II 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 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 ‘‘Medicare and Social 4 Security Fair Share Act’’. 5 SEC. 2. MODIFICATION OF PAYROLL TAXES. 6 (a) WAGE BASE FOR TAXES FUNDING SOCIAL SECU- 7 RITY.— 8 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 1174 IS (1) IN GENERAL.—Paragraph (1) of section 1 3121(a) of the Internal Revenue Code of 1986 is 2 amended to read as follows: 3 ‘‘(1) in the case of taxes imposed by sections 4 3101(a) and 3111(a), for any calendar year in which 5 the contribution and benefit base (as determined 6 under section 230 of the Social Security Act) is less 7 than $400,000, so much of the remuneration (other 8 than remuneration referred to in the succeeding 9 paragraphs of this subsection) with respect to em- 10 ployment that has been paid to an individual by an 11 employer during the calendar year as exceeds such 12 contribution and benefit base but does not exceed 13 $400,000;’’. 14 (2) CONFORMING AMENDMENTS.— 15 (A) SUCCESSOR EMPLOYERS.—Section 16 3121 of the Internal Revenue Code of 1986 is 17 amended by adding at the end the following 18 new subsection: 19 ‘‘(aa) SPECIAL RULES FOR SUCCESSOR EMPLOY- 20 ERS.—For purposes of subsection (a)(1), if an employer 21 (hereinafter referred to as successor employer) during any 22 calendar year acquires substantially all the property used 23 in a trade or business of another employer (hereinafter 24 referred to as a predecessor), or used in a separate unit 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 1174 IS of a trade or business of a predecessor, and immediately 1 after the acquisition employs in his trade or business an 2 individual who immediately prior to the acquisition was 3 employed in the trade or business of such predecessor, 4 then, for the purpose of determining the amount of remu- 5 neration paid by the successor employer under such sub- 6 section, any remuneration (other than remuneration re- 7 ferred to in the paragraphs succeeding paragraph (1) of 8 subsection (a)) with respect to employment paid (or con- 9 sidered under this subsection as having been paid) to such 10 individual by such predecessor during such calendar year 11 and prior to such acquisition shall be considered as having 12 been paid by such successor employer.’’. 13 (B) APPLICATION TO RAILROAD RETIRE- 14 MENT TAXES.—Clause (i) of section 15 3231(e)(2)(A) of such Code is amended to read 16 as follows: 17 ‘‘(i) IN GENERAL.—For any calendar 18 year in which the applicable base is less 19 than $400,000, the term ‘compensation’ 20 does not include so much of the remunera- 21 tion paid during any calendar year to an 22 individual by an employer for services ren- 23 dered as an employee to such employer as 24 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 1174 IS exceeds the applicable base but does not 1 exceed $400,000.’’. 2 (b) FURTHER ADDITIONAL HOSPITAL INSURANCE 3 TAX ON VERY HIGH INCOME TAXPAYERS.— 4 (1) IN GENERAL.—Section 3101(b) of the In- 5 ternal Revenue Code of 1986 is amended by adding 6 at the end the following new paragraph: 7 ‘‘(3) FURTHER ADDITIONAL TAX.—In addition 8 to the tax imposed by paragraphs (1) and (2) and 9 the preceding subsection, there is hereby imposed on 10 every taxpayer (other than a corporation, estate, or 11 trust) a tax equal to 1.2 percent of wages which are 12 received with respect to employment (as defined in 13 section 3121(b)) during the taxable year which are 14 in excess of— 15 ‘‘(A) in the case of a joint return, 16 $500,000, 17 ‘‘(B) in the case of a married taxpayer (as 18 defined in section 7703) filing a separate re- 19 turn, 1⁄2 of the dollar amount determined under 20 subparagraph (A), and 21 ‘‘(C) in any other case, $400,000.’’. 22 (2) COLLECTION OF TAX.—Section 3102 of 23 such Code is amended by adding at the end the fol- 24 lowing new subsection: 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 1174 IS ‘‘(g) SPECIAL RULES FOR FURTHER ADDITIONAL 1 TAX.— 2 ‘‘(1) IN GENERAL.—In the case of any tax im- 3 posed by section 3101(b)(3), subsection (a) shall 4 only apply to the extent to which the taxpayer re- 5 ceives wages from the employer in excess of 6 $400,000, and the employer may disregard the 7 amount of wages received by such taxpayer’s spouse. 8 ‘‘(2) COLLECTION OF AMOUNTS NOT WITH- 9 HELD.—To the extent that the amount of any tax 10 imposed by section 3101(b)(3) is not collected by the 11 employer, such tax shall be paid by the employee. 12 ‘‘(3) TAX PAID BY RECIPIENT.—If an employer, 13 in violation of this chapter, fails to deduct and with- 14 hold the tax imposed by section 3101(b)(3) and 15 thereafter the tax is paid by the employee, the tax 16 so required to be deducted and withheld shall not be 17 collected from the employer, but this paragraph shall 18 in no case relieve the employer from liability for any 19 penalties or additions to tax otherwise applicable in 20 respect of such failure to deduct and withhold.’’. 21 (c) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to remuneration paid, and taxable 23 years beginning, on or after January 1 of the first cal- 24 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 1174 IS endar year that begins after the date of enactment of this 1 Act. 2 SEC. 3. MODIFICATION OF TAXES ON SELF-EMPLOYMENT 3 INCOME. 4 (a) TAX ON NET EARNINGS FROM SELF-EMPLOY- 5 MENT UP TO CONTRIBUTION AND BENEFIT BASE AND 6 MORE THAN $400,000.—Paragraph (1) of section 7 1402(b) of the Internal Revenue Code of 1986 is amended 8 to read as follows: 9 ‘‘(1) in the case of the tax imposed by section 10 1401(a) for any taxable year beginning in a calendar 11 year in which the contribution and benefit base (as 12 determined under section 230 of the Social Security 13 Act) is less than $400,000, the excess (if any) of— 14 ‘‘(A) so much of the net earnings from 15 self-employment which is in excess of— 16 ‘‘(i) an amount equal to the contribu- 17 tion and benefit base (as determined under 18 section 230 of the Social Security Act) 19 which is effective for the calendar year in 20 which such taxable year begins, reduced 21 (but not below zero) by 22 ‘‘(ii) the amount of the wages paid to 23 such individual during such taxable year, 24 over 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 1174 IS ‘‘(B) the sum of— 1 ‘‘(i) the excess (if any) of— 2 ‘‘(I) the net earnings from self- 3 employment reduced by the excess (if 4 any) of subparagraph (A)(i) over sub- 5 paragraph (A)(ii), over 6 ‘‘(II) $400,000, reduced by such 7 contribution and benefit base, plus 8 ‘‘(ii) the amount of the wages paid to 9 such individual during such taxable year in 10 excess of such contribution and benefit 11 base and not in excess of $400,000; or’’. 12 (b) FURTHER ADDITIONAL HOSPITAL INSURANCE 13 TAX ON VERY HIGH INCOME TAXPAYERS.— 14 (1) IN GENERAL.—Section 1401(b) of the In- 15 ternal Revenue Code of 1986 is amended by adding 16 at the end the following new paragraph: 17 ‘‘(3) FURTHER ADDITIONAL TAX.— 18 ‘‘(A) IN GENERAL.—In addition to the tax 19 imposed by paragraphs (1) and (2) and the pre- 20 ceding subsection, there is hereby imposed on 21 every taxpayer (other than a corporation, es- 22 tate, or trust) for each taxable year a tax equal 23 to 1.2 percent of the self-employment income 24 for such taxable year which is in excess of— 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 1174 IS ‘‘(i) in the case of a joint return, 1 $500,000, 2 ‘‘(ii) in the case of a married taxpayer 3 (as defined in section 7703) filing a sepa- 4 rate return, 1⁄2 of the dollar amount deter- 5 mined under subparagraph (A), and 6 ‘‘(iii) in any other case, $400,000. 7 ‘‘(B) COORDINATION WITH FICA.—The 8 amounts under clause (i), (ii), or (iii) (which- 9 ever is applicable) of subparagraph (A) shall be 10 reduced (but not below zero) by the amount of 11 wages taken into account in determining the 12 tax imposed under section 3101(b)(3) with re- 13 spect to the taxpayer.’’. 14 (2) NO DEDUCTION FOR FURTHER ADDITIONAL 15 TAX.— 16 (A) IN GENERAL.—Section 164(f) of such 17 Code is amended by striking ‘‘section 18 1401(b)(2)’’ and inserting ‘‘paragraphs (2) and 19 (3) of section 1401(b)’’. 20 (B) DEDUCTION FOR NET EARNINGS FROM 21 SELF-EMPLOYMENT.—Section 1402(a)(12)(B) 22 of such Code is amended by striking ‘‘the rate 23 imposed under paragraph (2) of section 24 1401(b)’’ and inserting ‘‘the rates imposed 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 1174 IS under paragraphs (2) and (3) of section 1 1401(b)’’. 2 (3) TECHNICAL AMENDMENT.—Section 3 1401(b)(2)(B) of such Code is amended by striking 4 ‘‘section 3121(b)(2)’’ and inserting ‘‘section 5 3101(b)(2)’’. 6 (c) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to net earnings from self-employ- 8 ment derived, and taxable years beginning, on or after 9 January 1 of the first calendar year that begins after the 10 date of enactment of this Act. 11 SEC. 4. TAXES ON UNEARNED INCOME. 12 (a) MODIFICATIONS TO TAX ON NET INVESTMENT 13 INCOME.— 14 (1) IN GENERAL.—Section 1411 of the Internal 15 Revenue Code of 1986 is amended by adding at the 16 end the following new subsection: 17 ‘‘(f) ADDITIONAL AMOUNT FOR CERTAIN HIGH IN- 18 COME INDIVIDUALS.— 19 ‘‘(1) INCLUSION OF SPECIFIED NET INCOME.— 20 ‘‘(A) IN GENERAL.—In the case of any in- 21 dividual whose modified adjusted gross income 22 for the taxable year exceeds the high income 23 threshold amount, subsection (a)(1) shall be ap- 24 plied by substituting ‘the greater of specified 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 1174 IS net income or net investment income’ for ‘net 1 investment income’ in subparagraph (A) there- 2 of. 3 ‘‘(B) PHASE-IN OF INCREASE.—The in- 4 crease in the tax imposed under subsection 5 (a)(1) by reason of the application of subpara- 6 graph (A) (determined before application of 7 paragraph (2)) shall not exceed the amount 8 which bears the same ratio to the amount of 9 such increase (determined without regard to 10 this paragraph) as— 11 ‘‘(i) the excess described in subpara- 12 graph (A), bears to 13 ‘‘(ii) $100,000 (1⁄2 such amount in the 14 case of a married taxpayer (as defined in 15 section 7703) filing a separate return). 16 ‘‘(2) ADDITIONAL RATE BRACKET.—In the case 17 of any individual whose modified adjusted gross in- 18 come for the taxable year exceeds the high income 19 threshold amount, the amount of tax imposed under 20 subsection (a)(1) shall be increased by an amount 21 equal to 13.6 percent of the lesser of— 22 ‘‘(A) the greater of the specified net in- 23 come or net investment income for the taxable 24 year, or 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •S 1174 IS ‘‘(B) the excess (if any) of— 1 ‘‘(i) the modified adjusted gross in- 2 come for such taxable year, over 3 ‘‘(ii) the high income threshold 4 amount. 5 ‘‘(3) DEFINITIONS.— 6 ‘‘(A) HIGH INCOME THRESHOLD 7 AMOUNT.—For purposes of this subsection, the 8 term ‘high income threshold amount’ means— 9 ‘‘(i) except as provided in clause (ii) 10 or (iii), $400,000, 11 ‘‘(ii) in the case of a taxpayer making 12 a joint return under section 6013 or a sur- 13 viving spouse (as defined in section 2(a)), 14 $500,000, and 15 ‘‘(iii) in the case of a married tax- 16 payer (as defined in section 7703) filing a 17 separate return, 1⁄2 of the dollar amount 18 determined under clause (ii). 19 ‘‘(B) SPECIFIED NET INCOME.—For pur- 20 poses of this section, the term ‘specified net in- 21 come’ means net investment income deter- 22 mined— 23 ‘‘(i) without regard to the phrase 24 ‘other than such income which is derived in 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •S 1174 IS the ordinary course of a trade or business 1 not described in paragraph (2),’ in sub- 2 section (c)(1)(A)(i), 3 ‘‘(ii) without regard to the phrase ‘de- 4 scribed in paragraph (2)’ in subsection 5 (c)(1)(A)(ii), 6 ‘‘(iii) without regard to the phrase 7 ‘other than property held in a trade or 8 business not described in paragraph (2)’ in 9 subsection (c)(1)(A)(iii), 10 ‘‘(iv) without regard to paragraphs 11 (2), (3), and (4) of subsection (c), and 12 ‘‘(v) by treating paragraphs (5) and 13 (6) of section 469(c) (determined without 14 regard to the phrase ‘To the extent pro- 15 vided in regulations,’ in such paragraph 16 (6)) as applying for purposes of subsection 17 (c) of this section.’’. 18 (b) APPLICATION TO TRUSTS AND ESTATES.—Sec- 19 tion 1411(a)(2) of the Internal Revenue Code of 1986 is 20 amended— 21 (1) by striking ‘‘3.8 percent’’ and inserting 22 ‘‘17.4 percent’’, and 23 (2) in subparagraph (A) thereof, by striking 24 ‘‘undistributed net investment income’’ and inserting 25 VerDate Sep 11 2014 05:45 Apr 20, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1174.IS S1174 pbinns on DSKJLVW7X2PROD with $$_JOB 13 •S 1174 IS ‘‘the greater of undistributed specified net income or 1 undistributed net investment income’’. 2 (c) CLARIFICATIONS WITH RESPECT TO DETER- 3 MINATION OF NET INVESTMENT INCOME.— 4 (1) CERTAIN EXCEPTIONS.—Section 1411(c)(6) 5 of the Internal Revenue Code [Text truncated for display. 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