To amend the Internal Revenue Code of 1986 to allow an income disparity tax credit.

Summary: Adjusting for Income Disparity Act of 2012 - Amends the Internal Revenue Code to allow an individual taxpayer a new tax credit to compensate for income disparity. Sets the amount of such credit at the applicable credit amount ($2,500 to $5,000) reduced by a specified percentage (3 1/3% to 6 2/3%) of the excess of the taxpayer's modified adjusted gross income over a specified threshold ($15,000 to $30,000), based on the number of the taxpayer's dependents.

Accelerates to December 31, 2011 (currently, December 31, 2012), the termination date for the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) and the provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) providing for a reduction in capital gain and dividend tax rates.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Adjusting for Income Disparity Act 
of 2012''.

SEC. 2. INCOME DISPARITY TAX CREDIT.

    (a) In General.--Part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 32 
the following new section:

``SEC. 32A. INCOME DISPARITY CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to income disparity credit amount 
with respect to the taxpayer for the taxable year.
    ``(b) Income Disparity Credit Amount.--For purposes of this 
section--
            ``(1) In general.--The income disparity credit amount shall 
        be an amount equal to the applicable credit amount reduced (but 
        not below zero) by the applicable percentage of so much of the 
        taxpayer's modified adjusted gross income as exceeds the 
        phaseout threshold.
            ``(2) Applicable amount; percentage.--The applicable credit 
        amount, the applicable percentage, and the phaseout threshold 
        shall be determined as follows:


 
                                     The           The           The
  ``In the case of a taxpayer    applicable    applicable     phaseout
             with:                 credit      percentage     threshold
                                 amount is:        is:           is:
 
No dependents.................        $2,500        3\1/3\       $15,000
1 dependent...................        $4,000        5\1/3\       $20,000
2 dependents..................        $4,500             6       $25,000
3 or more dependents..........        $5,000        6\2/3\      $30,000.
 

    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Dependent.--The term `dependent' has the meaning 
        given such term by section 152 (determined without regard to 
        subsections (b)(2) and (d)(1)(B) thereof.)
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income increased 
        by--
                    ``(A) any amount excluded from gross income under 
                section 911, 931, or 933,
                    ``(B) any amount of interest received or accrued by 
                the taxpayer during the taxable year which is exempt 
                from tax,
                    ``(C) an amount equal to the portion of the 
                taxpayer's social security benefits (as defined in 
                section 86(d)) which is not included in gross income 
                under section 86 for the taxable year, and
                    ``(D) any Federal assistance otherwise excluded 
                from gross income.
            ``(3) Married individuals.--In the case of an individual 
        who is married (within the meaning of section 7703), this 
        section shall apply only if a joint return is filed for the 
        taxable year under section 6013.
            ``(4) Rule for excessive investment income.--No credit 
        shall be allowed under subsection (a) for the taxable year if 
        the aggregate amount of disqualified income (as defined in 
        section 32(i)(1)) of the taxpayer for the taxable year exceeds 
        $3,100.
            ``(5) Dependent ineligible.--If an individual is a 
        dependent with respect to a taxpayer for any taxable year of 
        such taxpayer beginning in a calendar year, such individual 
        shall not be allowed a credit under this section for any 
        taxable year of such individual beginning in such calendar 
        year.
            ``(6) Limitation on eligibility of nonresident aliens.--No 
        credit shall be allowed with respect to any individual who is a 
        nonresident alien individual for any portion of the taxable 
        year unless such individual is treated for such taxable year as 
        a resident of the United States for purposes of this chapter by 
        reason of an election under subsection (g) or (h) of section 
        6013.
            ``(7) Principal place of abode in united states.--
                    ``(A) In general.--No credit shall be allowed with 
                respect to an individual for a taxable year, unless 
                such individual's principal place of abode is in the 
                United States for more than \1/2\ of such taxable year.
                    ``(B) Treatment of military personnel stationed 
                outside the united states.--Rules similar to the rules 
                of section 32(c)(4) shall apply for purposes of 
                subparagraph (A).
            ``(8) Minimum hours of service.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) with respect to an individual unless 
                such individual (or, if married, such individual's 
                spouse) has performed 390 hours of service or more for 
                an employer during the taxable year.
                    ``(B) Special rule for self-employment.--A taxpayer 
                who is an employee within the meaning of section 
                401(c)(1) shall be treated as performing service for an 
                employer for purposes of this paragraph.
            ``(9) Identifying information required.--No credit shall be 
        allowed under subsection (a) with respect to an individual 
        unless the TIN of such individual, and the TIN of any dependent 
        taken into account under this section with respect to such 
        individual, is included on the return claiming the credit.
    ``(d) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2012, each of the dollar amounts in 
the table in subsection (b)(2) and the dollar amount in subsection 
(c)(4) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2011' for 
        `calendar year 1992' in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be rounded 
to the nearest multiple of $10.''.
    (b) Clerical Amendment.--The table of sections for part IV of 
subchapter A of chapter 1 of such Code is amended by inserting after 
the item relating to section 32 the following new item:

``Sec. 32A. Income disparity credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 3. ACCELERATION OF EGTRRA SUNSET.

    (a) In General.--Section 901 of the Economic Growth and Tax Relief 
Reconciliation Act of 2001 is amended by striking ``December 31, 2012'' 
and inserting ``December 31, 2011''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the enactment of the Economic Growth and Tax 
Relief Reconciliation Act of 2001.

SEC. 4. ACCELERATION OF JGTRRA SUNSET.

    (a) In General.--Section 303 of the Jobs and Growth Tax Relief 
Reconciliation Act of 2003 is amended by striking ``December 31, 2012'' 
and inserting ``December 31, 2011''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the enactment of the Jobs and Growth Tax 
Relief Reconciliation Act of 2003.