Taxpayer Freedom and Fairness Act

Summary: Taxpayer Freedom and Fairness Act - Amends the Internal Revenue Code to reduce the 15 percent individual income tax rate to ten percent over five years. 
Authorizes a married couple to file a combined return under which: (1) each spouse is taxed using the rates applicable to unmarried individuals; but (2) their joint tax liability shall be for the aggregate amount resulting from applying the separate rates to each taxable income.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Taxpayer Freedom and Fairness Act''.

SEC. 2. PHASED REDUCTION OF 15 PERCENT INDIVIDUAL INCOME TAX RATE TO 10 
              PERCENT.

    (a) In General.--Section 1 of the Internal Revenue Code of 1986 
(relating to tax imposed) is amended--
            (1) by striking ``15%'' each place it appears in the tables 
        in subsections (a) through (e) and inserting ``The applicable 
        rate'', and
            (2) by adding at the end the following:
    ``(i) Applicable Rate.--For purposes of this section, the 
applicable rate for any taxable year shall be determined in accordance 
with the following table:

``In the case of any taxable year   The applicable rate is:
        beginning in--
    1999..........................................          14 percent 
    2000..........................................          13 percent 
    2001..........................................          12 percent 
    2002..........................................          11 percent 
    2003 and thereafter...........................       10 percent.''.
    (b) Conforming Amendments.--
            (1) Section 1(f)(2) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by inserting ``except as provided in subsection 
                (i),'' before ``by not changing'' in subparagraph (B), 
                and
                    (B) by inserting ``and the adjustment in rates 
                under subsection (i)'' after ``rate brackets'' in 
                subparagraph (C).
            (2) Section 1(g)(7)(B)(ii)(II) of such Code is amended by 
        striking ``15 percent'' and inserting ``the applicable rate''.
            (3) Section 3402(p)(2) of such Code is amended by striking 
        ``15 percent'' and inserting ``the applicable rate in effect 
        under section 1(i) for the taxable year''.
    (c) New Tables.--Not later than 15 days after the date of enactment 
of this Act, the Secretary of the Treasury--
            (1) shall prescribe tables for taxable years beginning in 
        1999 which shall reflect the amendments made by this section 
        and which shall apply in lieu of the tables prescribed under 
        sections 1(f)(1) and 3(a) of the Internal Revenue Code of 1986 
        for such taxable years, and
            (2) shall modify the withholding tables and procedures for 
        such taxable years under section 3402(a)(1) of such Code to 
        take effect as if the reduction in the rate of tax under 
        section 1 of such Code (as amended by this section) was 
        attributable to such a reduction effective on such date of 
        enactment.
    (d) Section 15 Not To Apply.--No amendment made by this section 
shall be treated as a change in a rate of tax for purposes of section 
15 of the Internal Revenue Code of 1986.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 3. COMBINED RETURN TO WHICH UNMARRIED RATES APPLY.

    (a) In General.--Subpart B of part II of subchapter A of chapter 61 
of the Internal Revenue Code of 1986 (relating to income tax returns) 
is amended by inserting after section 6013 the following:

``SEC. 6013A. COMBINED RETURN WITH SEPARATE RATES.

    ``(a) General Rule.--A husband and wife may make a combined return 
of income taxes under subtitle A under which--
            ``(1) a separate taxable income is determined for each 
        spouse by applying the rules provided in this section, and
            ``(2) the tax imposed by section 1 is the aggregate amount 
        resulting from applying the separate rates set forth in section 
        1(c) to each such taxable income.
    ``(b) Determination of Taxable Income.--
            ``(1) In general.--For purposes of subsection (a)(1), the 
        taxable income for each spouse shall be one-half of the taxable 
        income computed as if the spouses were filing a joint return.
            ``(2) Nonitemizers.--For purposes of paragraph (1), if an 
        election is made not to itemize deductions for any taxable 
        year, the basic standard deduction shall be equal to the amount 
        which is twice the basic standard deduction under section 
        63(c)(2)(C) for the taxable year.
    ``(c) Treatment of Credits.--Credits shall be determined (and 
applied against the joint liability of the couple for tax) as if the 
spouses had filed a joint return.
    ``(d) Treatment as Joint Return.--Except as otherwise provided in 
this section or in the regulations prescribed hereunder, for purposes 
of this title (other than sections 1 and 63(c)) a combined return under 
this section shall be treated as a joint return.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out this section.''.
    (b) Unmarried Rate Made Applicable.--So much of subsection (c) of 
section 1 of the Internal Revenue Code of 1986 (relating to tax 
imposed) as precedes the table is amended to read as follows:
    ``(c) Separate or Unmarried Return Rate.--There is hereby imposed 
on the taxable income of every individual (other than a married 
individual (as defined in section 7703) filing a joint return or a 
separate return, a surviving spouse as defined in section 2(a), or a 
head of household as defined in section 2(b)) a tax determined in 
accordance with the following table:''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part II of subchapter A of chapter 61 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 6013 
the following:

                              ``Sec. 6013A. Combined return with 
                                        separate rates.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.