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H.R.2646
Common Sense Family Tax Relief Act of 1999 (Introduced in the
House)
HR 2646 IH
106th CONGRESS
1st Session
H. R. 2646
To amend the Internal Revenue Code of 1986 to provide common sense
tax relief for families.
IN THE HOUSE OF REPRESENTATIVES
July 29, 1999
Mrs. MCCARTHY of New York introduced the following bill; which was referred
to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide common sense
tax relief for families.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE- This Act may be cited as the `Common Sense Family Tax Relief Act of 1999'.
(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.
TITLE I--TAX RELIEF FOR
FAMILIES
Sec. 101. Elimination of marriage penalty in standard deduction.
Sec. 102. Expansion of dependent care tax credit.
Sec. 103. Credit for employer expenses in providing certain dependent
care services.
Sec. 104. Reduction in individual capital gain tax rates.
Sec. 105. Capital gains tax rates applied to capital gains
of designated settlement funds.
TITLE II--TAX RELIEF FOR
BUSINESSES
Sec. 201. Permanent extension of research credit; increase in
percentages under alternative incremental credit.
Sec. 202. Repeal of
limitation on estate tax deduction for family-owned
business interests.
TITLE III--EDUCATIONAL OPPORTUNITIES
Sec. 301. Elimination of 60-month limit on student loan interest
deduction.
Sec. 302. Credit for information technology training program
expenses.
Sec. 303. Certain credits related to education and children allowed
against alternative minimum tax .
TITLE IV--TAX RELIEF FOR
RETIREMENT SAVINGS
Sec. 401. Increase in deduction for individual retirement plan
savings.
Sec. 402. Adjustment in monthly exempt amount for purposes of the social
security earnings test.
TITLE V--INCENTIVE FOR AFFORDABLE HOUSING
Sec. 501. Increase in State ceiling on low-income housing credit.
TITLE VI--INCENTIVES FOR HEALTH CARE AND LONG-TERM CARE
Sec. 601. Deduction for 100 percent of health insurance costs of
self-employed individuals.
Sec. 602. Credit for taxpayers with long-term care needs.
TITLE I--TAX RELIEF FOR
FAMILIES
SEC. 101. ELIMINATION OF MARRIAGE PENALTY IN STANDARD DEDUCTION.
(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 AMENDMENTS-
(1) 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'.
(2) 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, 1999.
SEC. 102. EXPANSION OF DEPENDENT CARE TAX CREDIT.
(a) IN GENERAL- Paragraph (2) of section 21(a) (relating to expenses for
household and dependent care services necessary for gainful employment) is
amended to read as follows:
`(2) APPLICABLE PERCENTAGE DEFINED- For purposes of paragraph (1), the
term `applicable percentage' means 50 percent reduced (but not below 20
percent) by 1 percentage point for each $1,000 (or fraction thereof) by
which the taxpayer's adjusted gross income for the taxable year exceeds
$30,000.'
(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS- Section 21(e)
(relating to special rules) is amended by adding at the end the following:
`(11) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME PARENTS- Notwithstanding
subsection (d), in the case of any taxpayer with one or more qualifying
individuals described in subsection (b)(1)(A) under the age of 1 at any time
during the taxable year, such taxpayer shall be deemed to have
employment-related expenses with respect to such qualifying individuals in
an amount equal to the greater of--
`(A) the amount of employment-related expenses incurred for such
qualifying individuals for the taxable year (determined under this section
without regard to this paragraph), or
`(B) $125 for each month in such taxable year during which such
qualifying individual is under the age of 1.'.
(c) INFLATION ADJUSTMENT OF DOLLAR AMOUNTS-
(1) Section 21 is amended by redesignating subsection (f) as subsection
(g) and by inserting after subsection (e) the following new
subsection:
`(f) INFLATION ADJUSTMENT- In the case of any taxable year beginning in a
calendar year after 2000, the $30,000 amount contained in subsection (a), the
$2,400 amount in subsection (c), and the $125 amount in subsection (e)(11)(B)
shall be increased by an amount equal to--
`(1) such dollar amount, multiplied by
`(2) the cost-of-living adjustment determined under section 1(f)(3) for
such calendar year by substituting `calendar year 1999' for `calendar year
1992' in subparagraph (B) thereof.
If the increase determined under the preceding sentence is not a multiple
of $50 ($1 in the case of the $60 amount in subsection (e)(11)(B)), such
amount shall be rounded to the next lowest multiple thereof.'
(2) Paragraph (2) of section 21(c) is amended by striking `$4,800' and
inserting `twice the dollar amount applicable under paragraph (1)'.
(3) Paragraph (2) of section 21(d) is amended by striking `less than--'
and all that follows through the end of the first sentence and inserting
`less than 1/12 of the amount which applies under subsection (c) to the
taxpayer for the taxable year.'
(d) CREDIT ALLOWED BASED ON RESIDENCY IN CERTAIN CASES- Subsection (e) of
section 21 is amended by adding at the end the following new paragraph:
`(12) CREDIT ALLOWED BASED ON RESIDENCY IN CERTAIN CASES- In the case of
a taxpayer--
`(A) who does not satisfy the household maintenance test of subsection
(a) for any period, but
`(B) whose principal place of abode for such period is also the
principal place of abode of any qualifying individual, then such taxpayer
shall be treated as satisfying such test for such period but the amount of
credit allowable under this section with respect to such individual shall
be determined by allowing only 1/12 of the limitation under subsection (c)
for each full month that the requirement of subparagraph (B) is
met.'
(e) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after December 31, 1999.
SEC. 103. CREDIT FOR EMPLOYER EXPENSES IN PROVIDING CERTAIN DEPENDENT CARE
SERVICES.
(a) GENERAL RULE- Subpart D of part IV of subchapter A of chapter 1 is
amended by adding at the end the following new section:
`SEC. 45D. EMPLOYER EXPENSES IN PROVIDING DEPENDENT CARE SERVICES.
`(a) GENERAL RULE- For purposes of section 38, the employer day care
center credit determined under this section for the taxable year is the amount
determined under subsection (b) with respect to each qualified day care center
of the taxpayer.
`(b) CREDIT PER FACILITY- For purposes of this section--
`(1) IN GENERAL- The amount determined under this subsection for any
taxable year with respect to any qualified day care facility of the taxpayer
is 50 percent of the excess (if any) of--
`(A) the expenses paid or incurred by the taxpayer during the taxable
year in providing dependent care services at such facility for employees,
over
`(B) the aggregate amount received or accrued during the taxable year
by the employer for such services.
`(2) DEPRECIATION ALLOWANCES- For purposes of paragraph (1),
depreciation allowances under section 167 shall be treated as
expenses.
`(c) QUALIFIED DAY CARE CENTER- For purposes of this section, the term
`qualified day care center' means any day care center--
`(1) which is operated by the taxpayer exclusively for purposes of
providing dependent care services to employees,
`(2) which is located on the business premises of the taxpayer or on a
site adjacent to such premises,
`(3) which complies with all applicable laws and regulations of a State
or unit of local government, and
`(4) the operation of which is part of a dependent care assistance
program (as defined in section 129(d)).'
(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section
38 is amended by striking `plus' at the end of paragraph (11), by striking the
period at the end of paragraph (12) and inserting `, plus', and by adding at
the end thereof the following new paragraph:
`(13) the employer day care center credit determined under section
45D(a).'
(c) DENIAL OF DOUBLE BENEFIT- Section 280C is amended by adding at the end
thereof the following new subsection:
`(d) CREDIT FOR EMPLOYER DAY CARE CENTER EXPENSES- No deduction shall be
allowed for that portion of the expenses referred to in section 45D(b)(1)(A)
otherwise allowable as a deduction for the taxable year which is equal to the
amount of the credit determined for such taxable year under section
45D(a).'
(d) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by adding at the end the following new
item:
`Sec. 45D. Employer expenses in providing dependent care services.'
(e) EFFECTIVE DATE- The amendments made by this section shall apply to
taxable years beginning after the date of the enactment of this Act.
SEC. 104. REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES.
(1) Sections 1(h)(1)(B) and 55(b)(3)(B) are each amended by striking `10
percent' and inserting `7.5 percent'.
(2) The following sections are each amended by striking `20 percent' and
inserting `15 percent':
(D) The second sentence of section 7518(g)(6)(A).
(E) The second sentence of section 607(h)(6)(A) of the Merchant Marine
Act, 1936.
(3) Sections 1(h)(1)(D) and 55(b)(3)(D) are each amended by striking `25
percent' and inserting `20 percent'.
(b) CONFORMING AMENDMENTS-
(1) Section 311 of the Taxpayer Relief Act of 1997 is amended by
striking subsection (e).
(2) Section 1(h) is amended--
(A) by striking paragraphs (2), (9), and (13),
(B) by redesignating paragraphs (3) through (8) as paragraphs (2)
through (7), respectively, and
(C) by redesignating paragraphs (10), (11), and (12) as paragraphs
(8), (9), and (10), respectively.
(3) Paragraph (3) of section 55(b) is amended by striking `In the case
of taxable years beginning after December 31, 2000, rules similar to the
rules of section 1(h)(2) shall apply for purposes of subparagraphs (B) and
(C).'.
(4) Paragraph (7) of section 57(a) is amended--
(A) by striking `42 percent' and inserting `6 percent', and
(B) by striking the last sentence.
(c) TRANSITIONAL RULES FOR TAXABLE YEARS WHICH INCLUDE JULY 1, 1999- For
purposes of applying section 1(h) of the Internal Revenue Code of 1986 in the
case of a taxable year which includes July 1, 1999--
(1) The amount of tax
determined under subparagraph (B) of section 1(h)(1) of such Code shall be
the sum of--
(A) 7.5 percent of the lesser of--
(i) the net capital gain taking into account only gain or loss
properly taken into account for the portion of the taxable year on or
after such date (determined without regard to collectibles gain or loss,
gain described in section (1)(h)(6)(A)(i) of such Code, and section 1202
gain), or
(ii) the amount on which a tax is determined under such
subparagraph (without regard to this subsection), plus
(B) 10 percent of the excess (if any) of--
(i) the amount on which a tax is determined under such
subparagraph (without regard to this subsection), over
(ii) the amount on which a tax is determined under
subparagraph (A).
(2) The amount of tax
determined under subparagraph (C) of section (1)(h)(1) of such Code shall be
the sum of--
(A) 15 percent of the lesser of--
(i) the excess (if any) of the amount of net capital gain determined
under subparagraph (A)(i) of paragraph (1) of this subsection over the
amount on which a tax is
determined under subparagraph (A) of paragraph (1) of this subsection,
or
(ii) the amount on which a tax is determined under such
subparagraph (C) (without regard to this subsection), plus
(B) 20 percent of the excess (if any) of--
(i) the amount on which a tax is determined under such
subparagraph (C) (without regard to this subsection), over
(ii) the amount on which a tax is determined under
subparagraph (A) of this paragraph.
(3) The amount of tax
determined under subparagraph (D) of section (1)(h)(1) of such Code shall be
the sum of--
(A) 20 percent of the lesser of--
(i) the amount which would be determined under section 1(h)(6)(A)(i)
of such Code taking into account only gain properly taken into account
for the portion of the taxable year on or after such date,
or
(ii) the amount on which a tax is determined under such
subparagraph (D) (without regard to this subsection), plus
(B) 25 percent of the excess (if any) of--
(i) the amount on which a tax is determined under such
subparagraph (D) (without regard to this subsection), over
(ii) the amount on which a tax is determined under
subparagraph (A) of this paragraph.
(4) For purposes of applying section 55(b)(3) of such Code, rules
similar to the rules of paragraphs (1), (2), and (3) of this subsection
shall apply.
(5) In applying this subsection with respect to any pass-thru entity,
the determination of when gains and loss are properly taken into account
shall be made at the entity level.
(6) Terms used in this subsection which are also used in section 1(h) of
such Code shall have the respective meanings that such terms have in such
section.
(1) IN GENERAL- Except as otherwise provided by this subsection, the
amendments made by this section shall apply to taxable years ending after
June 30, 1999.
(2) WITHHOLDING- The amendment made by subsection (a)(2)(C) shall apply
to amounts paid after the date of the enactment of this Act.
(3) SMALL BUSINESS STOCK- The amendments made by subsection (b)(4) shall
apply to dispositions on or after July 1, 1999.
SEC. 105. CAPITAL GAINS TAX
RATES APPLIED TO CAPITAL GAINS OF DESIGNATED SETTLEMENT FUNDS.
(a) IN GENERAL- Paragraph (1) of section 468B(b) (relating to taxation of
designated settlement funds) is amended by inserting `(subject to section
1(h))' after `maximum rate'.
(b) EFFECTIVE DATE- The amendment made by this section shall apply to
taxable years beginning after December 31, 1999.
TITLE II--TAX RELIEF FOR
BUSINESSES
SEC. 201. PERMANENT EXTENSION OF RESEARCH CREDIT; INCREASE IN PERCENTAGES
UNDER ALTERNATIVE INCREMENTAL CREDIT.
(a) CREDIT MADE PERMANENT-
(1) IN GENERAL- Section 41 (relating to credit for increasing research
activities) is amended by striking subsection (h).
(2) CONFORMING AMENDMENT- Paragraph (1) section 45C(b) is amended by
striking subparagraph (D).
(3) EFFECTIVE DATE- The amendments made by this subsection shall apply
to amounts paid or incurred after June 30, 1999.
(b) INCREASE IN PERCENTAGES UNDER ALTERNATIVE INCREMENTAL CREDIT-
(1) IN GENERAL- Subparagraph (A) of section 41(c)(4) is amended--
(A) by striking `1.65 percent' and inserting `2.65 percent',
(B) by striking `2.2 percent' and inserting `3.2 percent',
and
(C) by striking `2.75 percent' and inserting `3.75 percent'.
(2) EFFECTIVE DATE- The amendments made by this subsection shall apply
to taxable years beginning after June 30, 1999.
SEC. 202. REPEAL OF LIMITATION
ON ESTATE TAX DEDUCTION FOR FAMILY-OWNED BUSINESS
INTERESTS.
(a) IN GENERAL- Subsection (a) of section 2057 (relating to family-owned
business interests) is amended to read as follows:
`(a) ALLOWANCE OF DEDUCTION- For purposes of the tax imposed by section 2001, in the
case of an estate of a decedent
to which this section applies, the value of the taxable estate shall be determined by
deducting from the value of the gross estate the adjusted value of the
qualified family-owned business interests of the decedent which are described
in subsection (b)(2).'
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