Paying a Fair Share Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1652 To ensure high-income earners pay a fair share of Federal taxes. IN THE SENATE OF THE UNITED STATES MAY 17, 2021 Mr. WHITEHOUSE (for himself, Mr. BROWN, Mr. DURBIN, Ms. WARREN, Mr. MARKEY, Ms. KLOBUCHAR, Mrs. FEINSTEIN, Ms. BALDWIN, Mr. REED, Mr. VAN HOLLEN, Mr. LEAHY, Mr. BOOKER, Mr. BLUMENTHAL, Ms. HIRONO, Mrs. GILLIBRAND, Mr. MERKLEY, and Mr. SANDERS) intro- duced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To ensure high-income earners pay a fair share of Federal taxes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Paying a Fair Share 4 Act of 2021’’. 5 SEC. 2. FAIR SHARE TAX ON HIGH-INCOME TAXPAYERS. 6 (a) IN GENERAL.—Subchapter A of chapter 1 of the 7 Internal Revenue Code of 1986 is amended by adding at 8 the end the following new part: 9 VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1652 IS ‘‘PART VIII—FAIR SHARE TAX ON HIGH-INCOME 1 TAXPAYERS 2 ‘‘Sec. 59B. Fair share tax. ‘‘SEC. 59B. FAIR SHARE TAX. 3 ‘‘(a) GENERAL RULE.— 4 ‘‘(1) PHASE-IN OF TAX.—In the case of any 5 high-income taxpayer, there is hereby imposed for a 6 taxable year (in addition to any other tax imposed 7 by this subtitle) a tax equal to the product of— 8 ‘‘(A) the amount determined under para- 9 graph (2), and 10 ‘‘(B) a fraction (not to exceed 1)— 11 ‘‘(i) the numerator of which is the ex- 12 cess of— 13 ‘‘(I) the taxpayer’s adjusted 14 gross income, over 15 ‘‘(II) the dollar amount in effect 16 under subsection (c)(1), and 17 ‘‘(ii) the denominator of which is the 18 dollar amount in effect under subsection 19 (c)(1). 20 ‘‘(2) AMOUNT OF TAX.—The amount of tax de- 21 termined under this paragraph is an amount equal 22 to the excess (if any) of— 23 ‘‘(A) the tentative fair share tax for the 24 taxable year, over 25 VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1652 IS ‘‘(B) the excess of— 1 ‘‘(i) the sum of— 2 ‘‘(I) the regular tax liability (as 3 defined in section 26(b)) for the tax- 4 able year, determined without regard 5 to any tax liability determined under 6 this section, 7 ‘‘(II) the tax imposed by section 8 55 for the taxable year, plus 9 ‘‘(III) the payroll tax for the tax- 10 able year, over 11 ‘‘(ii) the credits allowable under part 12 IV of subchapter A (other than sections 13 27(a), 31, and 34). 14 ‘‘(b) TENTATIVE FAIR SHARE TAX.—For purposes 15 of this section— 16 ‘‘(1) IN GENERAL.—The tentative fair share tax 17 for the taxable year is 30 percent of the excess of— 18 ‘‘(A) the adjusted gross income of the tax- 19 payer, over 20 ‘‘(B) the modified charitable contribution 21 deduction for the taxable year. 22 ‘‘(2) MODIFIED CHARITABLE CONTRIBUTION 23 DEDUCTION.—For purposes of paragraph (1)— 24 VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1652 IS ‘‘(A) IN GENERAL.—The modified chari- 1 table contribution deduction for any taxable 2 year is an amount equal to the amount which 3 bears the same ratio to the deduction allowable 4 under section 170 (section 642(c) in the case of 5 a trust or estate) for such taxable year as— 6 ‘‘(i) the amount of itemized deduc- 7 tions allowable under the regular tax (as 8 defined in section 55) for such taxable 9 year, determined after the application of 10 section 68, bears to 11 ‘‘(ii) such amount, determined before 12 the application of section 68. 13 ‘‘(B) TAXPAYER MUST ITEMIZE.—In the 14 case of any individual who does not elect to 15 itemize deductions for the taxable year, the 16 modified charitable contribution deduction shall 17 be zero. 18 ‘‘(c) HIGH-INCOME TAXPAYER.—For purposes of this 19 section— 20 ‘‘(1) IN GENERAL.—The term ‘high-income tax- 21 payer’ means, with respect to any taxable year, any 22 taxpayer (other than a corporation) with an adjusted 23 gross income for such taxable year in excess of 24 VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1652 IS $1,000,000 (50 percent of such amount in the case 1 of a married individual who files a separate return). 2 ‘‘(2) INFLATION ADJUSTMENT.— 3 ‘‘(A) IN GENERAL.—In the case of a tax- 4 able year beginning after 2021, the $1,000,000 5 amount under paragraph (1) shall be increased 6 by an amount equal to— 7 ‘‘(i) such dollar amount, multiplied by 8 ‘‘(ii) the cost-of-living adjustment de- 9 termined under section 1(f)(3) for the cal- 10 endar year in which the taxable year be- 11 gins, determined by substituting ‘calendar 12 year 2020’ for ‘calendar year 2016’ in sub- 13 paragraph (A)(ii) thereof. 14 ‘‘(B) ROUNDING.—If any amount as ad- 15 justed under subparagraph (A) is not a multiple 16 of $10,000, such amount shall be rounded to 17 the next lowest multiple of $10,000. 18 ‘‘(d) PAYROLL TAX.—For purposes of this section, 19 the payroll tax for any taxable year is an amount equal 20 to the excess of— 21 ‘‘(1) the taxes imposed on the taxpayer under 22 sections 1401, 1411, 3101, 3201, and 3211(a) (to 23 the extent such tax is attributable to the rate of tax 24 in effect under section 3101) with respect to such 25 VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1652 IS taxable year or wages or compensation received dur- 1 ing such taxable year, over 2 ‘‘(2) the deduction allowable under section 3 164(f) for such taxable year. 4 ‘‘(e) SPECIAL RULE FOR ESTATES AND TRUSTS.— 5 For purposes of this section, in the case of an estate or 6 trust, adjusted gross income shall be computed in the 7 manner described in section 67(e). 8 ‘‘(f) NOT TREATED AS TAX IMPOSED BY THIS CHAP- 9 TER FOR CERTAIN PURPOSES.—The tax imposed under 10 this section shall not be treated as tax imposed by this 11 chapter for purposes of determining the amount of any 12 credit under this chapter (other than the credit allowed 13 under section 27(a)) or for purposes of section 55.’’. 14 (b) CLERICAL AMENDMENT.—The table of parts for 15 subchapter A of chapter 1 of the Internal Revenue Code 16 of 1986 is amended by adding at the end the following 17 new item: 18 ‘‘PART VIII—FAIR SHARE TAX ON HIGH-INCOME TAXPAYERS’’. (c) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to taxable years beginning after 20 December 31, 2020. 21 SEC. 3. SENSE OF THE SENATE REGARDING TAX REFORM. 22 It is the sense of the Senate that— 23 (1) Congress should enact tax reform that re- 24 peals unfair and unnecessary tax loopholes and ex- 25 VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1652 IS penditures, simplifies the system for millions of tax- 1 payers and businesses, and makes sure that the 2 wealthiest taxpayers pay a fair share; and 3 (2) this Act is an interim step that can be done 4 quickly and serve as a floor on taxes for the highest- 5 income taxpayers, cut the deficit by billions of dol- 6 lars a year, and help encourage more fundamental 7 reform of the tax system. 8 Æ VerDate Sep 11 2014 22:20 May 27, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\S1652.IS S1652 kjohnson on DSK79L0C42PROD with BILLS