II 109th CONGRESS 1st Session S. 774 IN THE SENATE OF THE UNITED STATES April 13, 2005 Mr. Bunning 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 repeal the 1993 income tax increase on Social Security benefits.

1.

Short title

This Act may be cited as the Social Security Benefits Tax Relief Act of 2005 .

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 (relating to social security and tier 1 railroad retirement benefits) 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 the Internal Revenue Code of 1986 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 the Internal Revenue Code of 1986 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, 2005. (2)

Subsection (c)(1)

The amendment made by subsection (c)(1) shall apply to benefits paid after December 31, 2005. (3)

Subsection (c)(2)

The amendments made by subsection (c)(2) shall apply to tax liabilities for taxable years beginning after December 31, 2005.

3.

Maintenance of transfers to hospital insurance Trust Fund

There are hereby appropriated to the Federal Hospital Insurance Trust Fund established under section 1817 of the Social Security Act (42 U.S.C. 1395i) 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.