Family Living Wage Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Living Wage Act''.

SEC. 2. INCREASE IN EARNED INCOME TAX CREDIT.

    (a) General Rule.--Subsections (a) and (b) of section 32 of the 
Internal Revenue Code of 1986 (relating to earned income tax credit) 
are amended to read as follows:
    ``(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 earned income for the 
        taxable year as does not exceed $8,000.
            ``(2) Limitation.--The amount of the credit allowable to a 
        taxpayer under this subsection for any taxable year shall not 
        exceed the excess (if any) of--
                    ``(A) the credit percentage of $8,000, 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 
                $10,000.
    ``(b) Percentages.--For purposes of subsection (a)--
            ``(1) Credit percentage.--
                    ``(A) In general.--The credit percentage is the 
                percentage equal to the sum of--
                            ``(i) 20 percent,
                            ``(ii) 5 percent for each school age 
                        qualifying child, plus
                            ``(iii) 10 percent for each preschool age 
                        qualifying child.
                    ``(B) Not more than 4 children taken into 
                account.--Not more than 4 children shall be taken into 
                account under subparagraph (A), and preschool age 
                qualifying children shall be taken into account before 
                any other children are taken into account.
            ``(2) Phaseout percentage.--
                    ``(A) Phasedown to minimum benefit.--
                            ``(i) In general.--The phaseout percentage 
                        is the percentage determined in accordance with 
                        the following table:

                         ``If the combination of
                                                                       
                           qualifying children taken
                                                                       
                           into account under
                                                           The phaseout
                           paragraph (1) is--
                                                        percentage is--
                                 1 S.................          13      
                                 2 S, or 1 P.........          14      
                                 3 S, or 1 S and 1 P.          15      
                                 4 S, or 2 S and 1 P,          16      
                            or 2 P.
                                 3 S and 1 P, or 1 S           17      
                            and 2 P.
                                 2 S and 2 P, or 3 P.          18      
                                 1 S and 3 P.........          19      
                                 4 P.................         20.      
                            ``(ii) Symbols used in table.--For purposes 
                        of clause (i)--
                                    ``(I) S means school age qualifying 
                                child, and
                                    ``(II) P means preschool age 
                                qualifying child.
                    ``(B) Minimum benefit for taxpayers with incomes 
                below $50,000.--Except as provided in subparagraph (C), 
                subparagraph (A) shall not apply so as to reduce the 
                credit allowed by this section to a taxpayer to less 
                than the minimum benefit determined in accordance with 
                the following table:

                    ``If the phaseout percentage
                                                            The minimum
                      applicable to the taxpayer is--
                                                           benefit is--
                              13.....................          $200    
                              14.....................           400    
                              15.....................           600    
                              16.....................           800    
                              17.....................         1,000    
                              18.....................         1,200    
                              19.....................         1,400    
                              20.....................        1,600.    
                    ``(C) Phaseout of minimum benefit.--If the adjusted 
                gross income (or, if greater, the earned income) of the 
                taxpayer for the taxable year exceeds $50,000, the 
                minimum benefit determined under subparagraph (B) shall 
                be reduced by 15 percent of such excess.
            ``(3) Special rules for individual whose only children have 
        attained age 16.--For purposes of this section, in the case of 
        an individual who is an eligible individual solely by reason of 
        children each of whom has attained age 16 as of the close of 
        the taxable year--
                    ``(A) the credit percentage shall be 20 percent,
                    ``(B) the phaseout percentage shall be 12 percent, 
                and
                    ``(C) subparagraphs (B) and (C) of paragraph (2) 
                shall not apply.''
    (b) Preschool Age and School Age Qualifying Children Defined.--
Subsection (c) of section 32 of such Code is amended by adding at the 
end the following new paragraph:
            ``(4) Preschool age and school age qualifying children.--
                    ``(A) Preschool age qualifying child.--The term 
                `preschool age qualifying child' means any qualifying 
                child who has not attained age 6 as of the close of the 
                taxable year.
                    ``(B) School age qualifying child.--The term 
                `school age qualifying child' means any qualifying 
                child who has attained age 6 but not age 16 as of the 
                close of the taxable year.''
    (c) Advance Payment Provisions.--
            (1) Subsection (b) of section 3507 of such Code is amended 
        by striking ``and'' at the end of paragraph (2), by striking 
        the period at the end of paragraph (3) and inserting ``, and'', 
        and by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) states the number and ages of qualifying children (as 
        defined in section 32(c)) of the employee for the taxable 
        year.''
            (2) Paragraph (2) of section 3507(c) of such Code is 
        amended--
                    (A) in subparagraph (B)(i), by striking ``(without 
                regard to subparagraph (D)'' and by striking ``section 
                32(a)(1)'' and inserting ``section 32(a)'',
                    (B) in subparagraph (B)(ii), by striking ``section 
                32(b)(1)(B)(ii)'' and inserting ``section 32(a)(2)'' 
                and by striking ``section 32(a)(1)'' and inserting 
                ``section 32(a)'', and
                    (C) by adding at the end the following new 
                sentence:
        ``For purposes of this paragraph, the credit percentage shall 
        be determined under section 32(b) on the basis of the number 
        and ages of qualifying children specified in the earned income 
        eligibility certificate and the determination of the amounts 
        referred to in subparagraph (B)(ii) shall be made on the basis 
        of the number and ages of qualifying children so specified.''
            (3) Clause (i) of section 3507(e)(3)(A) of such Code is 
        amended by inserting before ``, or'' the following: ``(or 
        changing the percentages applicable to the employee under 
        section 32(b) for the taxable year)''.
    (d) Conforming Amendments.--
            (1) Paragraph (2) of section 32(f) of such Code is 
        amended--
                    (A) by striking ``subsection (b)'' each place it 
                appears in subparagraphs (A) and (B) and inserting 
                ``subsection (a)(2)'', and
                    (B) by adding at the end the following new 
                sentence:
        ``Separate tables shall be prescribed for each of the phaseout 
        percentages specified in the table contained in subsection 
        (b)(2)(A)(i).''
            (2) Paragraphs (1) and (2) of section 32(i) of such Code 
        are amended to read as follows:
            ``(1) In general.--In the case of any taxable year 
        beginning after 1995, each amount referred to in paragraph (2) 
        shall be increased by an amount equal to--
                    ``(A) such 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 `1994' for 
                `1989' in subparagraph (B) thereof.
            ``(2) Amounts.--The amounts referred to in this paragraph 
        are--
                    ``(A) the credit percentages used for purposes of 
                subsection (a),
                    ``(B) the $10,000 amount contained in subsection 
                (a)(2)(B), and
                    ``(C) the $50,000 amount contained in subsection 
                (b)(2)(C).''
            (3) Section 213 of such Code (relating to medical, dental, 
        etc., expenses) is amended by striking subsection (f).
            (4) 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).''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993; except that 
the amendments made by subsection (c) shall take effect on January 1, 
1994.

SEC. 3. DEPENDENT CARE CREDIT LIMITED TO HANDICAPPED DEPENDENTS AND 
              SPOUSES.

    (a) In General.--Paragraph (1) of section 21(b) of the Internal 
Revenue Code of 1986 (defining qualifying individual and employment-
related expenses) is amended by striking subparagraph (A), by 
redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), 
respectively, and by adding at the end the following new sentence:
        ``In the case of an individual described in subparagraph (A) 
        who has not attained age 16 as of the close of the taxable 
        year, such individual may be treated as a qualifying individual 
        for purposes of this section only if the taxpayer elects not to 
        treat such individual as a qualifying child under section 32 
        for such year.''
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 21(b)(2) of such Code is 
        amended by striking ``care of--'' and all that follows and 
        inserting ``care of a qualifying individual who regularly 
        spends at least 8 hours each day in the taxpayer's household.''
            (2) Paragraph (2) of section 21(d) of such Code is amended 
        by striking ``subsection (b)(1)(C)'' and inserting ``subsection 
        (b)(1)(B)''.
            (3) Paragraph (5) of section 21(e) of such Code is 
        amended--
                    (A) by striking ``is under the age of 13 or'' in 
                subparagraph (B), and
                    (B) by striking ``subparagraph (A) or (B) of 
                subsection (b)(1) (whichever is appropriate)'' and 
                inserting ``subsection (b)(1)(A)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.

SEC. 4. ELIMINATION OF PROPOSED CHANGES IN TREATMENT OF EARNED INCOME 
              CREDIT IN DETERMINING CERTAIN WELFARE BENEFITS.

    Paragraphs (1) and (2)(A) of section 402(c) of the Family Support 
Act of 1988 are repealed.

Summary: Family Living Wage Act - Amends Internal Revenue Code provisions governing the earned income tax credit to: (1) increase from $5,714 to $8,000 the amount of earned income subject to the credit, (2) establish the basic credit at 20 percent. And (3) permit an additional credit of five percent for each dependent school age child between age six and age 16 and ten percent for each preschool age child. Reduces the amount of the credit for taxpayers with adjusted gross income over $50,000. Indexes amounts relating to the credit beginning in 1995. Disallows application of the nonrefundable dependent care income tax credit with respect to a taxpayer's dependents under age 13, unless the child is physically or mentally incapable of self-care. Permits the credit with respect to handicapped children under age 16 only if the taxpayer elects not to include the child within the framework of the earned income credit. Repeals provisions of the Family Support Act of 1988 that revise the way in which the earned income credit is treated in the context of needs analysis for purposes of State plans for aid and services to needy families with children under title IV of the Social Security Act.