Tax Rate Reduction Act of 1999

Summary: Tax Rate Reduction Act of 1999 - Amends the Internal Revenue Code to reduce the 15 and 28 percent individual income tax rates to 10 and 23 percent over a ten-year period.

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Tax Rate Reduction 
Act of 1999''.
    (b) Section 15 Not To Apply.--The amendments made by section 2 
shall not be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.

SEC. 2. 5 PERCENTAGE POINT REDUCTION IN 15 AND 28 PERCENT INDIVIDUAL 
              INCOME TAX RATES OVER 10 YEARS.

    (a) In General.--Section 1 of the Internal Revenue Code of 1986 
(relating to tax imposed) is amended by striking subsections (a) 
through (e) and inserting the following:
    ``(a) Married Individuals Filing Joint Returns and Surviving 
Spouses.--There is hereby imposed on the taxable income of--
            ``(1) every married individual (as defined in section 7703) 
        who makes a single return jointly with his spouse under section 
        6013, and
            ``(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:

``If taxable income is:             The tax is:
    Not over $43,050...............
                                        14.5% of taxable income.
    Over $43,050 but not over 
        $104,050.
                                        $6,242.25, plus 27.5% of the 
                                                excess over $43,050
    Over $104,050 but not over 
        $158,550.
                                        $23,017.25, plus 31% of the 
                                                excess over $104,050
    Over $158,550 but not over 
        $283,150.
                                        $39,912.25, plus 36% of the 
                                                excess over $158,550
    Over $283,150..................
                                        $84,768.25, plus 39.6% of the 
                                                excess over $283,150
    ``(b) Heads of Households.--There is hereby imposed on the taxable 
income of every head of a household (as defined in section 2(b)) a tax 
determined in accordance with the following table:

``If taxable income is:             The tax is:
    Not over $34,550...............
                                        14.5% of taxable income.
    Over $34,550 but not over 
        $89,150.
                                        $5,009.75, plus 27.5% of the 
                                                excess over $34,550
    Over $89,150 but not over 
        $144,400.
                                        $20,024.75, plus 31% of the 
                                                excess over $89,150
    Over $144,400 but not over 
        $283,150.
                                        $37,152.25, plus 36% of the 
                                                excess over $144,400
    Over $283,150..................
                                        $87,102.25, plus 39.6% of the 
                                                excess over $283,150
    ``(c) Unmarried Individuals (Other Than Surviving Spouses and Heads 
of Households).--There is hereby imposed on the taxable income of every 
individual (other than a surviving spouse as defined in section 2(a) or 
the head of a household as defined in section 2(b)) who is not a 
married individual (as defined in section 7703) a tax determined in 
accordance with the following table:

``If taxable income is:             The tax is:
    Not over $25,570...............
                                        14.5% of taxable income.
    Over $25,570 but not over 
        $62,450.
                                        $3,707.65, plus 27.5% of the 
                                                excess over $25,570
    Over $62,450 but not over 
        $130,250.
                                        $13,849.65, plus 31% of the 
                                                excess over $62,450
    Over $130,250 but not over 
        $283,150.
                                        $34,867.65, plus 36% of the 
                                                excess over $130,250
    Over $283,150..................
                                        $89,911.65, plus 39.6% of the 
                                                excess over $283,150
    ``(d) Married Individuals Filing Separate Returns.--There is hereby 
imposed on the taxable income of every married individual (as defined 
in section 7703) who does not make a single return jointly with his 
spouse under section 6013, a tax determined in accordance with the 
following table:

``If taxable income is:             The tax is:
    Not over $21,525...............
                                        14.5% of taxable income.
    Over $21,525 but not over 
        $52,025.
                                        $3,121.12, plus 27.5% of the 
                                                excess over $21,525
    Over $52,025 but not over 
        $79,275.
                                        $11,508.62, plus 31% of the 
                                                excess over $52,025
    Over $79,275 but not over 
        $141,575.
                                        $19,956.12, plus 36% of the 
                                                excess over $79,275
    Over $141,575..................
                                        $42,384.12, plus 39.6% of the 
                                                excess over $141,575
    ``(e) Estates and Trusts.--There is hereby imposed on the taxable 
income of--
            ``(1) every estate, and
            ``(2) every trust,
taxable under this subsection a tax determined in accordance with the 
following table:

``If taxable income is:             The tax is:
    Not over $1,750................
                                        14.5% of taxable income.
    Over $1,750 but not over $4,050
                                        $253.75, plus 27.5% of the 
                                                excess over $1,750
    Over $4,050 but not over $6,200
                                        $886.25, plus 31% of the excess 
                                                over $4,050
    Over $6,200 but not over $8,450
                                        $1,552.75, plus 36% of the 
                                                excess over $6,200
    Over $8,450....................
                                        $2,362.75, plus 39% of the 
                                                excess over $8,450
    (b) Additional Reductions After 1999.--
            (1) In general.--Paragraph (7) of section 1(f) of such Code 
        is amended to read as follows:
            ``(7) Phasein of 5 percentage point rate reduction in lower 
        brackets.--In prescribing the tables under paragraph (1) which 
        apply with respect to taxable years beginning in a calendar 
        year after 1999, the corresponding percentages specified for 
        such calendar year in the following table shall be substituted 
        for 14.5% and 27.5%, respectively, in subsections (a), (b), 
        (c), (d), and (e).


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                                                      The corresponding
                                                    percentage shall  be
                          In the case of taxable     substituted for the
                          years  beginning during         following
                              calendar year:            percentages:
                                                   ---------------------
                                                      14.5%      27.5%
------------------------------------------------------------------------
                        2000......................    14.0%      27.0%
                        2001......................    13.5%      26.5%
                        2002......................    13.0%      26.0%
                        2003......................    12.5%      25.5%
                        2004......................    12.0%      25.0%
                        2005......................    11.5%      24.5%
                        2006......................    11.0%      24.0%
                        2007......................    10.5%      23.5%
                        2008 or thereafter........    10.0%     23.0%.''
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            (2) Technical amendments.--
                    (A) Subparagraph (B) of section 1(f)(2) of such 
                Code is amended by inserting ``except as provided in 
                paragraph (7),'' before ``by not changing''.
                    (B) Subparagraph (C) of section 1(f)(2) of such 
                Code is amended by inserting ``and the reductions under 
                paragraph (7) in the rates of tax'' before the period.
                    (C) The heading for subsection (f) of section 1 of 
                such Code is amended by inserting ``Rate Reductions;'' 
                before ``Adjustments''.
                    (D) Subparagraph (B) of section 1(g)(7) of such 
                Code is amended--
                            (i) by striking ``15 percent'' in clause 
                        (ii)(II) and inserting ``the applicable first 
                        bracket percentage'', and
                            (ii) by adding at the end the following 
                        flush sentence:
                ``For purposes of clause (ii), the applicable first 
                bracket percentage is the percentage applicable to the 
                lowest income bracket in the table contained in 
                subsection (c).''
                    (E) Section 1(h) of such Code is amended--
                            (i) by striking ``28 percent'' both places 
                        it appears in paragraphs (1)(A)(ii)(I) and 
                        (1)(B)(i) and inserting ``23 percent'', and
                            (ii) by striking paragraph (13).
                    (F) Section 3402(p)(1)(B) of such Code is amended 
                by striking ``7, 15, 28, or 31 percent'' and inserting 
                ``7 percent, a percentage applicable to any income 
                bracket in the table contained in section 1(c) other 
                than the highest 2 brackets,''.
                    (G) Section 3402(p)(2) of such Code is amended by 
                striking ``15 percent'' and inserting ``the applicable 
                first bracket percentage (as defined in section 
                1(g)(7))''.
                    (H) Section 3402(q)(1) of such Code is amended by 
                striking ``28 percent of such payment.'' and inserting 
                ``the applicable percentage of such payment. For 
                purposes of the preceding sentence, the applicable 
                percentage is the percentage applicable to the next to 
                the lowest income bracket in the table contained in 
                section 1(c).''
    (c) Inflation Adjustment Conforming Amendments.--
            (1) Subsection (f) of section 1 of such Code is amended--
                    (A) by striking ``1993'' in paragraph (1) and 
                inserting ``1999'', and
                    (B) by striking ``1992'' in paragraph (3)(B) and 
                inserting ``1998''.
            (2) The following provisions of such Code are each amended 
        by striking ``1992'' and inserting ``1998'' each place it 
        appears:
                    (A) Section 25A(h).
                    (B) Section 32(j)(1)(B).
                    (C) Section 41(e)(5)(C).
                    (D) Section 59(j)(2)(B).
                    (E) Section 63(c)(4)(B).
                    (F) Section 68(b)(2)(B).
                    (G) Section 135(b)(2)(B)(ii).
                    (H) Section 151(d)(4).
                    (I) Section 220(g)(2).
                    (J) Section 221(g)(1)(B).
                    (K) Section 512(d)(2)(B).
                    (L) Section 513(h)(2)(C)(ii).
                    (M) Section 685(c)(3)(B).
                    (N) Section 877(a)(2).
                    (O) Section 911(b)(2)(D)(ii)(II).
                    (P) Section 2032A(a)(3)(B).
                    (Q) Section 2503(b)(2)(B).
                    (R) Section 2631(c)(1)(B).
                    (S) Section 4001(e)(1)(B).
                    (T) Section 4261(e)(4)(A)(ii).
                    (U) Section 6039F(d).
                    (V) Section 6323(i)(4)(B).
                    (W) Section 6601(j)(3)(B).
                    (X) Section 7430(c)(1).
            (3) Subclause (II) of section 42(h)(6)(G)(i) of such Code 
        is amended by striking ``1987'' and inserting ``1998''.
    (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, 1998.
            (2) Amendments to withholding provisions.--The amendments 
        made by subparagraphs (F), (G), and (H) of subsection (b)(2) 
        shall apply to amounts paid after the date of the enactment of 
        this Act.