To amend the Internal Revenue Code of 1986 to provide a permanent zero percent capital gains rate for individuals and corporations.

Summary: Amends the Internal Revenue Code to establish, on a permanent basis, a zero percent tax rate for the net capital gains of individuals and corporations for purposes of the regular and alternative minimum tax. Eliminates the terminating date in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (i.e., December 31, 2008) for provisions that reduce the capital gains tax rate for individuals.

SECTION 1. ZERO PERCENT CAPITAL GAINS RATE FOR INDIVIDUALS AND 
              CORPORATIONS.

    (a) Zero Percent Capital Gains Rate for Individuals.--
            (1) In general.--Paragraph (1) of section 1(h) of the 
        Internal Revenue Code of 1986 is amended by striking 
        subparagraph (C), by redesignating subparagraphs (D) and (E) 
        and subparagraphs (C) and (D), respectively, and by amending 
        subparagraph (B) to read as follows:
                    ``(B) 0 percent of the adjusted net capital gain 
                (or, if less, taxable income);''.
            (2) Alternative minimum tax.--Paragraph (3) of section 
        55(b) is amended by striking subparagraph (C), by redesignating 
        subparagraph (D) as subparagraph (C), and by amending 
        subparagraph (B) to read as follows:
                    ``(B) 0 percent of the adjusted net capital gain 
                (or, if less, taxable excess), plus''.
            (3) Repeal of sunset of reduction in capital gains rates 
        for individuals.--Section 303 of the Jobs and Growth Tax Relief 
        Reconciliation Act of 2003 shall not apply to section 301 of 
        such Act.
    (b) Zero Percent Capital Gains Rate for Corporations.--
            (1) In general.--Section 1201 of the Internal Revenue Code 
        of 1986 is amended by redesignating subsection (b) as 
        subsection (c), and by striking subsection (a) and inserting 
        the following new subsections:
    ``(a) General Rule.--If for any taxable year a corporation has a 
net capital gain, then, in lieu of the tax imposed by sections 11, 511, 
821(a) or (c), and 831(a), there is hereby imposed a tax (if such tax 
is less than the tax imposed by such sections) which shall consist of 
the sum of--
            ``(1) a tax computed on the taxable income reduced by the 
        amount of the net capital gain, at the rates and in the manner 
        as if this subsection had not been enacted,
            ``(2) 0 percent of the adjusted net capital gain (or, if 
        less, taxable income),
            ``(3) 25 percent of the excess (if any) of--
                    ``(A) the unrecaptured section 1250 gain (or, if 
                less, the net capital gain (determined without regard 
                to subsection (b)(2))), over
                    ``(B) the excess (if any) of--
                            ``(i) the sum of the amount on which tax is 
                        determined under paragraph (1) plus the net 
                        capital gain, over
                            ``(ii) taxable income, plus
            ``(4) 28 percent of the amount of taxable income in excess 
        of the sum of the amounts on which tax is determined under the 
        preceding paragraphs of this subsection.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) In general.--The terms `adjusted net capital gain' 
        and `unrecaptured section 1250 gain' shall have the respective 
        meanings given such terms in section 1(h).
            ``(2) Dividends taxed at net capital gain.--Except as 
        otherwise provided in this section, the term `net capital gain' 
        has the meaning given such term in section 1(h)(11).''.
            (2) Alternative minimum tax.--Section 55(b) of such Code is 
        amended by adding at the end the following new paragraph:
            ``(4) Maximum rate of tax on net capital gain of 
        corporations.--The amount determined under paragraph (1)(B)(i) 
        shall not exceed the sum of--
                    ``(A) the amount determined under such paragraph 
                computed at the rates and in the same manner as if this 
                paragraph had not been enacted on the taxable excess 
                reduced by the net capital gain, plus
                    ``(B) the amount determined under section 1201.''.
            (3) Technical amendments.--
                    (A) Section 1445(e)(1) of such Code is amended by 
                striking ``35 percent (or, to the extent provided in 
                regulations, 15 percent)'' and inserting ``0 percent''.
                    (B) Section 1445(e)(2) of such Code is amended by 
                striking ``35 percent'' and inserting ``0 percent''.
                    (C) Section 7518(g)(6)(A) of such Code is amended 
                by striking ``15 percent (34 percent in the case of a 
                corporation)'' and inserting ``0 percent''.
                    (D) Section 607(h)(6)(A) of the Merchant Marine 
                Act, 1936 is amended by striking ``15 percent (34 
                percent in the case of a corporation)'' and inserting 
                ``0 percent''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        ending after the date of the enactment of this Act.
            (2) Withholding.--The amendments made by subparagraphs (A) 
        and (B) of subsection (b)(3) shall take apply to dispositions 
        and distributions after the date of the enactment of this Act.