Modification of taxes on self-employment income

(a) Tax on net earnings from self-Employment up to contribution and benefit base and more than $400,000 Paragraph (1) of section 1402(b) of the Internal Revenue Code of 1986 is amended to read as follows: (1) in the case of the tax imposed by section 1401(a) for any taxable year beginning in a calendar year in which the contribution and benefit base (as determined under section 230 of the Social Security Act) is less than $400,000, the excess (if any) of— (A) so much of the net earnings from self-employment which is in excess of— (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) which is effective for the calendar year in which such taxable year begins, reduced (but not below zero) by (ii) the amount of the wages paid to such individual during such taxable year, over (B) the sum of— (i) the excess (if any) of— (I) the net earnings from self-employment reduced by the excess (if any) of subparagraph (A)(i) over subparagraph (A)(ii), over (II) $400,000, reduced by such contribution and benefit base, plus (ii) the amount of the wages paid to such individual during such taxable year in excess of such contribution and benefit base and not in excess of $400,000; or. (b) Further additional hospital insurance tax on very high income taxpayers (1) In general Section 1401(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (3) Further additional tax (A) In general 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) for each taxable year a tax equal to 1.2 percent of the self-employment income for such taxable year which is in excess of— (i) in the case of a joint return, $500,000, (ii) 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 (iii) in any other case, $400,000. (B) Coordination with FICA The amounts under clause (i), (ii), or (iii) (whichever is applicable) of subparagraph (A) shall be reduced (but not below zero) by the amount of wages taken into account in determining the tax imposed under section 3101(b)(3) with respect to the taxpayer.. (2) No deduction for further additional tax (A) In general Section 164(f) of such Code is amended by striking section 1401(b)(2) and inserting paragraphs (2) and (3) of section 1401(b). (B) Deduction for net earnings from self-employment Section 1402(a)(12)(B) of such Code is amended by striking the rate imposed under paragraph (2) of section 1401(b) and inserting the rates imposed under paragraphs (2) and (3) of section 1401(b). (3) Technical amendment Section 1401(b)(2)(B) of such Code is amended by striking section 3121(b)(2) and inserting section 3101(b)(2). (c) Effective date The amendments made by this section shall apply to net earnings from self-employment derived, and taxable years beginning, on or after January 1 of the first calendar year that begins after the date of enactment of this Act.