Working Uninsured Tax Equity Act of 1999

Summary: Limits the full credit to individuals whose adjusted gross income is under $30,000 ($50,000 if filing a joint return). Disallows any credit to a married individual filing a separate return, but treats married individuals living apart and filing separate returns as not married (thus qualifying them for the credit). Prescribes a formula for phase-out of the credit for taxpayers with an adjusted gross income exceeding $30,000 ($50,000 for a joint return) by less than $10,000.
Allows self-employed individuals to elect such credit or the deduction for medical expenses, but not both.
States that such credit does not apply to long- term health care insurance.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Working Uninsured Tax Equity Act of 
1999''.

SEC. 2. REFUNDABLE CREDIT FOR HEALTH INSURANCE COSTS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable personal 
credits) is amended by redesignating section 35 as section 36 and by 
inserting after section 34 the following new section:

``SEC. 35. HEALTH INSURANCE COSTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle an amount 
equal to 30 percent of the amount paid during the taxable year for 
insurance which constitutes medical care for the taxpayer, his spouse, 
and dependents.
    ``(b) Limitations.--
            ``(1) Limitation based on earned income.--The payments 
        taken into account under subsection (a) for any taxable year 
        shall not exceed the sum of--
                    ``(A) the taxpayer's wages, salaries, tips, and 
                other employee compensation includible in gross income, 
                plus
                    ``(B) the taxpayer's earned income (as defined in 
                section 401(c)(2)).
            ``(2) Limitation based on other coverage.--Subsection (a) 
        shall not apply to--
                    ``(A) any taxpayer for any calendar month for which 
                the taxpayer is eligible to participate in any 
                subsidized health plan maintained by any employer of 
                the taxpayer or of the spouse of the taxpayer, or
                    ``(B) amounts paid for coverage under--
                            ``(i) part B of title XVIII of the Social 
                        Security Act, or
                            ``(ii) a Medicare supplemental policy 
                        (within the meaning of section 1882(g)(1) of 
                        the Social Security Act (42 U.S.C. 
                        1395ss(g)(1))) or similar supplemental coverage 
                        provided under a group health plan.
        The rule of the last sentence of section 162(l)(2)(B) shall 
        apply for purposes of subparagraph (A).
    ``(c) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--No credit shall be allowed under 
        subsection (a) for any taxable year for which the taxpayer's 
        adjusted gross income exceeds the applicable dollar amount by 
        $10,000 or more.
            ``(2) Phaseout.--If the taxpayer's adjusted gross income 
        for the taxable year exceeds the applicable dollar amount by 
        less than $10,000, the credit which would (but for this 
        subsection and subsection (d)) be allowed under subsection (a) 
        shall be reduced (but not below zero) by an amount which bears 
        the same ratio to such credit as such excess bears to $10,000. 
        Any reduction under the preceding sentence which is not a 
        multiple of $10 shall be rounded to the next lowest $10.
            ``(3) Applicable dollar amount.--The term `applicable 
        dollar amount' means--
                    ``(A) in the case of a taxpayer filing a joint 
                return, $50,000,
                    ``(B) in the case of any other taxpayer (other than 
                a married individual filing a separate return), 
                $30,000, and
                    ``(C) in the case of a married individual filing a 
                separate return, zero.
            ``(4) Special rule for married individuals filing 
        separately and living apart.--A husband and wife who--
                    ``(A) file separate returns for any taxable year, 
                and
                    ``(B) live apart at all times during such taxable 
                year,
        shall not be treated as married individuals for purposes of 
        this paragraph.
    ``(d) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed by subsection (a) for 
        the taxable year (determined after the application of 
        subsections (b) and (c)) shall not exceed the sum of--
                    ``(A) the tax imposed by this chapter for the 
                taxable year (reduced by the credits allowable against 
                such tax other than the credits allowable under this 
                subpart), and
                    ``(B) the taxpayer's social security taxes for such 
                taxable year.
            ``(2) Social security taxes.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--The term `social security taxes' 
                means, with respect to any taxpayer for any taxable 
                year--
                            ``(i) the amount of the taxes imposed by 
                        sections 3101, 3111, 3201(a), and 3221(a) on 
                        amounts received by the taxpayer during the 
                        calendar year in which the taxable year begins,
                            ``(ii) the taxes imposed by section 1401 on 
                        the self-employment income of the taxpayer for 
                        the taxable year, and
                            ``(iii) the taxes imposed by section 
                        3211(a)(1) on amounts received by the taxpayer 
                        during the calendar year in which the taxable 
                        year begins.
                    ``(B) Coordination with special refund of social 
                security taxes.--The term `social security taxes' shall 
                not include any taxes to the extent the taxpayer is 
                entitled to a special refund of such taxes under 
                section 6413(c).
                    ``(C) Special rule.--Any amounts paid pursuant to 
                an agreement under section 3121(l) (relating to 
                agreements entered into by American employers with 
                respect to foreign affiliates) which are equivalent to 
                the taxes referred to in subparagraph (A)(i) shall be 
                treated as taxes referred to in such subparagraph.
    ``(e) Coordination With Other Provisions.--
            ``(1) Deduction for medical expenses.--The amount taken 
        into account in computing the credit under subsection (a) shall 
        not be taken into account in computing the amount allowable to 
        the taxpayer as a deduction under section 213(a).
            ``(2) Self-employed individuals allowed either deduction or 
        credit for health insurance.--No credit shall be allowed under 
        this section to a taxpayer for a taxable year if any amount is 
        allowed as a deduction to such taxpayer for such year under 
        section 162(l).
    ``(f) Expenses Must Be Substantiated.--A payment for insurance to 
which subsection (a) applies may be taken into account under this 
section only if the taxpayer substantiates such payment in such form as 
the Secretary may prescribe.
    ``(g) Section Not To Apply to Long-Term Care Insurance.--This 
section shall not apply to insurance which constitutes medical care by 
reason of section 213(d)(1)(C).''
    (b) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of such Code is amended by 
striking the last item and inserting the following new items:

                              ``Sec. 35. Health insurance costs.
                              ``Sec. 36. Overpayments of tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.