I
106TH CONGRESS
1ST SESSION
H. R. 1099
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
MARCH 11, 1999
Mr. OWENS (for himself, Mr. HILLIARD, Ms. MCKINNEY, and Mr. SANDERS)
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,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Social Security Protec-
tion and Tax Relief Act of 1999’’.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Working people are subject to social secu-
rity taxes as well as income taxes, and for over 90
percent of the population the combined tax on
earned income is higher than the income tax rates
of 15 percent and 28 percent that apply to unearned
income.
(2) There is no logical reason why social secu-
rity taxes should be imposed only on earnings and
not on unearned income (such as dividends, interest,
rent income, and capital gains).
SEC. 3. SOCIAL SECURITY TAX ON CERTAIN UNEARNED IN-
COME.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to determination
of tax liability) is amended by adding at the end the fol-
lowing new part:
‘‘PART VIII—SOCIAL SECURITY TAX ON CERTAIN
UNEARNED INCOME
‘‘Sec. 59B. Social security tax on certain unearned 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, 1999.
(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 2000 ...............................................
6.2 percent
‘‘2000 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 1999 ...............................................
6.2 percent
‘‘1999 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, 2000 ........................
12.4
‘‘December 31, 1999 ..................
....................................................
9.9.’’
Æ