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H.R.2350
American Values Tax Savings Plan for the 21st Century (Introduced in
the House)
HR 2350 IH
106th CONGRESS
1st Session
H. R. 2350
To amend the Internal Revenue Code of 1986 to repeal taxes on American
Values.
IN THE HOUSE OF REPRESENTATIVES
June 24, 1999
Mr. SAM JOHNSON of Texas (for himself, Mr. MCINTOSH, Mr. DOOLITTLE, Mr.
ISTOOK, Mr. BURTON of Indiana, Mr. HILLEARY, Mr. HOSTETTLER, Mrs. CHENOWETH, Mr.
GRAHAM, Mr. BARTLETT of Maryland, Mr. TANCREDO, Mr. PITTS, Mr. DICKEY, Mr. JONES
of North Carolina, Mr. SUNUNU, Mr. HANSEN, Mr. SOUDER, Mr. WELDON of Florida,
Mr. CHABOT, Mrs. CUBIN, Mr. DEMINT, Mr. HERGER, Mr. MCINNIS, Mr. WATKINS, Mr.
HULSHOF, Mr. HAYWORTH, Mr. DELAY, Mr. PAUL, Mr. MANZULLO, Mrs. MYRICK, Mr.
SKEEN, Mr. BILIRAKIS, Mr. HEFLEY, Mr. ROHRABACHER, Mr. MILLER of Florida, Mr.
THORNBERRY, Mr. BONILLA, Mr. COBURN, Mr. POMBO, Mr. ISAKSON, Mr. SESSIONS, Mr.
PICKERING, Mr. RYUN of Kansas, Mr. GREEN of Wisconsin, Mr. RILEY, Mr. SHADEGG,
Mr. RYAN of Wisconsin, Mr. DREIER, Mr. HOBSON, Mr. HYDE, Mr. SPENCE, and Mr.
METCALF) introduced the following bill; which was referred to the Committee on
Ways and Means, and in addition to the Committee on the Budget, for a period to
be subsequently determined by the Speaker, in each case for consideration of
such provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to repeal taxes on American
Values.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `American Values Tax Savings Plan for the 21st
Century'.
(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.
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--MARRIAGE PENALTY RELIEF
Sec. 101. Basic standard deduction for married individuals to be twice
the deduction for unmarried individuals.
Sec. 102. Elimination of marriage penalty in individual income tax rates.
TITLE II--PHASEOUT OF ESTATE
AND GIFT TAXES
Sec. 201. Phaseout of estate and gift taxes.
TITLE III--PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL TAXPAYERS
Sec. 301. Phaseout of alternative minimum tax for all taxpayers.
TITLE IV--REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES
Sec. 401. Reduction in individual capital gain tax rates.
TITLE V--INCREASED INCENTIVES FOR RETIREMENT SAVINGS
Sec. 501. Increase in limitation on IRA contributions and indexing of
limitation for inflation.
Sec. 502. Increase in income limitation applicable to conversions, etc.
from traditional IRA to Roth IRA.
TITLE VI--INCENTIVES FOR HEALTH INSURANCE COVERAGE
Sec. 601. 100 percent deduction for health insurance costs of
self-employed individuals.
Sec. 602. Carryover of unused benefits from cafeteria plans and flexible
spending arrangements.
TITLE VII--INCENTIVES FOR EDUCATION
Sec. 701. Exclusion from gross income of education distributions from
qualified State tuition programs.
TITLE VIII--REPEAL OF
TELEPHONE EXCISE TAX
Sec. 801. Repeal of excise
tax on telephone and other
communications services.
Sec. 802. Sense of Congress to repeal Federal Communications
Commission E-rate discount program for schools and libraries.
TITLE IX--EXTENSION OF EXPIRING PROVISIONS
Sec. 901. Research credit.
Sec. 902. Work opportunity credit.
Sec. 903. Subpart F exemption for active financing income.
TITLE X--PAY-GO REFORM
Sec. 1001. Special pay-as-you-go rule.
Sec. 1002. Additional reporting requirement.
TITLE I--MARRIAGE PENALTY RELIEF
SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED INDIVIDUALS TO BE TWICE THE
DEDUCTION FOR UNMARRIED INDIVIDUALS.
(a) IN GENERAL- Paragraph (2) of section 63(c) (relating to standard
deduction) is amended--
(1) by striking `$5,000' in subparagraph (A) and inserting `twice the
dollar amount in effect under subparagraph (C) for the taxable year',
(2) by adding `or' at the end of subparagraph (B),
(3) by striking `in the case of' and all that follows in subparagraph
(C) and inserting `in any other case.', and
(4) by striking subparagraph (D).
(b) TECHNICAL AMENDMENT- 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 sections 63(c)(4) and 151(d)(4)(A)) shall be
applied'.
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 102. ELIMINATION OF MARRIAGE PENALTY IN INDIVIDUAL INCOME TAX RATES.
(a) IN GENERAL- Subsection (f) of section 1 (relating to tax imposed) is amended by adding at
the end the following new paragraph:
`(8) ELIMINATION OF MARRIAGE PENALTY- In prescribing the table under
paragraph (1) which applies in lieu of the table contained in subsection (a)
with respect to taxable years beginning in a calendar year after 2004, the
minimum and maximum dollar amounts for each rate bracket shall be twice the
minimum and maximum dollar amounts (respectively) prescribed by the
Secretary under this subsection for the comparable rate bracket under
subsection (c) for such taxable years. The preceding sentence shall apply in
lieu of applying paragraph (2)(A) to the table contained in subsection
(a).'
(b) TECHNICAL AMENDMENTS-
(1) Subparagraph (A) of section 1(f)(2) is amended by inserting `except
as provided in paragraph (8),' before `by increasing'.
(2) The heading for subsection (f) of section 1 is amended by inserting
`ELIMINATION OF MARRIAGE PENALTY AFTER 2004;' before `ADJUSTMENTS'.
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 2004.
TITLE II--PHASEOUT OF ESTATE AND GIFT TAXES
SEC. 201. PHASEOUT OF ESTATE
AND GIFT TAXES.
(a) REPEAL OF ESTATE AND GIFT TAXES- Subtitle B
(relating to estate and gift
taxes) is repealed effective with respect to estates of decedents dying, and
gifts made, after December 31, 2009.
(b) PHASEOUT OF TAX -
Subsection (c) of section 2001 (relating to imposition and rate of tax ) is amended by adding at the end
the following new paragraph:
`(3) PHASEOUT OF TAX - In
the case of estates of decedents dying, and gifts made, during any calendar
year after 1999 and before 2010--
`(A) IN GENERAL- The tentative tax under this subsection shall be
determined by using a table prescribed by the Secretary (in lieu of using
the table contained in paragraph (1)) which is the same as such table;
except that--
`(i) each of the rates of tax shall be reduced (but not
below zero) by the number of percentage points determined under
subparagraph (B), and
`(ii) the amounts setting forth the tax shall be adjusted to the
extent necessary to reflect the adjustments under clause
(i).
`(B) PERCENTAGE POINTS OF REDUCTION-
--The number of
`For calendar year:
--percentage points is:
--5
--10
--15
--20
--25
--30
--35
--40
--45
--50.
`(C) COORDINATION WITH PARAGRAPH (2)- Paragraph (2) shall be applied
by reducing the 55 percent percentage contained therein by the number of
percentage points determined for such calendar year under subparagraph
(B).
`(D) COORDINATION WITH CREDIT FOR STATE DEATH TAXES- Rules similar to
the rules of subparagraph (A) shall apply to the table contained in
section 2011(b) except that the number of percentage points referred to in
subparagraph (A)(i) shall be determined under the following
table:
--The number of
`For calendar year:
--percentage points is:
--1 1/2
--3
--4 1/2
--6
--7 1/2
--9
--10 1/2
--12
--13 1/2
--15.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
estates of decedents dying, and gifts made, after December 31, 1999.
TITLE III--PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL TAXPAYERS
SEC. 301. PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL TAXPAYERS.
(a) REPEAL IN 2004 FOR
NONCORPORATE TAXPAYERS AND IN 2005 FOR CORPORATIONS- Subsection (a) of section
55 (relating to alternative minimum tax imposed) is amended to read as
follows:
`(1) IN GENERAL- There is hereby imposed (in addition to any other tax imposed by this subtitle) a
tax equal to the excess (if
any) of--
`(A) the tentative minimum tax for the taxable year,
over
`(B) the regular tax for
the taxable year.
`(2) TERMINATION- No tax
shall be imposed by this section for any taxable year beginning after
December 31, 2003 (December 31, 2004, in the case of a corporation), and the
tentative minimum tax of any
taxpayer for any taxable year beginning after December 31, 2003 (December
31, 2004, in the case of a corporation) shall be zero for purposes of this
title.'
(b) PHASEOUT OF TAX ON
NONCORPORATE TAXPAYERS-
(1) IN GENERAL- Paragraph (1) of section 55(d) (relating to exemption
amounts) is amended--
(A) by striking `$45,000' in subparagraph (A) and inserting `the
applicable amount',
(B) by striking `$33,750' in subparagraph (B) and inserting ` 3/4 of
the applicable amount', and
(C) by striking `$22,500' in subparagraph (C) and inserting ` 1/2 of
the applicable amount'.
(2) APPLICABLE AMOUNT- Subsection (d) of section 55 is amended by adding
at the end the following new paragraph:
`(4) APPLICABLE AMOUNT- For purposes of paragraph (1), the applicable
amount shall be determined in accordance with the following table:
`For taxable years beginning
--The applicable
--amount is--
2000
--$70,000
2001
-- 95,000
2002
--120,500
2003
--145,000.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
TITLE IV--REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES
SEC. 401. REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES.
(a) IN GENERAL- Subparagraph (C) of section 1(h)(1) (relating to maximum
capital gains rate) is amended by striking `20 percent' and inserting `15
percent (10 percent in the case of taxable years beginning after December 31,
2004)'.
(b) CONFORMING AMENDMENTS-
(1) Paragraph (2) of section 1(h) is amended to read as follows:
`(2) 8 PERCENT RATE FOR QUALIFIED 5-YEAR GAIN OTHERWISE IN 15 PERCENT
BRACKET- In the case of any taxable year beginning after December 31, 2000,
the rate under paragraph (1)(B) shall be 8 percent with respect to so much
of the amount to which the 10-percent rate under paragraph (1)(B) would
otherwise apply as does not exceed qualified 5-year gain, and 10 percent
with respect to the remainder of such amount.'
(2) Section 1(h) is amended by striking paragraph (13).
(3) Subparagraph (C) of section 55(a)(3) is amended by striking `20
percent' and inserting `15 percent (10 percent in the case of taxable years
beginning after December 31, 2004)'.
(4) Paragraph (1) of section 1445(e) is amended by striking `20 percent'
and inserting `15 percent (10 percent in the case of taxable years beginning
after December 31, 2004)'.
(5) Subparagraph (A) of section 7518(g)(6)(A), and section 607(h)(6)(A)
of the Merchant Marine Act, 1936, are each amended by striking `20 percent'
and inserting `15 percent (10 percent in the case of taxable years beginning
after December 31, 2004)'.
(6) Section 311 of the Taxpayer Relief Act of 1997 is amended by
striking subsection (e).
(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall apply to taxable years beginning after December 31,
1999.
(2) WITHHOLDING- The amendment made by subsection (b)(4) shall apply to
amounts paid after December 31, 1999.
TITLE V--INCREASED INCENTIVES FOR RETIREMENT SAVINGS
SEC. 501. INCREASE IN LIMITATION ON IRA CONTRIBUTIONS AND INDEXING OF
LIMITATION FOR INFLATION.
(a) INCREASE IN MAXIMUM AMOUNT OF DEDUCTION- Paragraph (1) of section
219(b) (relating to maximum amount of deduction) is amended to read as
follows:
`(A) IN GENERAL- The amount allowable as a deduction under subsection
(a) to any individual for any taxable year shall not exceed the lesser
of--
`(i) the applicable dollar limitation, or
`(ii) an amount equal to the compensation includible in the
individual's gross income for such taxable year.
`(B) APPLICABLE DOLLAR LIMITATION- For purposes of subparagraph (A),
the applicable dollar limitation shall be determined in accordance with
the following table:
`For taxable years beginning
--The applicable dollar
in calendar year--
--limitation is--
--$2,500
-- 3,000
-- 3,500
-- 4,000
-- 4,500
-- 5,000.'
(b) INFLATION ADJUSTMENTS- Subsection (f) of section 219 is amended by
adding at the end the following new paragraph:
`(8) INFLATION ADJUSTMENT- In the case of taxable years beginning in a
calendar year after 2006, the $5,000 amount set forth in subsection
(b)(1)(B) 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 such calendar year by substituting `calendar year 2005' for `calendar
year 1992' in subparagraph (B) thereof.
If any increase determined under the preceding sentence is not a
multiple of $100, such increase shall be rounded to the nearest multiple of
$100.'
(c) CONFORMING AMENDMENTS-
(1) Section 408(a)(1) is amended by striking `in excess of $2,000 on
behalf of any individual' and inserting `on behalf of any individual in
excess of the applicable dollar limitation in effect for such taxable year
under section 219(b)(1)'.
(2) Section 408(b)(2)(B) is amended by striking `$2,000' and inserting
`the applicable dollar limitation in effect under section 219(b)(1)'.
(3) Section 408(b) is amended by striking `$2,000' in the matter
following paragraph (4) and inserting `the applicable dollar limitation in
effect under section 219(b)(1)'.
(4) Section 408(j) is amended by striking `$2,000'.
(5) Section 408(p)(8) is amended by striking `$2,000' and inserting `the
applicable dollar limitation in effect under section 219(b)(1)'.
(d) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 502. INCREASE IN INCOME LIMITATION APPLICABLE TO CONVERSIONS, ETC. FROM
TRADITIONAL IRA TO ROTH IRA.
(a) IN GENERAL- Clause (i) of section 408A(c)(3)(B) (relating to rollover
from IRA) is amended by striking `$100,000' and inserting `$1,000,000'.
(b) EFFECTIVE DATE- The amendment made by this section shall apply to
taxable years beginning after December 31, 1999.
TITLE VI--INCENTIVES FOR HEALTH INSURANCE COVERAGE
SEC. 601. 100 PERCENT DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EMPLOYED
INDIVIDUALS.
(a) IN GENERAL- Section 162(l)(1) (relating to special rules for health
insurance costs of self-employed individuals) is amended to read as
follows:
`(1) ALLOWANCE OF DEDUCTION- In the case of an individual who is an
employee within the meaning of section 401(c)(1), there shall be allowed as
a deduction under this section an amount equal to the amount paid during the
taxable year for insurance which constitutes medical care for the taxpayer,
the taxpayer's spouse, and dependents.'
(b) CLARIFICATION OF LIMITATIONS ON OTHER COVERAGE- The first sentence of
section 162(l)(2)(B) is amended to read as follows: `Paragraph (1) shall not
apply to any taxpayer for any calendar month for which the taxpayer
participates in any subsidized health plan maintained by any employer (other
than an employer described in section 401(c)(4)) of the taxpayer or the spouse
of the taxpayer.'
(c) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 602. CARRYOVER OF UNUSED BENEFITS FROM CAFETERIA PLANS AND FLEXIBLE
SPENDING ARRANGEMENTS.
(a) IN GENERAL- Section 125 (relating to cafeteria plans) is amended by
redesignating subsections (h) and (i) as subsections (i) and (j),
respectively, and by inserting after subsection (g) the following new
subsection:
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