To amend the Federal Election Campaign Act of 1971 to reduce the limitation amounts for contributions to candidates for Federal office and to amend the Internal Revenue Code of 1986 to provide a tax credit for contributions to candidates for public office.

Summary: Amends the Federal Election Campaign Act of 1971 to reduce from: (1) $1,000 to $500 the limitation on contributions by persons other than multicandidate political committees to any candidate for Federal office; and (2) $5,000 to $500 the limitation on contributions by such committees to any such candidate. 
Amends the Internal Revenue Code to provide tax credits for contributors to candidates for public office equal to 50 percent of the annual total of a contributor's political contributions.  Limits tax credits to an annual total of $125 and $250 respectively for individual and joint contributors.  Disallows such tax credits to estates and trusts.

SECTION 1. REDUCTION IN LIMITATION AMOUNTS FOR CONTRIBUTIONS TO 
              CANDIDATES FOR FEDERAL OFFICE.

    (a) Limitation Amount for Contributions by Persons Other Than 
Multicandidate Political Committees.--Section 315(a)(1)(A) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 441a(a)(1)(A)) is 
amended by striking out ``$1,000'' and inserting in lieu thereof 
``$500''.
    (b) Limitation Amount for Contributions by Multicandidate Political 
Committees.--Section 315(a)(2)(A) of the Federal Election Campaign Act 
of 1971 (2 U.S.C. 441a(a)(2)(A)) is amended by striking out ``$5,000'' 
and inserting in lieu thereof ``$500''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
shall apply with respect to elections taking place after December 31, 
1990.

SEC. 2. INCOME TAX CREDIT FOR CONTRIBUTIONS TO CANDIDATES FOR PUBLIC 
              OFFICE.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 23 the 
following new section:

``SEC. 24. CONTRIBUTIONS TO CANDIDATES FOR PUBLIC OFFICE.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed, subject to the limitations in subsection (b), as a credit 
against the tax imposed by this chapter for the taxable year, an amount 
equal to 50 percent of all political contributions, payment of which is 
made by the taxpayer within the taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by subsection (a) 
        for a taxable year shall not exceed $125 ($250 in the case of a 
        joint return under section 6013).
            ``(2) Verification.--A credit shall be allowed by 
        subsection (a) with respect to any political contribution only 
        if the contribution is verified in the manner prescribed by the 
        Secretary in regulations.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Political contribution.--The term `political 
        contribution' means a contribution or gift of money to--
                    ``(A) an individual who is a candidate for 
                nomination or election to any Federal, State, or local 
                elective public office in any primary, general, or 
                special election, for use by the individual to further 
                the candidacy of the individual for nomination or 
                election to the office,
                    ``(B) any committee, association, or organization 
                (whether or not incorporated) organized and operated 
                exclusively for the purpose of influencing, or 
                attempting to influence, the nomination or election of 
                1 or more individuals who are candidates for nomination 
                or election to any Federal, State, or local elective 
                public office, for use by the committee, association, 
                or organization to further the candidacy of the 
                individual or individuals for nomination or election to 
                the office,
                    ``(C) the national committee of a national 
                political party,
                    ``(D) the State committee of a national political 
                party as designated by the national committee of the 
                party, or
                    ``(E) a local committee of a national political 
                party as designated by the State committee of the party 
                designated under subparagraph (D).
            ``(2) Candidate.--The term `candidate' means, with respect 
        to any Federal, State, or local elective public office, an 
        individual who--
                    ``(A) publicly announces before the close of the 
                calendar year following the calendar year in which the 
                contribution or gift is made that the individual is a 
                candidate for nomination or election to the office, and
                    ``(B) meets the qualifications prescribed by law to 
                hold the office.
            ``(3) National political party.--The term `national 
        political party' means--
                    ``(A) in the case of contributions made during a 
                taxable year of the taxpayer in which the electors of 
                President and Vice President are chosen, a political 
                party presenting candidates or electors for such 
                offices on the official election ballot of 10 or more 
                States, or
                    ``(B) in the case of contributions made during any 
                other taxable year of the taxpayer, a political party 
                which met the qualifications described in subparagraph 
                (A) in the last preceding election of a President and 
                Vice President.
            ``(4) State and local.--The term `State' means the various 
        States and the District of Columbia. The term `local' means a 
        political subdivision or part thereof, or 2 or more political 
        subdivisions or parts thereof, of a State.
    ``(d) Cross References.--

                                ``(1) For disallowance of credits to 
estates and trusts, see section 642(j).
                                ``(2) For treatment of Indian tribal 
governments as States (and the subdivisions of Indian tribal 
governments as political subdivisions of States), see section 7871.''
    (b) Conforming Amendments.--
            (1) Section 642 of such Code (relating to special rules for 
        credits and deductions) is amended by adding at the end the 
        following new subsection:
    ``(j) Political Contribution Credit.--An estate or trust shall not 
be allowed the credit against tax for contributions to candidates for 
public office provided by section 24.''
            (2) Paragraph (6) of section 7871(a) of such Code (relating 
        to Indian tribal governments treated as States for certain 
        purposes) is amended by redesignating subparagraphs (A) through 
        (D) as subparagraphs (B) through (E), respectively, and by 
        inserting before such subparagraph (B) the following new 
        subparagraph:
                    ``(A) section 24(c)(4) (defining State for purposes 
                of credit for contributions to candidates for public 
                office),''.
            (3) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 23 the following new item:

                              ``Sec. 24. Contributions to candidates 
                                        for public office.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.