To amend the Internal Revenue Code of 1986 to repeal the 1993 income tax increase on Social Security benefits.

January 28, 2003

Mr. SAM JOHNSON of Texas (for himself, Mr. AKIN, Mr. BURR, Mr. DEMINT, Mr. KNOLLENBERG, Mr. MICA, Mr. NEY, Mr. SMITH of New Jersey, Mr. TOOMEY, and Mr. WILSON of South Carolina) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to repeal the 1993 income tax increase on Social Security benefits.

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 `Social Security Benefits Tax Relief Act of 2003'.

SEC. 2. REPEAL OF 1993 INCOME TAX INCREASE ON SOCIAL SECURITY BENEFITS.

(a) RESTORATION OF PRIOR LAW FORMULA- Subsection (a) of section 86 of the Internal Revenue Code of 1986 is amended to read as follows:

`(a) IN GENERAL- Gross income for the taxable year of any taxpayer described in subsection (b) (notwithstanding section 207 of the Social Security Act) includes Social Security benefits in an amount equal to the lesser of--

`(1) one-half of the Social Security benefits received during the taxable year, or

`(2) one-half of the excess described in subsection (b)(1).'

(b) REPEAL OF ADJUSTED BASE AMOUNT- Subsection (c) of section 86 of such Code is amended to read as follows:

`(c) BASE AMOUNT- For purposes of this section, the term `base amount' means--

`(1) except as otherwise provided in this subsection, $25,000,

`(2) $32,000 in the case of a joint return, and

`(3) zero in the case of a taxpayer who--

`(A) is married as of the close of the taxable year (within the meaning of section 7703) but does not file a joint return for such year, and

`(B) does not live apart from his spouse at all times during the taxable year.'

(c) CONFORMING AMENDMENTS-

(1) Subparagraph (A) of section 871(a)(3) of such Code is amended by striking `85 percent' and inserting `50 percent'.

(2)(A) Subparagraph (A) of section 121(e)(1) of the Social Security Amendments of 1983 (Public Law 98-21) is amended--

(i) by striking `(A) There' and inserting `There';

(ii) by striking `(i)' immediately following `amounts equivalent to'; and

(iii) by striking `, less (ii)' and all that follows and inserting a period.

(B) Paragraph (1) of section 121(e) of such Act is amended by striking subparagraph (B).

(C) Paragraph (3) of section 121(e) of such Act is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B).

(D) Paragraph (2) of section 121(e) of such Act is amended in the first sentence by striking `paragraph (1)(A)' and inserting `paragraph (1)'.

(d) EFFECTIVE DATES-

(1) IN GENERAL- Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 2002.

(2) SUBSECTION (c)(1)- The amendment made by subsection (c)(1) shall apply to benefits paid after December 31, 2002.

(3) SUBSECTION (c)(2)- The amendments made by subsection (c)(2) shall apply to tax liabilities for taxable years beginning after December 31, 2002.

SEC. 3. MAINTENANCE OF TRANSFERS TO HOSPITAL INSURANCE TRUST FUND.

(a) IN GENERAL- There are hereby appropriated to the Hospital Insurance Trust Fund established under section 1817 of the Social Security Act amounts equal to the reduction in revenues to the Treasury by reason of the enactment of this Act. Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had this Act not been enacted.

(b) REPORTS- The Secretary of the Treasury or the Secretary's delegate shall annually report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate the amounts and timing of the transfers under this section.

END