A bill to reduce the Federal budget deficit and encourage energy conservation through an increase in the motor fuels excise tax, and for other purposes.

Summary: Amends the Internal Revenue Code to increase the gasoline deficit reduction rate and the diesel fuel deficit reduction rate by ten cents a gallon beginning after December 31, 1993, and ending before January 1, 1999. 
Increases the earned income credit and includes families without qualifying children.

SECTION 1. ADDITIONAL TAX ON MOTOR FUELS.

    (a) 50-Cent Increase Over the Next 5 Calendar Years.--
            (1) Gasoline.--Subparagraph (B)(iii) of section 4081(a)(2) 
        of the Internal Revenue Code of 1986 (relating to rates of tax) 
        is amended by striking ``2.5 cents a gallon'' and inserting 
        ``2.5 cents a gallon, increased by 10 cents a gallon in each 
        calendar year beginning after December 31, 1993, and ending 
        before January 1, 1999''.
            (2) Diesel fuel.--Paragraph (4) of section 4091(b) of the 
        Internal Revenue Code of 1986 (relating to rates of tax) is 
        amended by striking ``2.5 cents a gallon'' and inserting ``2.5 
        cents a gallon, increased by 10 cents a gallon in each calendar 
        year beginning after December 31, 1993, and ending before 
        January 1, 1999''.
    (b) Floor Stocks Tax.--
            (1) Imposition of tax.--On gasoline or diesel fuel subject 
        to tax under section 4081 or 4091 of the Internal Revenue Code 
        of 1986, which on the first day of any tax increase calendar 
        year is held by a dealer for sale, there is hereby imposed a 
        floor stocks tax equal to the tax increase for such year.
            (2) Application of other laws.--All other provisions of 
        law, including penalties, applicable with respect to the taxes 
        imposed by sections 4081 and 4091 of such Code shall apply to 
        the floor stocks tax imposed by this subsection.
            (3) Due date of tax.--The taxes imposed by this subsection 
        shall be paid before February 15th of the calendar year to 
        which the tax relates.
            (4) Definitions.--For purposes of this subsection--
                    (A) Dealer.--The term ``dealer'' includes a 
                wholesaler, jobber, distributor, or retailer.
                    (B) Held by a dealer.--An article shall be 
                considered as ``held by a dealer'' if title thereto has 
                passed to such dealer (whether or not delivery to the 
                dealer has been made) and if, for purposes of 
                consumption, title to such article or possession 
                thereof has not at any time been transferred to any 
                person other than a dealer.
                    (C) Tax increase calendar year.--The term ``tax 
                increase calendar year'' means any calendar year 
                beginning after December 31, 1993, in which the deficit 
                reduction rate or the diesel deficit reduction rate has 
                increased over such rate for the preceding calendar 
                year.
    (c) Conforming Amendments.--
            (1) Section 4081(d)(3) of the Internal Revenue Code of 1986 
        is amended by striking ``1995'' and inserting ``1999''.
            (2) Section 4091(b)(6)(D) of such Code is amended by 
        striking ``1995'' and inserting ``1999''.
            (3) Section 4041(m)(1)(A) of such Code is amended by 
        striking ``1.25 cents per gallon'' and inserting ``one-half of 
        the deficit reduction rate in effect under section 4081 at the 
        time of such sale or use''.
    (d) Effective Date.--The amendments made by this section shall 
apply to gasoline removed (as defined in section 4082 of the Internal 
Revenue Code of 1986) and sales of diesel fuel (as defined in section 
4092(a)(2) of such Code) made after December 31, 1993.

SEC. 2. EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT.

    (a) General Rule.--Section 32 of the Internal Revenue Code of 1986 
(relating to earned income credit) is amended by striking subsections 
(a) and (b) and inserting the following:
    ``(a) Allowance of Credit.--
            ``(1) In general.--In the case of an eligible individual, 
        there shall be allowed as a credit against the tax imposed by 
        this subtitle for the taxable year an amount equal to the 
        credit percentage of so much of the taxpayer's earned income 
        for the taxable year as does not exceed the earned income 
        amount.
            ``(2) Limitation.--The amount of the credit allowable to a 
        taxpayer under paragraph (1) for any taxable year shall not 
        exceed the excess (if any) of--
                    ``(A) the credit percentage of the earned income 
                amount, over
                    ``(B) the phaseout percentage of so much of the 
                adjusted gross income (or, if greater, the earned 
                income) of the taxpayer for the taxable year as exceeds 
                the phaseout amount.
    ``(b) Percentages and Amounts.--For purposes of subsection (a)--
            ``(1) Percentages.--The credit percentage and the phaseout 
        percentage shall be determined as follows:
                    ``(A) In general.--In the case of taxable years 
                beginning after 1994:

      

                                                                                                                
                 In the case of an eligible                                                                     
                      individual with:            The credit percentage is:        The phaseout percentage is:  
                                                                                                                
                1 qualifying child..........  34.37...........................                16.16             
                2 or more qualifying          39.66...........................                19.83             
                 children.                                                                                      
                No qualifying children......  7.65............................                7.65              
                                                                                                                

                    ``(B) Transitional percentages.--In the case of a 
                taxable year beginning in 1994:

      

                                                                                                                
                        In the case of an                                                                       
                       eligible individual        The credit percentage is:        The phaseout percentage is:  
                              with:                                                                             
                                                                                                                
                    1 qualifying child......  26.60...........................                16.16             
                    2 or more qualifying      31.59...........................                15.79             
                     children.                                                                                  
                    No qualifying children..  7.65............................                7.65              
                                                                                                                

            ``(2) Amounts.--The earned income amount and the phaseout 
        amount shall be determined as follows:
                    ``(A) In general.--In the case of taxable years 
                beginning after 1994:

      

                                                                                                                
                 In the case of an eligible                                                                     
                      individual with:          The earned income amount is:         The phaseout amount is:    
                                                                                                                
                1 qualifying child..........  $6,000..........................               $11,000            
                2 or more qualifying          $8,500..........................               $11,000            
                 children.                                                                                      
                No qualifying children......  $4,000..........................               $5,000             
                                                                                                                

                    ``(B) Transitional amounts.--In the case of a 
                taxable year beginning in 1994:

      

                                                                                                                
                        In the case of an                                                                       
                       eligible individual      The earned income amount is:         The phaseout amount is:    
                              with:                                                                             
                                                                                                                
                    1 qualifying child......  $7,750..........................              $11,000           
                    2 or more qualifying      $8,500..........................              $11,000           
                     children.                                                                                  
                    No qualifying children..  $4,000..........................              $5,000''.           
                                                                                                                

    (b) Eligible Individual.--Subparagraph (A) of section 32(c)(1) of 
the Internal Revenue Code of 1986 (defining eligible individual) is 
amended to read as follows:
                    ``(A) In general.--The term `eligible individual' 
                means--
                            ``(i) any individual who has a qualifying 
                        child for the taxable year, or
                            ``(ii) any other individual who does not 
                        have a qualifying child for the taxable year, 
                        if--
                                    ``(I) such individual's principal 
                                place of abode is in the United States 
                                for more than one-half of such taxable 
                                year,
                                    ``(II) such individual (or, if the 
                                individual is married, the individual's 
                                spouse) has attained age 22 before the 
                                close of the taxable year, and
                                    ``(III) such individual (or, if the 
                                individual is married, the individual's 
                                spouse) is not a dependent for whom a 
                                deduction is allowable under section 
                                151 to another taxpayer for any taxable 
                                year beginning in the same calendar 
                                year as such taxable year.''
    (c) Inflation Adjustments.--Section 32(i) of the Internal Revenue 
Code of 1986 (relating to inflation adjustments) is amended--
            (1) by striking paragraphs (1) and (2) and inserting the 
        following new paragraph:
            ``(1) In general.--In the case of any taxable year 
        beginning after 1994, each dollar amount contained in 
        subsection (b)(2)(A) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3), for the calendar year in which 
                the taxable year begins, by substituting `calendar year 
                1993' for `calendar year 1992'.'', and
            (2) by redesignating paragraph (3) as paragraph (2).
    (d) Conforming Amendments.--
            (1) Subparagraph (D) of section 32(c)(3) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) by striking ``clause (i) or (ii)'' in clause 
                (iii) and inserting ``clause (i)'',
                    (B) by striking clause (ii), and
                    (C) by redesignating clause (iii) as clause (ii).
            (2) Paragraph (3) of section 162(l) of such Code is amended 
        to read as follows:
            ``(3) Coordination with medical deduction.--Any amount paid 
        by a taxpayer for insurance to which paragraph (1) applies 
        shall not be taken into account in computing the amount 
        allowable to the taxpayer as a deduction under section 
        213(a).''
            (3) Section 213 of such Code is amended by striking 
        subsection (f).
            (4) Subsection (b) of section 3507 of such Code is amended 
        by redesignating paragraphs (2) and (3) as paragraphs (3) and 
        (4), respectively, and by inserting after paragraph (1) the 
        following new paragraph:
            ``(2) certifies that the employee has 1 or more qualifying 
        children (within the meaning of section 32(c)(3)) for such 
        taxable year,''.
            (5) Subparagraph (B) of section 3507(c)(2) of such Code is 
        amended by striking clauses (i) and (ii) and inserting the 
        following:
                            ``(i) of not more than the credit 
                        percentage in effect under section 32(b)(1) for 
                        an eligible individual with 1 qualifying child 
                        and with earned income not in excess of the 
                        earned income amount in effect under section 
                        32(b)(2) for such an eligible individual, which
                            ``(ii) phases out at the phaseout 
                        percentage in effect under section 32(b)(1) for 
                        such an eligible individual between the 
                        phaseout amount in effect under section 
                        32(b)(2) for such an eligible individual and 
                        the amount of earned income at which the credit 
                        under section 32(a) phases out for such an 
                        eligible individual, or''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.