[House Report 107-31]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-31
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PROVIDING FOR CONSIDERATION OF H.R. 6, MARRIAGE PENALTY AND FAMILY TAX
RELIEF ACT OF 2001
_______
March 28, 2001.--Referred to the House Calendar and ordered to be
printed
_______
Ms. Pryce of Ohio, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 104]
The Committee on Rules, having had under consideration
House Resolution 104, by a nonrecord vote, report the same to
the House with the recommendation that the resolution be
adopted.
summary of provisions of the resolution
The resolution provides for consideration in the House of
H.R. 6, the Marriage Penalty and Family Tax Relief Act of 2001,
under a modified closed rule. The rule provides one hour of
debate equally divided and controlled by the chairman and
ranking minority member of the Committee on Ways and Means. The
rule waives all points of order against consideration of the
bill.
The rule provides that the amendment recommended by the
Committee on Ways and Means now printed in the bill shall be
considered as adopted. The rule further provides for
consideration of the amendment in the nature of a substitute,
printed in this report, if offered by Representative Rangel or
his designee, which shall be considered as read and shall be
separately debatable for one hour equally divided and
controlled by the proponent and an opponent. The rule waives
all points of order against the amendment in the nature of a
substitute. Finally, the rule provides one motion to recommit
with or without instructions.
The waiver of all points of order includes a waiver of
clause 4(a) of rule XIII (requiring a three-day layover of the
committee report), a waiver of section 302 of the Congressional
Budget Act of 1974 (prohibiting consideration of legislation
providing new budget authority in excess of a committee's
allocation of such authority) and section 303 of the
Congressional Budget Act of 1974 (prohibiting consideration of
legislation, as reported, providing new budget authority,
changes in revenues, or changes in the public debt for a fiscal
year until the budget resolution for that year has been agreed
to).
The waiver of clause 4(a) of rule XIII is needed because
the report was not available until Wednesday, March 28 and the
bill may be considered by the House as early as Thursday, March
29. The waiver of section 302 is necessary because, according
to the Joint Committee on Taxation, the bill would increase
direct spending by $5.1 billion over the 2001-2006 period. The
waiver of section 303 is necessary because Congress has not yet
completed consideration of a budget resolution for FY 2002 and,
according to the Joint Committee on Taxation, the bill would
decrease revenues and increase direct spending in FY 2002.
The waiver of all points of order against consideration of
the minority substitute is necessary for the same general
reasons as are necessary for the bill.
summary of amendment made in order
Rangel--Democratic Substitute. Creates a new 12 percent tax
rate (phased-in through 2003) for the first $20,000 of taxable
income, equivalent to the approximately $41,000 of total income
for a couple with two children. (The lower rate applies to the
first $10,000 of taxable income on a single return.) Increases
the earned income tax credit by $272 for families with one
child and $320 for families with two or more children. Creates
a standard deduction for married couples equal to twice the
standard available to single individuals (the current law
standard deduction of $7,800 per couple is increased to
$9,300). Provides marriage penalty relief in the earned income
credit and the rate reductions. Costs $585 billion over ten
years.
text of amendment made in order under the rule
An Amendment To Be Offered by Representative Rangel of New York, or a
Designee, Debatable for 60 Minutes
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``Tax
Reduction Act of 2001''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a section
or other provision, the reference shall be considered to be
made to a section or other provision of the Internal Revenue
Code of 1986.
(c) Section 15 Not To Apply.--No amendment made by this Act
shall be treated as a change in a rate of tax for purposes of
section 15 of the Internal Revenue Code of 1986.
TITLE I--INDIVIDUAL INCOME TAX RATE REDUCTIONS; EXPANSION OF EARNED
INCOME CREDIT ASSISTANCE
SEC. 101. INDIVIDUAL INCOME TAX RATE REDUCTIONS.
(a) In General.--Section 1 is amended by adding at the end
the following new subsection:
``(i) 12 Percent Rate Bracket.--
``(1) In general.--In the case of taxable years
beginning after December 31, 2000--
``(A) the rate of tax under subsections (a),
(b), (c), and (d) on taxable income not over
the initial bracket amount shall be 12 percent,
and
``(B) the 15 percent rate of tax shall apply
only to taxable income over the initial bracket
amount.
``(2) Initial bracket amount.--For purposes of this
subsection--
``(A) In general.--Except as provided in
subparagraph (B), the initial bracket amount
is--
``(i) $20,000 in the case of
subsection (a),
``(ii) 80 percent of the dollar
amount in clause (i) in the case of
subsection (b), and
``(iii) 50 percent of the dollar
amount in clause (i) in the case of
subsections (c) and (d).
``(B) Phasein.--The initial bracket amount
is--
``(i) \1/4\ the amount otherwise
applicable under subparagraph (A) in
the case of taxable years beginning
during 2001, and
``(ii) \1/2\ such amount otherwise
applicable under subparagraph (A) in
the case of taxable years beginning
during 2002.
``(3) Inflation adjustment.--
``(A) In general.--In the case of any taxable
year beginning in a calendar year after 2003,
the $20,000 amount under paragraph (2)(A)(i)
shall be increased by an amount equal to--
``(i) such dollar amount, multiplied
by
``(ii) the cost-of-living adjustment
determined under subsection (f)(3) for
the calendar year in which the taxable
year begins, determined by substituting
`calendar year 2002' for `calendar year
1992' in subparagraph (B) thereof.
``(B) Rounding rules.--If any amount after
adjustment under subparagraph (A) is not a
multiple of $50, such amount shall be rounded
to the next lowest multiple of $50.
``(4) Adjustment of tables.--The Secretary shall
adjust the tables prescribed under subsection (f) to
carry out this subsection.''
(b) Adjustment in Computation of Alternative Minimum Tax.--
Paragraph (2) of section 55(a) is amended to read as follows:
``(2) the sum of--
``(A) the regular tax for the taxable year,
plus
``(B) in the case of an individual, 3 percent
of so much of the individual's taxable income
for the taxable year as is taxed at 12
percent.''
(c) Repeal of Reduction of Refundable Tax Credits.--
(1) Subsection (d) of section 24 is amended by
striking paragraph (2) and redesignating paragraph (3)
as paragraph (2).
(2) Section 32 is amended by striking subsection (h).
(d) Conforming Amendment.--Subclause (II) of section
1(g)(7)(B)(ii) is amended by striking ``15 percent'' and
inserting ``12 percent''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2000.
(f) Protection of Social Security and Medicare.--The amounts
transferred to any trust fund under the Social Security Act
shall be determined as if this Act had not been enacted.
SEC. 102. MODIFICATIONS TO EARNED INCOME TAX CREDIT.
(a) Increases in Percentages and Amounts Used to Determine
Credit; Marriage Penalty Relief.--
(1) In general.--Subsection (b) of section 32 is
amended to read as follows:
``(b) Percentages and Amounts.--
``(1) Percentages.--The credit percentage, the
initial phaseout percentage, and the final phaseout
percentage shall be determined as follows:
``In the case of an eligible The initial phaseout The final phaseout
individual with: The credit percentage is: percentage is: percentage is:
1 qualifying child............... 34 15.98 18.98
2 or more qualifying children.... 40 21.06 24.06
No qualifying children........... 7.65 7.65 7.65
``(2) Amounts.--
``(A) In general.--The earned income amount
and the initial phaseout amount shall be
determined as follows:
``In the case of an eligible The earned income The initial phaseout
individual with: amount is: amount is:
1 qualifying child.......... $8,140 $13,470
2 or more qualifying $10,820 $13,470
children...................
No qualifying children...... $4,900 $6,130
In the case of a joint return where there is at
least 1 qualifying child, the initial phaseout
amount shall be $2,500 greater than the amount
otherwise applicable under the preceding
sentence.
``(B) Final phaseout amount.--The final
phaseout amount is $26,000 ($28,500 in the case
of a joint return).''
(2) Modification of computation of phaseout.--
Paragraph (2) of section 32(a) is amended to read as
follows:
``(2) Phaseout of credit.--The amount of the credit
allowable to a taxpayer under paragraph (1) for any
taxable year shall be reduced (but not below zero) by
the sum of--
``(A) the initial phaseout percentage of so
much of the total income (or, if greater, the
earned income) of the taxpayer for the taxable
year as exceeds the initial phaseout amount but
does not exceed the final phaseout amount, plus
``(B) the final phaseout percentage of so
much of the total income (or, if greater, the
earned income) of the taxpayer for the taxable
year as exceeds the final phaseout amount.''
(3) Total income.--Paragraph (5) of section 32(c) is
amended to read as follows:
``(5) Total income.--The term `total income' means
adjusted gross income determined without regard to--
``(A) the deductions referred to in
paragraphs (6), (7), (9), (10), (15), (16), and
(17) of section 62(a),
``(B) the deduction allowed by section
162(l), and
``(C) the deduction allowed by section
164(f).''
(4) Conforming amendments.--
(A) Subsection (j) of section 32 is amended
to read as follows:
``(j) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2002, each of the dollar amounts in
subsection (b)(2) 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 2001'
for `calendar year 1992' in subparagraph (B)
thereof.
``(2) Rounding.--If any dollar amount, after being
increased under paragraph (1), is not a multiple of
$10, such dollar amount shall be rounded to the nearest
multiple of $10.''
(B) Subparagraph (C) of section 32(c)(1) is
amended by striking ``modified adjusted gross
income'' and inserting ``total income''.
(C) Paragraph (2) of section 32(f) is amended
to read as follows:
``(2) Requirements for tables.--
``(A) In general.--The provisions of
subsection (a)(1) and the provisions of
subsection (a)(2) shall be reflected in
separate tables prescribed under paragraph (1).
``(B) Subsection (a)(1) table.--The tables
prescribed under paragraph (1) to reflect the
provisions of subsection (a)(1) shall have
income brackets of not greater than $50 each
for earned income between $0 and the earned
income amount.
``(C) Subsection (a)(2) table.--The tables
prescribed under paragraph (1) to reflect the
provisions of subsection (a)(2) shall have
income brackets of not greater than $50 each
for total income (or, if greater, the earned
income) above the initial phaseout threshold.''
(b) Repeal of Denial of Credit Where Investment Income.--
Section 32 is amended by striking subsection (i).
(c) Earned Income To Include Only Amounts Includible in Gross
Income.--
(1) In general.--Section 32(c)(2)(A)(i) (defining
earned income) is amended by inserting ``, but only if
such amounts are includible in gross income for the
taxable year'' after ``other employee compensation''.
(2) Conforming amendment.--Section 32(c)(2)(B) is
amended by striking ``and'' at the end of clause (iv),
by striking the period at the end of clause (v) and
inserting ``, and'', and by adding at the end the
following new clause:
``(vi) the requirement under
subparagraph (A)(i) that an amount be
includible in gross income shall not
apply if such amount is exempt from tax
under section 7873 or is derived
directly from restricted and allotted
land under the Act of February 8, 1887
(commonly known as the Indian General
Allotment Act) (25 U.S.C. 331 et seq.)
or from land held under Acts or
treaties containing an exception
provision similar to the Indian General
Allotment Act.''
(d) Modification of Joint Return Requirement.--Subsection (d)
of section 32 is amended to read as follows:
``(d) Married Individuals.--
``(1) In general.--If the taxpayer is married at the
close of the taxable year, the credit shall be allowed
under subsection (a) only if the taxpayer and his
spouse file a joint return for the taxable year.
``(2) Marital status.--For purposes of paragraph (1),
an individual legally separated from his spouse under a
decree of divorce or of separate maintenance shall not
be considered as married.
``(3) Certain married individuals living apart.--For
purposes of paragraph (1), if--
``(A) an individual --
``(i) is married and files a separate
return, and
``(ii) has a qualifying child who is
a son, daughter, stepson, or
stepdaughter of such individual, and
``(B) during the last 6 months of such
taxable year, such individual and such
individual's spouse do not have the same
principal place of abode,
such individual shall not be considered as married.''
(e) Expansion of Mathematical Error Authority.--Paragraph (2)
of section 6213(g) is amended by striking ``and'' at the end of
subparagraph (K), by striking the period at the end of
subparagraph (L) and inserting ``, and'', and by inserting
after subparagraph (L) the following new subparagraph:
``(M) the entry on the return claiming the
credit under section 32 with respect to a child
if, according to the Federal Case Registry of
Child Support Orders established under section
453(h) of the Social Security Act, the taxpayer
is a noncustodial parent of such child.''
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
TITLE II--MARRIAGE PENALTY RELIEF
SEC. 201. MARRIAGE PENALTY RELIEF.
(a) Standard Deduction.--
(1) In general.--Paragraph (2) of section 63(c)
(relating to standard deduction) is amended--
(A) by striking ``$5,000'' in subparagraph
(A) and inserting ``twice the dollar amount in
effect under subparagraph (C) for the taxable
year'',
(B) by adding ``or'' at the end of
subparagraph (B),
(C) by striking ``in the case of'' and all
that follows in subparagraph (C) and inserting
``in any other case.'', and
(D) by striking subparagraph (D).
(2) Increase allowed as deduction in determining
minimum tax.--Subparagraph (E) of section 56(b)(1) is
amended by adding at the end the following new
sentence: ``The preceding sentence shall not apply to
so much of the standard deduction under subparagraph
(A) of section 63(c)(2) as exceeds the amount which
would be such deduction but for the amendment made by
section 201(a)(1) of the Tax Reduction Act of 2001.
(3) Technical amendments.--
(A) Subparagraph (B) of section 1(f)(6) is
amended by striking ``(other than with'' and
all that follows through ``shall be applied''
and inserting ``(other than with respect to
sections 63(c)(4) and 151(d)(4)(A)) shall be
applied''.
(B) Paragraph (4) of section 63(c) is amended
by adding at the end the following flush
sentence:
``The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2000.