Para-
graph (2) of section 4042(b) of such Code
is amended by striking subparagraph (C).
(c) EFFECTIVE
DATE.—The amendments
made by this section shall take effect on Octo-
ber 1, 2000.
Union Calendar No. 461
106TH CONGRESS
2D SESSION
H. R. 4844
[Report No. 106–777, Parts I and II]
A BILL
To modernize the financing of the railroad retire-
ment system and to provide enhanced benefits to
employees and beneficiaries.
JULY 26, 2000
Reported from the Committee on Ways and Means with
an amendment, committed to the Committee of the
Whole House on the State of the Union, and ordered
to be printed