[House Report 107-68]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-68
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PROVIDING FOR CONSIDERATION OF H.R. 1836, ECONOMIC GROWTH AND TAX
RELIEF RECONCILIATION ACT OF 2001
_______
May 15, 2001.--Referred to the House Calendar and ordered to be printed
_______
Mr. Reynolds, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 142]
The Committee on Rules, having had under consideration
House Resolution 142, 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. 1836, the Economic Growth and Tax Relief Reconciliation
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 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. The rule also provides
one motion to recommit with or without instructions.
Finally, the rule provides that upon receipt of a message
from the Senate transmitting H.R. 1836 with Senate amendments
thereto, it shall be in order to consider in the House a motion
offered by the chairman of the Committee on Ways and Means or
his designee that the House disagree to the Senate amendments
and request or agree to a conference with the Senate thereon.
Amendment made in order
Rangel--Amendment in the Nature of a Substitute. Includes a
one-time rebate, payable immediately after enactment, to all
individuals who had income tax liability for taxable year 2000,
up to a maximum of $300 for single taxpayers ($600 for married
couples); individuals with children who have payroll tax
liabilities but not income tax liabilities, would be entitled
to a refund of a portion of their payroll taxes; the refund
would be automatically paid by the IRS without any requirement
for taxpayers to submit claims; for families with children, the
rebate could not exceed the sum of net income tax liability and
payroll tax liability for taxable year 2000. Also creates a new
12% rate bracket for the first $20,000 of taxable income on a
joint return ($10,000 for single returns); adjusts the minimum
tax so that all taxpayers with income tax liability receive the
benefit of the rate reductions; eliminates the interaction of
the minimum tax with certain refundable credits; also includes
a provision that provides that the transfers to the Social
Security and Medicare Trust Funds (based on the income taxation
of Social Security benefits) will not be reduced by reasons of
the rate reductions. Modifies the earned income tax credit by
increasing the amount of earned income eligible for the credit
by $800; addresses the marriage penalty contained in the EITC
by increasing by $2,500 the income level at which the credit
begins to phase out on a joint return; coordinates the EITC
phase out rates with the rate reductions provided in the bill;
dramatically simplifies the EITC by eliminating complicated
income calculations and worksheets resulting in a credit that
would require 3 or 4 lines on a return, all of which would be
based on other information set forth in Form 1040. Creates a
standard deduction for married couples twice the standard
available to single individuals.
text of amendment made in order under the rule
1. 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.
(d) Table of Contents.--
Sec. 1. Short title.
TITLE I--REFUND OF 2000 INDIVIDUAL INCOME TAXES
Sec. 101. Refund of 2000 individual income taxes.
TITLE II--INDIVIDUAL INCOME TAX RATE REDUCTIONS; EXPANSION OF EARNED
INCOME CREDIT ASSISTANCE
Sec. 201. Individual income tax rate reductions.
Sec. 202. Modifications to earned income tax credit.
TITLE III--MARRIAGE PENALTY RELIEF
Sec. 301. Marriage penalty relief.
TITLE I--REFUND OF 2000 INDIVIDUAL INCOME TAXES
SEC. 101. REFUND OF 2000 INDIVIDUAL INCOME TAXES.
(a) In General.--Subchapter B of chapter 65 (relating to
rules of special application) is amended by adding at the end
the following new section:
``SEC. 6428. REFUND OF 2000 INDIVIDUAL INCOME TAXES.
``(a) In General.--Except as otherwise provided in this
section, each individual shall be treated as having made a
payment against the tax imposed by chapter 1 for such
individual's first taxable year beginning in 2000 in an amount
equal to 100 percent of the amount of such individual's net
Federal tax liability for such taxable year.
``(b) Maximum Payment.--The amount treated as paid by reason
of this section shall not exceed $300 ($600 in the case of a
married couple filing a joint return).
``(c) Net Federal Tax Liability.--For purposes of this
section--
``(1) In general.--The term `net Federal tax
liability' means the amount equal to the excess (if
any) of--
``(A) the sum of the regular tax liability
(as defined in section 26(b)) plus the tax
imposed by section 55, over
``(B) the sum of the credits allowable under
part IV of subchapter A (other than the credits
allowable subpart C thereof, relating to
refundable credits).
``(2) Families with children.--In the case of a
taxpayer with 1 or more qualifying children (as defined
in section 32) for the taxpayer's first taxable year
beginning in 2000, such taxpayer's net Federal tax
liability for such year shall be the amount determined
under paragraph (1) increased by 7.65 percent of the
taxpayer's taxable earned income for such year. For
purposes of the preceding sentence, the term `taxable
earned income' means earned income as defined in
section 32 but only to the extent includible in gross
income.
``(d) Date Payment Deemed Made.--The payment provided by this
section shall be deemed made on the later of--
``(1) the date prescribed by law (determined without
extensions) for filing the return of tax imposed by
chapter 1 for the taxable year, or
``(2) the date on which the taxpayer files his return
of tax imposed by chapter 1 for the taxable year.
``(e) Certain Persons Not Eligible.--This section shall not
apply to--
``(1) any estate or trust, and
``(2) any nonresident alien individual.''.
(b) Clerical Amendment.--The table of sections for subchapter
B of chapter 65 is amended by adding at the end the following
new item:
``Sec. 6428. Refund of 2000 individual income taxes.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning in 2000.
(d) 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.
TITLE II--INDIVIDUAL INCOME TAX RATE REDUCTIONS; EXPANSION OF EARNED
INCOME CREDIT ASSISTANCE
SEC. 201. 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, 2001--
``(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, the initial bracket amount is--
``(A) $20,000 in the case of subsection (a),
``(B) 80 percent of the dollar amount in
subparagraph (A) in the case of subsection (b),
and
``(C) 50 percent of the dollar amount in
subparagraph (B) in the case of subsections (c)
and (d).
``(3) Inflation adjustment.--
``(A) In general.--In the case of any taxable
year beginning in a calendar year after 2002,
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 2001' 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, 2001.
(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. 202. 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 $11,120 $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 III--MARRIAGE PENALTY RELIEF
SEC. 301. 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).''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2000.