S. 1917 (112th): Middle Class Tax Cut Act of 2011

112th Congress, 2011–2013. Text as of Nov 29, 2011 (Placed on Calendar in the Senate).

Status & Summary | PDF | Source: GPO

II

Calendar No. 238

112th CONGRESS

1st Session

S. 1917

IN THE SENATE OF THE UNITED STATES

November 28, 2011

(for himself, Mr. Menendez, Mr. Brown of Ohio, Ms. Stabenow, Mr. Reid, Mr. Schumer, Mr. Blumenthal, Mr. Durbin, Mr. Lautenberg, Mr. Leahy, and Mr. Whitehouse) introduced the following bill; which was read the first time

November 29, 2011

Read the second time and placed on the calendar

A BILL

To create jobs by providing payroll tax relief for middle class families and businesses, and for other purposes.

1.

Short title

This Act may be cited as the Middle Class Tax Cut Act of 2011.

I

Payroll tax relief

101.

Temporary payroll tax cut for employers, employees and the self-employed

(a)

Wages

Notwithstanding any other provision of law—

(1)

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

(2)

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).

(3)

Subsection (a)(2) shall only apply to—

(A)

employees performing services in a trade or business of a qualified employer, or

(B)

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.

(4)

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).

(b)

Self-Employment taxes

(1)

In general

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—

(A)

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

(B)

9.3 percent for any portion of net earnings from self-employment not subject to subsection (b)(1)(A).

(2)

Coordination with deductions for employment taxes

For purposes of the Internal Revenue Code of 1986, in the case of any taxable year which begins in the payroll tax holiday period—

(A)

Deduction in computing net earnings from self-employment

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.

(B)

Individual deduction

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.

(c)

Regulatory authority

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.

(d)

Definitions

(1)

Payroll tax holiday period

The term payroll tax holiday period means calendar year 2012.

(2)

Qualified employer

For purposes of this paragraph,

(A)

In general

The term qualified employer 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.

(B)

Treatment of employees of post-secondary educational institutions

Notwithstanding paragraph (A), the term qualified employer includes any employer which is a public institution of higher education (as defined in section 101 of the Higher Education Act of 1965).

(3)

Aggregation rules

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.

(e)

Transfers of funds

(1)

Transfers to federal old-age and survivors insurance trust fund

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.

(2)

Transfers to social security equivalent benefit account

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.

(f)

Coordination with other federal laws

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.

102.

Temporary tax credit for increased payroll

(a)

In general

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:

(1)

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.

(2)

With respect to the period from January 1, 2012 through December 31, 2012,

(A)

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

(B)

3.1 percent of the excess (if any) of—

(i)

the lesser of $5,000,000 or such wages for calendar year 2012, over

(ii)

such wages for calendar year 2011.

(3)

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.

(4)

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.

(b)

Qualified employers

For purposes of this section—

(1)

In general

The term qualified employer 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.

(2)

Treatment of employees of post-secondary educational institutions

Notwithstanding subparagraph (1), the term qualified employer includes any employer which is a public institution of higher education (as defined in section 101 of the Higher Education Act of 1965).

(c)

Aggregation rules

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.

(d)

Application of credits

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.

(e)

Transfers to federal old-Age and survivors insurance trust fund

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.

(f)

Application to railroad retirement taxes

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 compensation for wages as appropriate.

II

Surtax on millionaires

201.

Surtax on millionaires

(a)

In general

Subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:

VIII

Surtax on millionaires

Sec. 59B. Surtax on millionaires.

59B.

Surtax on millionaires

(a)

General rule

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).

(b)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning after 2013, each dollar amount under subsection (a) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2011 for calendar year 1992 in subparagraph (B) thereof.

(2)

Rounding

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.

(c)

Modified adjusted gross income

For purposes of this section, the term modified adjusted gross income 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).

(d)

Special rules

(1)

Nonresident alien

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.

(2)

Citizens and residents living abroad

The dollar amount in effect under subsection (a) shall be decreased by the excess of—

(A)

the amounts excluded from the taxpayer’s gross income under section 911, over

(B)

the amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A).

(3)

Charitable trusts

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).

(4)

Not treated as tax imposed by this chapter for certain purposes

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.

.

(b)

Clerical amendment

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:

Part VIII. Surtax on millionaires.

.

(c)

Section 15 not to apply

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.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

November 29, 2011

Read the second time and placed on the calendar