Modification of payroll taxes

(a) Wage base for taxes funding social security (1) In general Paragraph (1) of section 3121(a) of the Internal Revenue Code of 1986 is amended to read as follows: (1) in the case of taxes imposed by sections 3101(a) and 3111(a), for any calendar year in which the contribution and benefit base (as determined under section 230 of the Social Security Act) is less than $400,000, so much of the remuneration (other than remuneration referred to in the succeeding paragraphs of this subsection) with respect to employment that has been paid to an individual by an employer during the calendar year as exceeds such contribution and benefit base but does not exceed $400,000;. (2) Conforming amendments (A) Successor employers Section 3121 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (aa) Special rules for successor employers For purposes of subsection (a)(1), if an employer (hereinafter referred to as successor employer) during any calendar year acquires substantially all the property used in a trade or business of another employer (hereinafter referred to as a predecessor), or used in a separate unit of a trade or business of a predecessor, and immediately after the acquisition employs in his trade or business an individual who immediately prior to the acquisition was employed in the trade or business of such predecessor, then, for the purpose of determining the amount of remuneration paid by the successor employer under such subsection, any remuneration (other than remuneration referred to in the paragraphs succeeding paragraph (1) of subsection (a)) with respect to employment paid (or considered under this subsection as having been paid) to such individual by such predecessor during such calendar year and prior to such acquisition shall be considered as having been paid by such successor employer.. (B) Application to railroad retirement taxes Clause (i) of section 3231(e)(2)(A) of such Code is amended to read as follows: (i) In general For any calendar year in which the applicable base is less than $400,000, the term compensation does not include so much of the remuneration paid during any calendar year to an individual by an employer for services rendered as an employee to such employer as exceeds the applicable base but does not exceed $400,000.. (b) Further additional hospital insurance tax on very high income taxpayers (1) In general Section 3101(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (3) Further additional tax In addition to the tax imposed by paragraphs (1) and (2) and the preceding subsection, there is hereby imposed on every taxpayer (other than a corporation, estate, or trust) a tax equal to 1.2 percent of wages which are received with respect to employment (as defined in section 3121(b)) during the taxable year which are in excess of— (A) in the case of a joint return, $500,000, (B) in the case of a married taxpayer (as defined in section 7703) filing a separate return, ½ of the dollar amount determined under subparagraph (A), and (C) in any other case, $400,000.. (2) Collection of tax Section 3102 of such Code is amended by adding at the end the following new subsection: (g) Special rules for further additional tax (1) In general In the case of any tax imposed by section 3101(b)(3), subsection (a) shall only apply to the extent to which the taxpayer receives wages from the employer in excess of $400,000, and the employer may disregard the amount of wages received by such taxpayer’s spouse. (2) Collection of amounts not withheld To the extent that the amount of any tax imposed by section 3101(b)(3) is not collected by the employer, such tax shall be paid by the employee. (3) Tax paid by recipient If an employer, in violation of this chapter, fails to deduct and withhold the tax imposed by section 3101(b)(3) and thereafter the tax is paid by the employee, the tax so required to be deducted and withheld shall not be collected from the employer, but this paragraph shall in no case relieve the employer from liability for any penalties or additions to tax otherwise applicable in respect of such failure to deduct and withhold.. (c) Effective date The amendments made by this section shall apply to remuneration paid, and taxable years beginning, on or after January 1 of the first calendar year that begins after the date of enactment of this Act.