1.This Act may be cited as
the Middle Class Tax Cut Act of
2011
.
<enum>I</enum><header>Payroll tax
relief</header>
<section id="H33F376AB09A2461E923D41E19CB0401C"><enum>101.</enum><header>Temporary
payroll tax cut for employers, employees and the self-employed</header>
<subsection id="H1FF2326785714AD0A05A7DB9A5BFF623"><enum>(a)</enum><header>Wages</header><text>Notwithstanding
any other provision of law—</text>
<paragraph id="H93D99C810DE242199A37EE1F4D854DD0"><enum>(1)</enum><text>with respect to
remuneration received during the payroll tax holiday period, the rate of tax
under 3101(a) of the Internal Revenue Code of 1986 shall be 3.1 percent
(including for purposes of determining the applicable percentage under sections
3201(a) and 3211(a) of such Code), and</text>
</paragraph><paragraph id="H6ED0815FFAA34078848394C9B4AF569D"><enum>(2)</enum><text>with respect to
remuneration paid during the payroll tax holiday period, the rate of tax under
3111(a) of such Code shall be 3.1 percent (including for purposes of
determining the applicable percentage under sections 3221(a) and 3211(a) of
such Code).</text>
</paragraph><paragraph id="HFA29432FBD904B399D91864C8C4C2C0E"><enum>(3)</enum><text>Subsection (a)(2)
shall only apply to—</text>
<subparagraph id="H97AD6F62AA0044A6844F4D9898EC4B36"><enum>(A)</enum><text>employees
performing services in a trade or business of a qualified employer, or</text>
</subparagraph><subparagraph id="HE5B6DAAAA92C41B097AD62F5BCA9F5F3"><enum>(B)</enum><text>in the case of a
qualified employer exempt from tax under section 501(a), in furtherance of the
activities related to the purpose or function constituting the basis of the
employer’s exemption under section 501.</text>
</subparagraph></paragraph><paragraph id="H2AC06A104AFB459EBEB8B0B757A21669"><enum>(4)</enum><text>Subsection (a)(2)
shall apply only to the first $5 million of remuneration or compensation paid
by a qualified employer subject to section 3111(a) or a corresponding amount of
compensation subject to 3221(a).</text>
</paragraph></subsection><subsection id="H5B66081176634496B52B0233292846A9"><enum>(b)</enum><header>Self-Employment
taxes</header>
<paragraph id="HEFD56154FCDE4A88ADBA0C08B3A477FE"><enum>(1)</enum><header>In
general</header><text>Notwithstanding any other provision of law, with respect
to any taxable year which begins in the payroll tax holiday period, the rate of
tax under section 1401(a) of the Internal Revenue Code of 1986 shall be—</text>
<subparagraph id="H77077CDAE5A5491BA8B9724A2E72DA1B"><enum>(A)</enum><text>6.2 percent on the
portion of net earnings from self-employment subject to 1401(a) during the
payroll tax period that does not exceed the amount of the excess of $5 million
over total remuneration, if any, subject to section 3111(a) paid during the
payroll tax holiday period to employees of the self-employed person, and</text>
</subparagraph><subparagraph id="H78FFCE93E97948F98F546D4CE8F648D0"><enum>(B)</enum><text>9.3 percent for
any portion of net earnings from self-employment not subject to subsection
(b)(1)(A).</text>
</subparagraph></paragraph><paragraph id="HF5A7D9E90BE24DDBA38E0FC7EC65DB3C"><enum>(2)</enum><header>Coordination
with deductions for employment taxes</header><text>For purposes of the Internal
Revenue Code of 1986, in the case of any taxable year which begins in the
payroll tax holiday period—</text>
<subparagraph id="H29E74882C33A4F49A796C30D490C1693"><enum>(A)</enum><header>Deduction in
computing net earnings from self-employment</header><text>The deduction allowed
under section 1402(a)(12) of such Code shall be the sum of (i) 4.55 percent
times the amount of the taxpayer’s net earnings from self-employment for the
taxable year subject to paragraph (b)(1)(A) of this section, plus (ii) 7.65
percent of the taxpayer's net earnings from self-employment in excess of that
amount.</text>
</subparagraph><subparagraph id="H2706F305B71A4D2F847CF0292D6198D2"><enum>(B)</enum><header>Individual
deduction</header><text>The deduction under section 164(f) of such Code shall
be equal to the sum of (i) one-half of the taxes imposed by section 1401 (after
the application of this section) with respect to the taxpayer’s net earnings
from self-employment for the taxable year subject to paragraph (b)(1)(A) of
this section plus (ii) 62.7 percent of the taxes imposed by section 1401 (after
the application of this section) with respect to the excess.</text>
</subparagraph></paragraph></subsection><subsection id="H3313D38BAD89494496DCAA2CFB61DF0B"><enum>(c)</enum><header>Regulatory
authority</header><text>The Secretary may prescribe any such regulations or
other guidance necessary or appropriate to carry out this section, including
the allocation of the excess of $5 million over total remuneration subject to
section 3111(a) paid during the payroll tax holiday period among related
taxpayers treated as a single qualified employer.</text>
</subsection><subsection id="H054A8E93F4AC4C4F92AEDE6D7104BF76"><enum>(d)</enum><header>Definitions</header>
<paragraph id="H4A01BDAE6DB14C9F912E4F2830973642"><enum>(1)</enum><header>Payroll tax
holiday period</header><text>The term <term>payroll tax holiday period</term>
means calendar year 2012.</text>
</paragraph><paragraph id="H627EE94296004BFD8DF17CF0339B1E9D"><enum>(2)</enum><header>Qualified
employer</header><text>For purposes of this paragraph,</text>
<subparagraph id="H171E9EB160F947C7A3BDB6BC5EA1F14A"><enum>(A)</enum><header>In
general</header><text>The term <term>qualified employer</term> means any
employer other than the United States, any State or possession of the United
States, or any political subdivision thereof, or any instrumentality of the
foregoing.</text>
</subparagraph><subparagraph id="HA3990EA3754943C0B5CB35FA40CCBD9C"><enum>(B)</enum><header>Treatment of
employees of post-secondary educational
institutions</header><text>Notwithstanding paragraph (A), the term
<term>qualified employer</term> includes any employer which is a public
institution of higher education (as defined in section 101 of the Higher
Education Act of 1965).</text>
</subparagraph></paragraph><paragraph id="H8CFEEE267D2B4CC9AE847282AC6AA881"><enum>(3)</enum><header>Aggregation
rules</header><text>For purposes of this subsection rules similar to sections
414(b), 414(c), 414(m) and 414(o) shall apply to determine when multiple
entities shall be treated as a single employer, and rules with respect to
predecessor and successor employers may be applied, in such manner as may be
prescribed by the Secretary.</text>
</paragraph></subsection><subsection id="HF83C204628D044A796A8CF3675B11639"><enum>(e)</enum><header>Transfers of
funds</header>
<paragraph id="HBE87DCBC152449698ECB4057CA30BBF9"><enum>(1)</enum><header>Transfers to
federal old-age and survivors insurance trust fund</header><text>There are
hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the
Federal Disability Insurance Trust Fund established under section 201 of the
Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues
to the Treasury by reason of the application of subsections (a) and (b) to
employers other than those described in (e)(2). 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 such amendments not been enacted.</text>
</paragraph><paragraph id="H8B3FFB853CD4403D91FF42BD743B0559"><enum>(2)</enum><header>Transfers to
social security equivalent benefit account</header><text>There are hereby
appropriated to the Social Security Equivalent Benefit Account established
under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C.
231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason
of the application of subsection (a) to employers subject to the Railroad
Retirement Tax. 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 Account had such amendments not been enacted.</text>
</paragraph></subsection><subsection id="HC87F5275422E4696882D0779975232F5"><enum>(f)</enum><header>Coordination
with other federal laws</header><text>For purposes of applying any provision of
Federal law other than the provisions of the Internal Revenue Code of 1986, the
rate of tax in effect under section 3101(a) of such Code shall be determined
without regard to the reduction in such rate under this section.</text>
</subsection></section><section id="HCA7D892EFD6745FEA4D9604112953C37"><enum>102.</enum><header>Temporary tax
credit for increased payroll</header>
<subsection id="H19B1919B3054420EB94064938E0FFE63"><enum>(a)</enum><header>In
general</header><text>Notwithstanding any other provision of law, each
qualified employer shall be allowed, with respect to wages for services
performed for such qualified employer, a payroll increase credit determined as
follows:</text>
<paragraph id="HE8F01FBFE61E409D8FB4C9B610B76F6B"><enum>(1)</enum><text>With respect to
the period from October 1, 2011 through December 31, 2011, 6.2 percent of the
excess, if any, (but not more than $12.5 million of the excess) of the wages
subject to tax under section 3111(a) of the Internal Revenue Code of 1986 for
such period over such wages for the corresponding period of 2010.</text>
</paragraph><paragraph id="HD17F6F247BB242C4AF74ECCD88CCC148"><enum>(2)</enum><text>With respect to
the period from January 1, 2012 through December 31, 2012,</text>
<subparagraph id="HA9D1B5EB43B941C98C4EFEBCA27B3C92"><enum>(A)</enum><text>6.2 percent of the
excess, if any, (but not more than $50 million of the excess) of the wages
subject to tax under section 3111(a) of the Internal Revenue Code of 1986 for
such period over such wages for calendar year 2011, minus</text>
</subparagraph><subparagraph id="HDAEA69B9F02244E79D4B8CB1536D9686"><enum>(B)</enum><text>3.1 percent of the
excess (if any) of—</text>
<clause id="id82083A767AC64EAC963215E9DEB13C51"><enum>(i)</enum><text>the
lesser of $5,000,000 or such wages for calendar year 2012, over</text>
</clause><clause id="idC49A50DD349045539F4CB9D170A8C222"><enum>(ii)</enum><text>such wages for
calendar year 2011.</text>
</clause></subparagraph></paragraph><paragraph id="HF8FBFCF1B6BA40C289ACA9DF0C893A57"><enum>(3)</enum><text>In the case of a
qualified employer for which the wages subject to tax under section 3111(a) of
the Internal Revenue Code of 1986 (a) were zero for the corresponding period of
2010 referred to in subsection (a)(1), the amount of such wages shall be deemed
to be 80 percent of the amount of wages taken into account for the period from
October 1, 2011 through December 31, 2011 and (b) were zero for the calendar
year 2011 referred to in subsection (a)(2), then the amount of such wages shall
be deemed to be 80 percent of the amount of wages taken into account for
2012.</text>
</paragraph><paragraph id="H3337927F47844E7793FF9F72EB1CFA6A"><enum>(4)</enum><text>This subsection
(a) shall only apply with respect to the wages of employees performing services
in a trade or business of a qualified employer or, in the case of a qualified
employer exempt from tax under section 501(a) of the Internal Revenue Code of
1986, in furtherance of the activities related to the purpose or function
constituting the basis of the employer’s exemption under section 501.</text>
</paragraph></subsection><subsection id="HA6124422044C467DB2F6D747AE686FA6"><enum>(b)</enum><header>Qualified
employers</header><text>For purposes of this section—</text>
<paragraph id="H0CCAA1291A054C1BBDDB3262F7D24C6E"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified employer</term> means any
employer other than the United States, any State or possession of the United
States, or any political subdivision thereof, or any instrumentality of the
foregoing.</text>
</paragraph><paragraph id="H95AB9F1428FD41C292BAE3CCFEC4FCCC"><enum>(2)</enum><header>Treatment of
employees of post-secondary educational
institutions</header><text>Notwithstanding subparagraph (1), the term
<term>qualified employer</term> includes any employer which is a public
institution of higher education (as defined in section 101 of the Higher
Education Act of 1965).</text>
</paragraph></subsection><subsection id="H5053C507CBDF4BA8A346A31931A39800"><enum>(c)</enum><header>Aggregation
rules</header><text>For purposes of this subsection rules similar to sections
414(b), 414(c), 414(m) and 414(o) of the Internal Revenue Code of 1986 shall
apply to determine when multiple entities shall be treated as a single
employer, and rules with respect to predecessor and successor employers may be
applied, in such manner as may be prescribed by the Secretary.</text>
</subsection><subsection id="H3AC500688C324DBC8F03DDB538F261B4"><enum>(d)</enum><header>Application of
credits</header><text>The payroll increase credit shall be treated as a credit
allowable under Subtitle C of the Internal Revenue Code of 1986 under rules
prescribed by the Secretary of the Treasury, provided that the amount so
treated for the period described in subsection (a)(1) or subsection (a)(2)
shall not exceed the amount of tax imposed on the qualified employer under
section 3111(a) of such Code for the relevant period. Any income tax deduction
by a qualified employer for amounts paid under section 3111(a) of such Code or
similar Railroad Retirement Tax provisions shall be reduced by the amounts so
credited.</text>
</subsection><subsection id="HF8C3F388131D4160BCB97BECBDB0DA52"><enum>(e)</enum><header>Transfers to
federal old-Age and survivors insurance trust fund</header><text>There are
hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the
Federal Disability Insurance Trust Fund established under section 201 of the
Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues
to the Treasury by reason of the amendments made by subsection (d). 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 such amendments
not been enacted.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HC00D426BE6BF4126A56EDA1BE257804B"><enum>(f)</enum><header>Application to
railroad retirement taxes</header><text>For purposes of qualified employers
that are employers under section 3231(a) of the Internal Revenue Code of 1986,
subsections (a)(1) and (a)(2) of this section shall apply by substituting
section 3221 for section 3111, and substituting the term
<term>compensation</term> for <term>wages</term> as appropriate.</text>
</subsection></section><enum>II</enum><header>Surtax on
millionaires</header>
<section display-inline="no-display-inline" id="HA28A15FC25DD45F4BA246FB84F76BC65" section-type="subsequent-section"><enum>201.</enum><header>Surtax on
millionaires</header>
<subsection id="H1AF74AB15367443E847AF49218D439E1"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end
the following new part:</text>
<quoted-block display-inline="no-display-inline" id="H68B3E5ED711A460899A59259AD8FEE8E" style="OLC">
<part id="HE68ADC46065E49E29EAD319B3A46EF9A"><enum>VIII</enum><header>Surtax on
millionaires</header>
<toc container-level="subpart-container" idref="HE68ADC46065E49E29EAD319B3A46EF9A" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H7C1EBF7ADD474F3887944D5F3CCAB13C" level="section">Sec. 59B. Surtax on millionaires.</toc-entry>
</toc>
<section id="H7C1EBF7ADD474F3887944D5F3CCAB13C"><enum>59B.</enum><header>Surtax on
millionaires</header>
<subsection id="H522C22D8E2304DAF939665731F5591A5"><enum>(a)</enum><header>General
rule</header><text>In the case of a taxpayer other than a corporation for any
taxable year beginning after 2012, there is hereby imposed (in addition to any
other tax imposed by this subtitle) a tax equal to 3.25 percent of so much of
the modified adjusted gross income of the taxpayer for such taxable year as
exceeds $1,000,000 ($500,000, in the case of a married individual filing a
separate return).</text>
</subsection><subsection id="H11C18879FB5A4656B664B81F53DEEB24"><enum>(b)</enum><header>Inflation
adjustment</header>
<paragraph id="HA439353630A34CD7BEB4B5068B7263AB"><enum>(1)</enum><header>In
general</header><text>In the case of any taxable year beginning after 2013,
each dollar amount under subsection (a) shall be increased by an amount equal
to—</text>
<subparagraph id="H1A3A41F648964D5E8C2E89BADEEC67E3"><enum>(A)</enum><text>such dollar
amount, multiplied by</text>
</subparagraph><subparagraph id="HAE4E61F14D9B411587A6BC48C3B794E8"><enum>(B)</enum><text>the cost-of-living
adjustment determined under section 1(f)(3) for the calendar year in which the
taxable year begins, determined by substituting <quote>calendar year
2011</quote> for <quote>calendar year 1992</quote> in subparagraph (B)
thereof.</text>
</subparagraph></paragraph><paragraph id="H4D5466E1E6BE4AD8B01FE86F4CA669BD"><enum>(2)</enum><header>Rounding</header><text>If
any amount as adjusted under paragraph (1) is not a multiple of $10,000, such
amount shall be rounded to the next highest multiple of $10,000.</text>
</paragraph></subsection><subsection id="id7A9A10052B9042A0968F7439C651213B"><enum>(c)</enum><header>Modified
adjusted gross income</header><text>For purposes of this section, the term
<term>modified adjusted gross income</term> means adjusted gross income reduced
by any deduction (not taken into account in determining adjusted gross income)
allowed for investment interest (as defined in section 163(d)). In the case of
an estate or trust, adjusted gross income shall be determined as provided in
section 67(e).</text>
</subsection><subsection id="HFA8AA1245BC645B7A981845A6CC111B8"><enum>(d)</enum><header>Special
rules</header>
<paragraph id="H91056A08DFAD4A3A8288EF192827451F"><enum>(1)</enum><header>Nonresident
alien</header><text display-inline="yes-display-inline">In the case of a
nonresident alien individual, only amounts taken into account in connection
with the tax imposed under section 871(b) shall be taken into account under
this section.</text>
</paragraph><paragraph id="HE209317559AE4E23A1DA7DBBB99D7BDA"><enum>(2)</enum><header>Citizens and
residents living abroad</header><text>The dollar amount in effect under
subsection (a) shall be decreased by the excess of—</text>
<subparagraph id="H6E27F8680FA049258B36663D24BE3896"><enum>(A)</enum><text>the amounts
excluded from the taxpayer’s gross income under section 911, over</text>
</subparagraph><subparagraph id="H7531001F71C84E82A887592694AEC1CE"><enum>(B)</enum><text display-inline="yes-display-inline">the amounts of any deductions or exclusions
disallowed under section 911(d)(6) with respect to the amounts described in
subparagraph (A).</text>
</subparagraph></paragraph><paragraph id="HA4587652828F4C6DBC43739FF0CF8984"><enum>(3)</enum><header>Charitable
trusts</header><text display-inline="yes-display-inline">Subsection (a) shall
not apply to a trust all the unexpired interests in which are devoted to one or
more of the purposes described in section 170(c)(2)(B).</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="HBD3512E2CD7D47C0A4F86D17D52EB726"><enum>(4)</enum><header>Not treated as
tax imposed by this chapter for certain purposes</header><text display-inline="yes-display-inline">The tax imposed under this section shall
not be treated as tax imposed by this chapter for purposes of determining the
amount of any credit under this chapter or for purposes of section
55.</text>
</paragraph></subsection></section></part><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H5D9653923D384E51BBBC336A41E29DC7"><enum>(b)</enum><header>Clerical
amendment</header><text display-inline="yes-display-inline">The table of parts
for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new item:</text>
<quoted-block display-inline="no-display-inline" id="HCD459A5EF1C64C258A4645DBA9351A0B" style="OLC">
<toc regeneration="no-regeneration">
<toc-entry level="subpart">Part VIII. Surtax on
millionaires.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection display-inline="no-display-inline" id="H5E1A86FC968B49B1B50DCA1A6C1E2B1D"><enum>(c)</enum><header>Section 15 not
to apply</header><text>The amendment made by subsection (a) shall not be
treated as a change in a rate of tax for purposes of section 15 of the Internal
Revenue Code of 1986.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H1037A56D9D63420793B242ED2124B414"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to taxable
years beginning after December 31, 2012.</text>
</subsection></section>
November 29, 2011
Read the second time and placed on the
calendar