INCREASE IN DOLLAR LIMITATION ON AMOUNT OF WAGES SUBJECT TO HOSPITAL INSURANCE TAX.

SEC. 11331. INCREASE IN DOLLAR LIMITATION ON AMOUNT OF WAGES SUBJECT TO HOSPITAL INSURANCE TAX. (a) Hospital Insurance Tax.— (1) In general.— Paragraph (1) of section 3121(a) is amended— (A) by striking “contribution and benefit base (as determined under section 230 of the Social Security Act)” each place it appears and inserting “applicable contribution base (as determined under subsection (x))”, and (B) by striking “such contribution and benefit base” and inserting “such applicable contribution base”. (2) Applicable contribution base.— Section 3121 is amended by adding at the end thereof the following new subsection: “(x) Applicable Contribution Base.— For purposes of this chapter— “(1) Old-age, survivors, and disability insurance.— For purposes of the taxes imposed by sections 3101(a) and 3111(a), the applicable contribution base for any calendar year is the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year. “(2) Hospital insurance.— For purposes of the taxes imposed by section 3101(b) and 3111(b), the applicable contribution base is— “(A) $125,000 for calendar year 1991, and “(B) for any calendar year after 1991, the applicable contribution base for the preceding year adjusted in the same manner as is used in adjusting the contribution and benefit base under section 230(b) of the Social Security Act.” (b) Self-Employment Tax.— (1) In general.— Subsection (b) of section 1402 is amended by striking “the contribution and benefit base (as determined under section 230 of the Social Security Act)” and inserting “the 104 STAT. 1388–468applicable contribution base (as determined under subsection (k))”. (2) Applicable contribution base.— Section 1402 is amended by adding at the end thereof the following new subsection: “(k) Applicable Contribution Base.— For purposes of this chapter— “(1) Old-age, survivors, and disability insurance.— For purposes of the tax imposed by section 1401(a), the applicable contribution base for any calendar year is the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year. “(2) Hospital insurance.— For purposes of the tax imposed by section 1401(b), the applicable contribution base for any calendar year is the applicable contribution base determined under section 3121(x)(2) for such calendar year.” (c) Railroad Retirement Tax.— Clause (i) of section 3231(e)(2)(B) is amended to read as follows: “(i) Tier 1 taxes.— “(I) In general.— Except as provided In subclause (II) of this clause and in clause (ii), the term ‘applicable base’ means for any calendar year the contribution and benefit base determined under section 230 of the Social Security Act for such calendar year. “(II) Hospital insurance taxes.— For purposes of applying so much of the rate applicable under section 3201(a) or 3221(a) (as the case may be) as does not exceed the rate of tax in effect under section 3101(b), and for purposes of applying so much of the rate of tax applicable under section 3211(a)(1) as does not exceed the rate of tax in effect under section 1401(b), the term ‘applicable base’ means for any calendar year the applicable contribution base determined under section 3121(x)(2) for such calendar year.” (d) Technical Amendment.— (1) Paragraph (3) of section 6413(c) is amended to read as follows: “(3) Separate application for hospital insurance taxes.— In applying this subsection with respect to— “(A) the tax imposed by section 3101(b) (or any amount equivalent to such tax), and “(B) so much of the tax imposed by section 3201 as is determined at a rate not greater than the rate in effect under section 3101(b), the applicable contribution base determined under section 3121(x)(2) for any calendar year shall be substituted for ‘contribution and benefit base (as determined under section 230 of the Social Security Act)’ each place it appears.” (2) Sections 3122 and 3125 are each amended by striking “contribution and benefit base limitation” each place it appears and inserting “applicable contribution base limitation”. (e) Effective Date.— The amendments made by this section shall apply to 1991 and later calendar years.