[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5735 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 5735

   To amend the Internal Revenue Code of 1986 to allow individuals a 
refundable credit against income tax for Social Security taxes paid on 
                        up to $25,000 of wages.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 14, 2002

 Mr. Hinchey introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to allow individuals a 
refundable credit against income tax for Social Security taxes paid on 
                        up to $25,000 of wages.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. REFUNDABLE CREDIT FOR PAYROLL TAXES.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and by inserting 
after section 35 the following new section:

``SEC. 36. CREDIT FOR PAYROLL TAXES.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle an amount 
equal to the taxpayer's social security taxes for the taxable year.
    ``(b) Limitation.--The amount of the credit allowable under 
subsection (a) to any taxpayer for any taxable year shall not exceed 
$1,550.
    ``(c) Social Security Taxes.--For purposes of this section--
            ``(1) In general.--The term `social security taxes' means, 
        with respect to any taxpayer for any taxable year--
                    ``(A) the amount of the taxes imposed by section 
                3101(a) on amounts received by the taxpayer during the 
                calendar year in which the taxable year begins,
                    ``(B) so much of the amount of the taxes imposed by 
                section 3201(a) as relates to section 3101(a) on 
                amounts received by the taxpayer during the calendar 
                year in which the taxable year begins,
                    ``(C) 50 percent of the taxes imposed by subsection 
                (a) of section 1401 on the self-employment income of 
                the taxpayer for the taxable year, and
                    ``(D) 50 percent of so much of the taxes imposed by 
                section 3211(a)(1) as relates to section 3101(a) on 
                amounts received by the taxpayer during the calendar 
                year in which the taxable year begins.
            ``(2) Coordination with special refund of social security 
        taxes.--The term `social security taxes' shall not include any 
        taxes to the extent the taxpayer is entitled to a special 
        refund of such taxes under section 6413(c).
            ``(3) Special rule.--Any amounts paid pursuant to an 
        agreement under section 3121(l) (relating to agreements entered 
        into by American employers with respect to foreign affiliates) 
        which are equivalent to the taxes referred to in paragraph 
        (1)(A) shall be treated as taxes referred to in such paragraph.
    ``(d) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2004.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 36 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by striking the last item and inserting the 
        following new items:

                              ``Sec. 36. Credit for payroll taxes.
                              ``Sec. 37. Overpayments of tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 2. FREEZE OF REDUCTION IN TOP INDIVIDUAL INCOME TAX RATE.

    (a) In General.--The column relating to 39.6% in the table in 
subsection (i)(2) of section 1 of the Internal Revenue Code of 1986 
(relating to reductions in rates after June 30, 2001) is amended--
            (1) by striking ``37.6%'' and inserting ``38.6%'', and
            (2) by striking ``35.0%'' and inserting ``38.6%''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the date of the enactment of this Act.
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