[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 1174 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 1174
To amend the Internal Revenue Code of 1986 to increase funding for
Social Security and Medicare.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 18, 2023
Mr. Whitehouse introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to increase funding for
Social Security and Medicare.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare and Social Security Fair
Share Act''.
SEC. 2. MODIFICATION OF PAYROLL TAXES.
(a) Wage Base for Taxes Funding Social Security.--
(1) In general.--Paragraph (1) of section 3121(a) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(1) in the case of taxes imposed by sections 3101(a) and
3111(a), for any calendar year in which the contribution and
benefit base (as determined under section 230 of the Social
Security Act) is less than $400,000, so much of the
remuneration (other than remuneration referred to in the
succeeding paragraphs of this subsection) with respect to
employment that has been paid to an individual by an employer
during the calendar year as exceeds such contribution and
benefit base but does not exceed $400,000;''.
(2) Conforming amendments.--
(A) Successor employers.--Section 3121 of the
Internal Revenue Code of 1986 is amended by adding at
the end the following new subsection:
``(aa) Special Rules for Successor Employers.--For purposes of
subsection (a)(1), if an employer (hereinafter referred to as successor
employer) during any calendar year acquires substantially all the
property used in a trade or business of another employer (hereinafter
referred to as a predecessor), or used in a separate unit of a trade or
business of a predecessor, and immediately after the acquisition
employs in his trade or business an individual who immediately prior to
the acquisition was employed in the trade or business of such
predecessor, then, for the purpose of determining the amount of
remuneration paid by the successor employer under such subsection, any
remuneration (other than remuneration referred to in the paragraphs
succeeding paragraph (1) of subsection (a)) with respect to employment
paid (or considered under this subsection as having been paid) to such
individual by such predecessor during such calendar year and prior to
such acquisition shall be considered as having been paid by such
successor employer.''.
(B) Application to railroad retirement taxes.--
Clause (i) of section 3231(e)(2)(A) of such Code is
amended to read as follows:
``(i) In general.--For any calendar year in
which the applicable base is less than
$400,000, the term `compensation' does not
include so much of the remuneration paid during
any calendar year to an individual by an
employer for services rendered as an employee
to such employer as exceeds the applicable base
but does not exceed $400,000.''.
(b) Further Additional Hospital Insurance Tax on Very High Income
Taxpayers.--
(1) In general.--Section 3101(b) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
paragraph:
``(3) Further additional tax.--In addition to the tax
imposed by paragraphs (1) and (2) and the preceding subsection,
there is hereby imposed on every taxpayer (other than a
corporation, estate, or trust) a tax equal to 1.2 percent of
wages which are received with respect to employment (as defined
in section 3121(b)) during the taxable year which are in excess
of--
``(A) in the case of a joint return, $500,000,
``(B) in the case of a married taxpayer (as defined
in section 7703) filing a separate return, \1/2\ of the
dollar amount determined under subparagraph (A), and
``(C) in any other case, $400,000.''.
(2) Collection of tax.--Section 3102 of such Code is
amended by adding at the end the following new subsection:
``(g) Special Rules for Further Additional Tax.--
``(1) In general.--In the case of any tax imposed by
section 3101(b)(3), subsection (a) shall only apply to the
extent to which the taxpayer receives wages from the employer
in excess of $400,000, and the employer may disregard the
amount of wages received by such taxpayer's spouse.
``(2) Collection of amounts not withheld.--To the extent
that the amount of any tax imposed by section 3101(b)(3) is not
collected by the employer, such tax shall be paid by the
employee.
``(3) Tax paid by recipient.--If an employer, in violation
of this chapter, fails to deduct and withhold the tax imposed
by section 3101(b)(3) and thereafter the tax is paid by the
employee, the tax so required to be deducted and withheld shall
not be collected from the employer, but this paragraph shall in
no case relieve the employer from liability for any penalties
or additions to tax otherwise applicable in respect of such
failure to deduct and withhold.''.
(c) Effective Date.--The amendments made by this section shall
apply to remuneration paid, 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. 3. MODIFICATION OF TAXES ON SELF-EMPLOYMENT INCOME.
(a) Tax on Net Earnings From Self-Employment up to Contribution and
Benefit Base and More Than $400,000.--Paragraph (1) of section 1402(b)
of the Internal Revenue Code of 1986 is amended to read as follows:
``(1) in the case of the tax imposed by section 1401(a) for
any taxable year beginning in a calendar year in which the
contribution and benefit base (as determined under section 230
of the Social Security Act) is less than $400,000, the excess
(if any) of--
``(A) so much of the net earnings from self-
employment which is in excess of--
``(i) an amount equal to the contribution
and benefit base (as determined under section
230 of the Social Security Act) which is
effective for the calendar year in which such
taxable year begins, reduced (but not below
zero) by
``(ii) the amount of the wages paid to such
individual during such taxable year, over
``(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
subparagraph (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 Internal 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 preceding subsection,
there is hereby imposed on every taxpayer (other than a
corporation, estate, 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--
``(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 separate
return, \1/2\ of the dollar amount determined
under subparagraph (A), and
``(iii) in any other case, $400,000.
``(B) Coordination with fica.--The amounts under
clause (i), (ii), or (iii) (whichever 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 respect 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 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-employment 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 Income Individuals.--
``(1) Inclusion of specified net income.--
``(A) In general.--In the case of any individual
whose modified adjusted gross income for the taxable
year exceeds the high income threshold amount,
subsection (a)(1) shall be applied by substituting `the
greater of specified net income or net investment
income' for `net investment income' in subparagraph (A)
thereof.
``(B) Phase-in of increase.--The increase in the
tax imposed under subsection (a)(1) by reason of the
application of subparagraph (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 subparagraph
(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 income 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 income or
net investment income for the taxable year, or
``(B) the excess (if any) of--
``(i) the modified adjusted gross income
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 surviving
spouse (as defined in section 2(a)), $500,000,
and
``(iii) in the case of a married taxpayer
(as defined in section 7703) filing a separate
return, \1/2\ of the dollar amount determined
under clause (ii).
``(B) Specified net income.--For purposes of this
section, the term `specified net income' means net
investment income determined--
``(i) without regard to the phrase `other
than such income which is derived in the
ordinary course of a trade or business not
described in paragraph (2),' in subsection
(c)(1)(A)(i),
``(ii) without regard to the phrase
`described 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 provided in
regulations,' in such paragraph (6)) as
applying for purposes of subsection (c) of this
section.''.
(b) Application to Trusts and Estates.--Section 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 ``the
greater of undistributed specified net income or undistributed
net investment income''.
(c) Clarifications With Respect to Determination of Net Investment
Income.--
(1) Certain exceptions.--Section 1411(c)(6) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(6) Special rules.--Net investment income shall not
include--
``(A) any item taken into account in determining
self-employment income for such taxable year on which a
tax is imposed by section 1401(b),
``(B) wages received with respect to employment on
which a tax is imposed under section 3101(b)
(determined without regard to section 3101(c)) or
3201(a) (including amounts taken into account under
section 3121(v)(2)), and
``(C) wages received from the performance of
services earned outside the United States for a foreign
employer.''.
(2) Net operating losses not taken into account.--Section
1411(c)(1)(B) of such Code is amended by inserting ``(other
than section 172)'' after ``this subtitle''.
(3) Inclusion of certain foreign income.--
(A) In general.--Section 1411(c)(1)(A) of such Code
is amended by striking ``and'' at the end of clause
(ii), by striking ``over'' at the end of clause (iii)
and inserting ``and'', and by adding at the end the
following new clause:
``(iv) any amount includible in gross
income under section 951, 951A, 1293, or 1296,
over''.
(B) Proper treatment of certain previously taxed
earnings and profits.--Section 1411(c) of such Code is
amended by adding at the end the following new
paragraph:
``(7) Certain earnings and profits of foreign
corporations.--
``(A) In general.--Except as otherwise provided by
the Secretary, a distribution of earnings and profits
that is not treated as a dividend for purposes of
chapter 1 by reason of section 959(d) or section
1293(c) shall not be treated as a dividend for purposes
of this section.
``(B) Regulations and other guidance.--The
Secretary shall issue regulations or other guidance
providing for the treatment of distributions by a
foreign corporation after December 31, 2023, of
earnings and profits of such foreign corporation which
accrued before such date, but which have not been
previously subject to tax under this section.''.
(d) Transfers of Revenues to Old-Age and Survivors, Disability
Insurance, and Federal Hospital Insurance Trust Funds.--
(1) Federal old-age and survivors trust fund.--
(A) In general.--Section 201(a) of the Social
Security Act (42 U.S.C. 401(a)) is amended--
(i) by striking ``100 per centum of'',
(ii) by inserting ``100 percent of'' before
``the taxes'' each place it appears in
paragraphs (1), (2), (3), and (4), and
(iii) by striking ``and'' at the end of
paragraph (3), by striking the period at the
end of paragraph (4) and inserting ``; and'',
and by inserting after paragraph (4) the
following new paragraph:
``(5) 71.3 percent of the taxes imposed by section 1411 of
the Internal Revenue Code of 1986 for any taxable year
beginning after December 31, 2023, as determined by the
Secretary of the Treasury or the Secretary's delegate based on
tax returns under subtitle F of such Code, less the amounts
specified in paragraph (3) of subsection (b).''.
(B) Conforming amendment.--The fourth sentence of
section 201(a) of such Act (42 U.S.C. 401(a)) is
amended by striking ``clauses (3) and (4)'' each place
it appears and inserting ``paragraphs (3), (4), and
(5)''.
(2) Federal disability insurance trust fund.--Section
201(b) of the Social Security Act (42 U.S.C. 401(b)) is
amended--
(A) by striking ``100 per centum of'', and
(B) by striking ``and'' at the end of paragraph
(1), by striking the period at the end of paragraph (2)
and inserting ``; and'', and by inserting after
paragraph (2) the following new paragraph:
``(3) 10.3 percent of the taxes imposed by section 1411 of
the Internal Revenue Code of 1986 for any taxable year
beginning after December 31, 2023, as determined by the
Secretary of the Treasury or the Secretary's delegate based on
tax returns under subtitle F of such Code.''.
(3) Federal hospital insurance trust fund.--Section 1817(a)
of the Social Security Act (42 U.S.C. 1395i(a)) is amended--
(A) by striking ``100 per centum of'',
(B) by inserting ``100 percent of'' before ``the
taxes'' each place it appears in paragraphs (1) and
(2), and
(C) by striking ``and'' at the end of paragraph
(1), by striking the period at the end of paragraph (2)
and inserting ``; and'', and by inserting after
paragraph (2) the following new paragraph:
``(3) 28.7 percent of the taxes imposed by section 1411 of
the Internal Revenue Code of 1986 for any taxable year
beginning after December 31, 2023, as determined by the
Secretary of the Treasury or the Secretary's delegate based on
tax returns under subtitle F of such Code.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2023.
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