[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 397 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 397
To amend the Internal Revenue Code of 1986 to allow a deduction for the
old-age, survivors, and disability insurance taxes paid by employees
and self-employed individuals, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 13, 2003
Mr. Ensign (for himself and Mrs. Hutchison) 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 allow a deduction for the
old-age, survivors, and disability insurance taxes paid by employees
and self-employed individuals, and for other purposes.
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 ``Payroll Tax Deduction Act''.
SEC. 2. DEDUCTION FOR OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE
TAXES OF EMPLOYEES AND SELF-EMPLOYED INDIVIDUALS.
(a) Taxes of Employees.--
(1) Deduction allowed in arriving at adjusted gross
income.--Section 62(a) of the Internal Revenue Code of 1986
(defining adjusted gross income) is amended by inserting after
paragraph (18) the following new paragraph:
``(19) Employees' oasdi taxes.--The deduction allowed by
section 164(g).''.
(2) Determination of deduction.--Section 164 of such Code
(relating to deduction for taxes) is amended by redesignating
subsection (g) as subsection (h) and by inserting after
subsection (f) the following new subsection:
``(g) Employees' OASDI Taxes.--
``(1) In general.--In the case of an individual, in
addition to the taxes described in subsection (a), there shall
be allowed as a deduction for the taxable year an amount equal
to the sum of--
``(A) the taxes imposed by section 3101(a) for the
taxable year, and
``(B) the taxes imposed by section 3201(a) for the
taxable year but only to the extent attributable to the
percentage in effect under section 3101(a).
``(2) Special rule for certain agreements.--For purposes of
paragraph (1), taxes imposed by section 3101(a) shall include
amounts equivalent to such taxes imposed with respect to
remuneration covered by--
``(A) an agreement under section 218 of the Social
Security Act, or
``(B) an agreement under section 3121(l) (relating
to agreements entered into by American employers with
respect to foreign affiliates).
``(3) Coordination with special refund of social security
taxes.--Taxes shall not be taken into account under paragraph
(1) to the extent the taxpayer is entitled to a special refund
of such taxes under section 6413(c).
``(4) Coordination with earned income credit.--No deduction
shall be allowed under paragraph (1) for any taxable year if
the individual elects to claim the earned income credit under
section 32 for the taxable year.''.
(3) Conforming amendment.--Subsection (a) of section 275 of
such Code is amended in the matter following paragraph (6) by
inserting ``or 164(g)'' after ``164(f)''.
(b) Deduction for Self-Employed Individuals.--
(1) In general.--Paragraph (1) of section 164(f) of the
Internal Revenue Code of 1986 (relating to deduction for one-
half of self-employment taxes) is amended to read as follows:
``(1) In general.--In the case of an individual, in
addition to the taxes described in subsection (a), there shall
be allowed as a deduction for the taxable year an amount equal
to the sum of--
``(A) the taxes imposed by section 1401(a) for such
taxable year, plus
``(B) 50 percent of the taxes imposed by section
1401(b) for such taxable year.
In the case of an individual who elects to claim the earned
income credit under section 32 for the taxable year, only 50
percent of the taxes described in subparagraph (A) shall be
taken into account.''.
(2) Conforming amendments.--
(A) Section 32(a)(1) of such Code is amended by
inserting ``who elects the application of this
section'' after ``eligible individual''.
(B) The heading for section 164(f) of such Code is
amended by striking ``One-Half'' and inserting
``Portion''.
(C) Section 1402(a)(12) of such Code is amended--
(i) by striking ``one-half'' the first
place it appears and inserting ``portion'', and
(ii) by striking subparagraph (B) and
inserting:
``(B) a percentage equal to the sum for such year
of the rate of tax under section 1401(a) and one-half
of the rate of tax under section 1401(b);''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.
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