SUMMARY AS OF:
1/6/1999--Introduced.
TABLE OF CONTENTS:
Title I: Findings; Need to Replace the Income Tax
Title II: Simplified USA Tax for Individuals
Title III: Simplified USA Tax for Business
Title IV: Deferred Compensation Plans
Title V: Repeal of Estate and Gift Taxes
Title VI: Technical and Administrative Changes; Effective
Dates
Simplified USA Tax Act of 1999 - Title I: Findings; Need to Replace the
Income Tax - Sets forth findings, the main features of the Simplified USA
Tax System, and the concepts and structure of the Simplified USA Tax System.
Title II: Simplified USA Tax for Individuals - Establishes a new
chapter 1 of the Internal Revenue Code (IRC), "Simplified USA Tax for
Individuals."
Establishes tax rates at 15, 25, and 30 percent. Sets forth provisions
defining gross income, exclusions from gross income, alimony and child support
deductions, personal and dependency deductions, the family living allowance, the
homeowner deduction, the education deduction (equal, as a general rule, to the
sum of all qualified education expenses), the philanthropic transfer deduction,
the kiddie tax (concerning taxable income of children), and tax credits
(including allowing a payroll tax credit).
Sets forth provisions concerning a Roth IRA, a deductible IRA, annuities,
endowment contracts, and life insurance contracts. Permits contributions to a
Roth IRA of up to the amount of an individual's adjusted gross income. Provides,
as a general rule, for the exclusion from gross income of Roth IRA
distributions. Sets forth provisions concerning basis, business transactions,
and nonrecognition transactions.
Establishes rules for exclusion from gross income, rules relating to
deductions, and rules for the rental of real estate.
Requires a trust or estate to prepay the Simplified USA Tax for individuals.
Sets the tax rate at 30 percent on the taxable income of a trust or estate when
the taxable income exceeds $3,800. Sets forth rules concerning trusts and
estates, including rules for credits, deductions, trust income, distributions,
beneficiaries, charitable remainder trusts, reversionary interests, and funeral
trusts.
Title III: Simplified USA Tax for Businesses - Renumbers the current
chapter 2 (Tax on Self-Employment Income) of the IRC as chapter 3. Establishes a
new chapter 2, "Simplified USA Tax for Businesses."
States that the tax equals the amount by which the business tax exceeds the
payroll tax credit. Defines the "business tax" as the sum of: (1) 8 percent of
the portion of the gross profits of the business entity for the taxable year
that does not exceed $150,000; and (2) 12 percent of such portion of the gross
profits of the business entity for the taxable year that exceeds $150,000.
Directs the Secretary to prescribe rules under which the gross profits of
business entities under common control are aggregated for purposes of applying
the benefit of the lower rate. States that such rules shall be similar to rules
applicable under IRC sections 1551 (Disallowance of the benefits of the
graduated corporate rates and accumulated credit) and 1561 (Limitations on
certain multiple tax benefits in the case of controlled corporations). Defines
the "payroll tax credit" as a credit for the social security, railroad
retirement, and hospital insurance taxes paid by an employer.
Sets forth subchapters governing: (1) the basic rules for the business tax;
(2) capital contributions, mergers, acquisitions, and distributions; (3)
accounting method rules; (4) land and rental property; (5) insurance and
financial products; (6) financial intermediation and financial institutions; (7)
tax-exempt organizations; (8) cooperatives; (9) sourcing rules; (10) business
conducted in a possession; (11) the payroll tax credit; (12) the import tax (as
a general rule, eleven percent of the customs value of property or services);
and (12) transition, administration, and consolidated returns (permitted, if it
would have been permitted under the IRC provisions governing consolidated
returns and such provisions were applied by treating each business entity as a
corporation and its owners or partners as shareholders).
Repeals chapter 6 (Consolidated Returns) of the IRC.
Title IV: Deferred Compensation Plans - Provides, in general, that
subchapter D (Deferred Compensation) of chapter 1 of the IRC is saved.
Title V: Repeal of Estate and Gift Taxes - Repeals Subtitle B (Estate
and Gift Taxes) of the IRC.
Title VI: Technical and Administrative Changes: Effective Dates -
Renames the IRC the "USA Tax Code." Makes other amendments to the IRC which
reflect the amendments made by this Act.