To spur job growth by reducing individual capital gains rates and to make permanent the Economic Growth and Tax Relief Act of 2001.

Summary: Tax Relief Improvement Act of 2001 - Amends the Internal Revenue Code (IRC) to reduce individual capital gains tax rates.Amends the Economic Growth and Tax Relief Reconciliation Act of 2001 to repeal title IX (Compliance with Congressional Budget Act).Makes permanent IRC provisions relating to: (1) the deduction for higher education expenses; (2) the nonrefundable credit to certain individuals for elective deferrals and IRA contributions; and (3) the increase in the alternative minimum tax exemption.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Relief Improvement Act of 
2001''.

SEC. 2. REDUCED CAPITAL GAINS RATE FOR INDIVIDUALS.

    (a) In General.--Subsection (h) of section 1 of the Internal 
Revenue Code of 1986 (relating to maximum capital gains rate) is 
amended to read as follows:
    ``(h) Maximum Capital Gains Rate.--
            ``(1) In general.--If a taxpayer has a net capital gain for 
        any taxable year, the tax imposed by this section for such 
        taxable year shall not exceed the sum of--
                    ``(A) a tax computed at the rates and in the same 
                manner as if this subsection had not been enacted on 
                taxable income reduced by the net capital gain,
                    ``(B) 7.5 percent of so much of the taxpayer's net 
                capital gain (or, if less, taxable income) as does not 
                exceed the excess (if any) of--
                            ``(i) the amount of taxable income which 
                        would (without regard to this paragraph) be 
                        taxed at a rate of 15 percent or less, over
                            ``(ii) the amount on which tax is 
                        determined under subparagraph (A), plus
                    ``(C) 15 percent of the taxpayer's net capital gain 
                (or, if less, taxable income) in excess of the amount 
                of capital gain on which tax is determined under 
                subparagraph (B).
            ``(2) Net capital gain taken into account as investment 
        income.--For purposes of this subsection, the net capital gain 
        for any taxable year shall be reduced (but not below zero) by 
        the amount which the taxpayer elects to take into account as 
        investment income under section 163(d)(4)(B)(iii).''
    (b) Minimum Tax.--
            (1) In general.--Subparagraph (A) of section 55(b)(1) of 
        such Code is amended by redesignating clauses (ii) and (iii) as 
        clauses (iii) and (iv), respectively, and by inserting after 
        clause (i) the following new clause:
                            ``(ii) Maximum rate of tax on net capital 
                        gain.--The amount determined under the first 
                        sentence of clause (i) shall not exceed the sum 
                        of--
                                    ``(I) the amount determined under 
                                such first sentence computed at the 
                                rates and in the same manner as if this 
                                clause had not been enacted on the 
                                taxable excess reduced by the net 
                                capital gain, plus
                                    ``(II) a tax of 15 percent of the 
                                lesser of the net capital gain or the 
                                taxable excess.''
            (2) Conforming amendment.--Clause (iii) of section 
        55(a)(1)(A) of such Code (as redesignated by paragraph (1)) is 
        amended by striking ``clause (i)'' and inserting ``this 
        subparagraph''.
    (c) Conforming Amendments.--
            (1) Section 1202 of such Code (relating to 50-percent 
        exclusion for gain from certain small business stock) is hereby 
        repealed.
            (2)(A) Subsection (a) of section 57 of such Code is amended 
        by striking paragraph (7).
            (B) Subclause (II) of section 53(d)(1)(B)(ii) of such Code 
        is amended by striking ``, (5), and (7)'' and inserting ``and 
        (5)''.
            (3) Paragraph (1) of section 170(e) of such Code is amended 
        by striking ``the amount of gain'' in the material following 
        subparagraph (B)(ii) and inserting ``50 percent (80 percent in 
        the case of a corporation) of the amount of gain''.
            (4) Paragraph (2) of section 172(d) of such Code is amended 
        to read as follows:
            ``(2) Capital gains and losses of taxpayers other than 
        corporations.--In the case of a taxpayer other than a 
corporation, the amount deductible on account of losses from sales or 
exchanges of capital assets shall not exceed the amount includible on 
account of gains from sales or exchanges of capital assets.''
            (5) Paragraph (4) of section 642(c) of such Code is amended 
        by striking the first sentence.
            (6) Paragraph (3) of section 643(a) of such Code is amended 
        by striking the last sentence.
            (7) Paragraph (4) of section 691(c) of such Code is amended 
        by striking ``1202,''.
            (8) The second sentence of section 871(a)(2) of such Code 
        is amended by striking ``such gains and losses shall be 
        determined without regard to section 1202 and''.
            (9) Subsection (a) of section 1044 of such Code is amended 
        by striking the last sentence.
            (10) Paragraph (1) of section 1445(e) of such Code is 
        amended by striking ``28 percent'' and inserting ``15 
        percent''.
            (11) Section 6652 of such Code is amended by striking 
        subsection (k) and by redesignating subsections (l) and (m) as 
        subsections (k) and (l), respectively.
            (12)(A) The second sentence of section 7518(g)(6)(A) of 
        such Code is amended by striking ``28 percent'' and inserting 
        ``15 percent''.
            (B) The second sentence of section 607(h)(6)(A) of the 
        Merchant Marine Act, 1936 is amended by striking ``28 percent'' 
        and inserting ``15 percent''.
            (13) The table of sections for part I of subchapter P of 
        chapter 1 of such Code is amended by striking the item relating 
        to section 1202.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2001.
            (2) Withholding.--The amendment made by subsection (c)(10) 
        shall apply to amounts paid after December 31, 2001.

SEC. 3. REPEAL OF SUNSETS OF ECONOMIC GROWTH AND TAX RELIEF 
              RECONCILIATION ACT OF 2001.

    (a) In General.--Title IX of the Economic Growth and Tax Relief 
Reconciliation Act of 2001 (Public Law 107-16) is hereby repealed.
    (b) Deduction for Higher Education Expenses Made Permanent.--
            (1) In general.--Section 222 of the Internal Revenue Code 
        of 1986 is amended by striking subsection (e).
            (2) Conforming amendment.--Subparagraph (B) of section 
        222(b)(2) of such Code is amended--
                    (A) by striking ``or 2005'' and inserting ``or 
                thereafter'', and
                    (B) by striking ``and 2005'' in the heading and 
                inserting ``and thereafter''.
    (c) Nonrefundable Credit to Certain Individuals for Elective 
Deferrals and IRA Contributions Made Permanent.--Section 25B of such 
Code is amended by striking subsection (g).
    (d) Increase in Alternative Minimum Tax Exemption Made Permanent.--
            (1) Subparagraph (A) of section 55(d)(1) of such Code 
        (relating to exemption amount for taxpayers other than 
        corporations) is amended by striking ``$45,000 ($49,000 in the 
        case of taxable years beginning in 2001, 2002, 2003, and 
        2004)'' and inserting ``$49,000''.
            (2) Subparagraph (B) of section 55(d)(1) of such Code 
        (relating to exemption amount for taxpayers other than 
        corporations) is amended by striking ``$33,750 ($35,750 in the 
        case of taxable years beginning in 2001, 2002, 2003, and 
        2004)'' and inserting ``$35,750''.
    (e) Effective Date.--The amendments made by this section shall take 
effect as if included in the provisions of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 to which they relate.