S.Amdt. 2513

SA 2513. Mr. WHITEHOUSE submitted an amendment intended to be
proposed by him to the bill H.R. 1, to provide for reconciliation
pursuant to title II of H. Con. Res. 14; which was ordered to lie on
the table; as follows:

At the appropriate place, insert the following:

SEC. _____. ADDITIONAL HOSPITAL INSURANCE TAX ON TRADE OR
BUSINESS INCOME OF CERTAIN HIGH INCOME
INDIVIDUALS.

(a) In General.--Section 1401(b) is amended by adding at
the end the following new paragraph:
``(3) Application to certain high income individuals.--
``(A) In general.--In addition to the taxes imposed by
paragraphs (1) and (2) and subsection (a), in the case of any
individual

[[Page S4000]]

whose modified adjusted gross income for the taxable year
exceeds the high income threshold amount, there is hereby
imposed on the income of such individual a tax equal to 3.8
percent of the individual's specified net income for the
taxable year.
``(B) Phase-in of tax.--The tax imposed by subparagraph (A)
shall not exceed the amount which bears the same ratio to the
amount of such tax (determined without regard to this
subparagraph) as--
``(i) the amount by which the individual's modified
adjusted gross income exceeds the high income threshold
amount, 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).
``(C) High income threshold amount.--For purposes of this
paragraph, 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).
``(D) Specified net income.--For purposes of this
paragraph--
``(i) In general.--The term `specified net income' means
the excess, if any, of--

``(I) the sum of--

``(aa) gross income from interest, dividends, annuities,
royalties, and rents which is derived in the ordinary course
of a trade or business not described in section 1411(c)(2),
``(bb) other gross income derived from a trade or business
not described in section 1411(c)(2), and
``(cc) net gain (to the extent taken into account in
computing taxable income) attributable to the disposition of
property held in a trade or business not described in section
1411(c)(2), including gain from the disposition of an
interest in a partnership or S corporation (other than gain
which is described in section 1411(c)(1)(A)(iii), after the
application of section 1411(c)(4)), over

``(II) the deductions allowed by this subtitle, other than
section 172, which are properly allocable to such gross
income or net gain.

The rules of paragraphs (5) and (6) of section 469(c) shall
apply for purposes of this clause.
``(ii) Exceptions.--Such term shall not include--

``(I) any distribution to which section 1411(c)(5) applies,
``(II) self-employment income subject to the taxes imposed
by paragraphs (1) and (2),
``(III) wages on which a tax is imposed under section
3101(b),
``(IV) compensation subject to the tax under subsections
(a) and (b) of section 3201, or
``(V) net investment income subject to the tax under
section 1411(a).

``(E) Coordination rule.--For purposes of section
1402(a)(12)(B), the tax imposed by subparagraph (A) shall not
be treated as a rate imposed by this subsection.''.
(b) Application to Trusts and Estates.--Section
1411(a)(2)(A) is amended by striking ``undistributed net
investment income'' and inserting ``the greater of
undistributed specified net income (as determined under
section 1401(b)(3)(D)) or undistributed net investment
income''.
(c) Clarifications With Respect to Determination of Net
Investment Income.--
(1) Net operating losses not taken into account.--Section
1411(c)(1)(B) is amended by inserting ``(other than section
172)'' after ``this subtitle''.
(2) Inclusion of certain foreign income.--
(A) In general.--Section 1411(c)(1)(A) 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 income.--
Section 1411(c) is amended by adding at the end the following
new paragraph:
``(7) Certain previously taxed income.--The Secretary shall
issue regulations or other guidance providing for the
treatment of distributions of amounts previously included in
gross income for purposes of chapter 1 but not previously
subject to tax under this section.''.
(d) Conforming Amendment.--Section 164(f)(1) is amended by
striking ``section 1401(b)(2)'' and inserting ``paragraphs
(2) and (3) of section 1401''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2025.
(f) Transition Rule.--The regulations or other guidance
issued by the Secretary under section 1411(c)(7) of the
Internal Revenue Code of 1986 (as added by this section)
shall include provisions which provide for the proper
coordination and application of clauses (i) and (iv) of
section 1411(c)(1)(A) with respect to--
(1) taxable years beginning on or before December 31, 2025,
and
(2) taxable years beginning after such date.
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