Flat Alternative Individual Return Tax Act of 1997

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Flat Alternative Individual Return 
Tax Act of 1997''.

SEC. 2. FLAT ALTERNATIVE INDIVIDUAL RETURN TAX.

    (a) In General.--Part I of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to tax on individuals) is 
amended by redesignating section 5 as section 6 and by inserting after 
section 4 the following new section:

``SEC. 5. FLAT ALTERNATIVE INDIVIDUAL RETURN TAX.

    ``(a) Election.--In lieu of the tax imposed by sections 1 and 55, 
an individual may elect to be subject to the tax imposed by this 
section.
    ``(b) FAIR Tax Imposed.--In the case of an individual making an 
election under subsection (a), there is hereby imposed on the FAIR 
taxable income of such individual a tax equal to 20 percent of such 
FAIR taxable income.
    ``(c) FAIR Taxable Income.--For purposes of this section, the term 
`FAIR taxable income' means the excess of--
            ``(1) gross income minus the deductions specified by 
        paragraph (1) of section 62(a), over
            ``(2) the FAIR standard deduction.
    ``(d) FAIR Standard Deduction.--
            ``(1) In general.--For purposes of this section, the term 
        `FAIR standard deduction' means the sum of--
                    ``(A) the basic standard deduction, plus
                    ``(B) the additional standard deduction.
            ``(2) Basic standard deduction.--For purposes of paragraph 
        (1), the basic standard deduction is--
                    ``(A) $21,400 in the case of--
                            ``(i) a joint return, or
                            ``(ii) a surviving spouse (as defined in 
                        section 2(a)),
                    ``(B) $14,000 in the case of a head of household 
                (as defined in section 2(b)), and
                    ``(C) $10,700 in the case of an individual--
                            ``(i) who is not married and who is not a 
                        surviving spouse or head of household, or
                            ``(ii) who is a married individual filing a 
                        separate return.
            ``(3) Additional standard deduction.--For purposes of 
        paragraph (1), the additional standard deduction is $5,000 for 
        each dependent (as defined in section 152) who is described in 
        section 151(c)(1) for the taxable year and who is not required 
        to file a return for such taxable year.
    ``(e) Income of Certain Children.--For purposes of this section--
            ``(1) an individual's taxable income shall include the 
        taxable income of each dependent child of such individual who 
        has not attained age 14 as of the close of such taxable year, 
        and
            ``(2) such dependent child shall have no liability for tax 
        imposed by this section with respect to such income and shall 
        not be required to file a return for such taxable year.
    ``(f) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 1998, each dollar amount 
        contained in subsection (d) shall be increased by an amount 
        determined by the Secretary to be equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment for such 
                calendar year.
            ``(2) Cost-of-living adjustment.--For purposes of paragraph 
        (1), the cost-of-living adjustment for any calendar year is the 
        percentage (if any) by which--
                    ``(A) the CPI for the preceding calendar year, 
                exceeds
                    ``(B) the CPI for the calendar year 1997.
            ``(3) CPI for any calendar year.--For purposes of paragraph 
        (2), the CPI for any calendar year is the average of the 
        Consumer Price Index as of the close of the 12-month period 
        ending on August 31 of such calendar year.
            ``(4) Consumer price index.--For purposes of paragraph (3), 
        the term `Consumer Price Index' means the last Consumer Price 
        Index for all-urban consumers published by the Department of 
        Labor. For purposes of the preceding sentence, the revision of 
        the Consumer Price Index which is most consistent with the 
        Consumer Price Index for calendar year 1986 shall be used.
            ``(5) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $10, such increase shall be rounded to 
        the next highest multiple of $10.
    ``(g) Married Couple Must File Joint Return.--
            ``(1) In general.--Except in the case of a husband and wife 
        who live apart at all times during the taxable year, if the 
        taxpayer is married at the close of the taxable year, an 
        election under subsection (a) shall be made only if the 
        taxpayer and his spouse file a joint return for the taxable 
        year.
            ``(2) Marital status.--For purposes of this section, 
        marital status shall be determined under section 7703.''
    (b) Conforming Amendment.--The table of sections for part I of 
subchapter A of chapter 1 of such Code is amended by striking the item 
relating to section 5 and inserting after the item relating to section 
4 the following new items:

                              ``Sec. 5. Flat alternative individual 
                                        return tax.
                              ``Sec. 6. Cross references relating to 
                                        tax on individuals.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1997.

SEC. 3. SUPERMAJORITY REQUIRED.

    (a) In General.--It shall not be in order in the House of 
Representatives or the Senate to consider any bill, joint resolution, 
amendment thereto, or conference report thereon that includes any 
provision that--
            (1) increases the FAIR tax rate (as specified in subsection 
        (b) of section 5 of the Internal Revenue Code of 1986, as added 
        by this Act),
            (2) creates any additional FAIR income tax rate (related to 
        the alternative tax imposed by such section 5), or
            (3) reduces the FAIR standard deduction (as defined in 
        subsection (d) of such section 5).
    (b) Waiver or Suspension.--This section may be waived or suspended 
in the House of Representatives or the Senate only by the affirmative 
vote of three-fifths of the Members, duly chosen and sworn.

Summary: Flat Alternative Individual Return Tax Act of 1997 - Amends the Internal Revenue Code to allow an individual to pay, instead of the tax otherwise due under the Code, a tax equal to 20 percent of FAIR taxable income. Defines such income as gross income minus specified deductions over the FAIR standard deduction. Defines such deduction.