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[House Report 111-671]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     111-671

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 PROVIDING FOR CONSIDERATION OF THE SENATE AMENDMENT TO THE BILL (H.R. 
4853) TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO EXTEND THE FUNDING 
  AND EXPENDITURE AUTHORITY OF THE AIRPORT AND AIRWAY TRUST FUND, TO 
 AMEND TITLE 49, UNITED STATES CODE, TO EXTEND AUTHORIZATIONS FOR THE 
AIRPORT IMPROVEMENT PROGRAM, AND FOR OTHER PURPOSES, AND PROVIDING FOR 
             CONSIDERATION OF MOTIONS TO SUSPEND THE RULES

                                _______
                                

  December 1, 2010.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

   Ms. Pingree of Maine, from the Committee on Rules, submitted the 
                               following

                              R E P O R T

                      [To accompany H. Res. 1745]

    The Committee on Rules, having had under consideration 
House Resolution 1745, by a record vote of 7 to 2, report the 
same to the House with the recommendation that the resolution 
be adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for the consideration of the Senate 
amendment to H.R. 4853. The resolution makes in order a motion 
offered by the chair of the Committee on Ways and Means that 
the House concur in the Senate amendment to H.R. 4853 with the 
amendment printed in this report. The resolution provides one 
hour of debate on the motion equally divided and controlled by 
the chair and ranking minority member of the Committee on Ways 
and Means. The resolution waives all points of order against 
consideration of the motion except those arising under clause 
10 of rule XXI. The resolution provides that the Senate 
amendment and the motion shall be considered as read. Finally, 
the resolution authorizes the Speaker to entertain motions that 
the House suspend the rules at any time through the legislative 
day of December 3, 2010. The Speaker or her designee shall 
consult with the Minority Leader or his designee on the 
designation of any matter for consideration pursuant to this 
resolution.

                         EXPLANATION OF WAIVERS

    Although the rule waives all points of order against 
consideration of the motion (except those arising under clause 
10 of rule XXI), the Committee is not aware of any points of 
order against the motion. The waiver of all points of order 
against the motion is prophylactic.

                            COMMITTEE VOTES

    The results of each record vote on an amendment or motion 
to report, together with the names of those voting for and 
against, are printed below:

Rules Committee record vote No. 504

    Date: December 1, 2010.
    Measure: Senate amendment to H.R. 4853.
    Motion by: Mr. Dreier.
    Summary of motion: To make in order and provide the 
appropriate waivers for an amendment if offered by the Ranking 
Member of the Ways and Means Committee, or his designee.
    Results: Defeated 2-7.
    Vote by Members: McGovern--Nay; Cardoza--Nay; Arcuri--Nay; 
Perlmutter--Nay; Pingree--Nay; Polis--Nay; Dreier--Yea; Foxx--
Yea; Slaughter--Nay.

Rules Committee record vote No. 505

    Date: December 1, 2010.
    Measure: Senate amendment to H.R. 4853.
    Motion by: Mr. Dreier.
    Summary of motion: To increase time for debate to 3 hours.
    Results: Defeated 2-7.
    Vote by Members: McGovern--Nay; Cardoza--Nay; Arcuri--Nay; 
Perlmutter--Nay; Pingree--Nay; Polis--Nay; Dreier--Yea; Foxx--
Yea; Slaughter--Nay.

Rules Committee record vote No. 506

    Date: December 1, 2010.
    Measure: Senate amendment to H.R. 4853.
    Motion by: Mr. McGovern.
    Summary of motion: To report the rule.
    Results: Adopted 7-2.
    Vote by Members: McGovern--Yea; Cardoza--Yea; Arcuri--Yea; 
Perlmutter--Yea; Pingree--Yea; Polis--Yea; Dreier--Nay; Foxx--
Nay; Slaughter--Yea.

                     SUMMARY OF THE HOUSE AMENDMENT

    The amendment includes: Two year extension of alternative 
minimum tax relief; Permanent extension of marginal individual 
income tax rate reduction for middle-class taxpayers; Permanent 
reduced capital gains and dividend tax relief for middle-class 
taxpayers; Permanent extension of EGTRRA and ARRA improvements 
to child tax credit; Permanent extension of PEP and Pease 
relief for middle-class taxpayers; Permanent marriage penalty 
relief for middle-class taxpayers; Permanent earned income tax 
credit simplification and increase; Permanent extension of 
education tax incentives; Permanent extension of tax benefits 
for families and children; and Permanent extension of enhanced 
small business expensing.

                      TEXT OF THE HOUSE AMENDMENT

  In lieu of the matter proposed to be inserted by the Senate 
amendment to the text of the bill, insert the following:

SECTION 1. SHORT TITLE; ETC.

  (a) Short Title.--This Act may be cited as the ``Middle Class 
Tax Relief Act of 2010''.
  (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section 
or other provision, the reference shall be considered to be 
made to a section or other provision of the Internal Revenue 
Code of 1986.
  (c) Table of Contents.--The table of contents for this Act is 
as follows:

Sec. 1. Short title; etc.

             TITLE I--MIDDLE CLASS TAX RELIEF MADE PERMANENT

Sec. 101. Middle class tax relief made permanent.
Sec. 102. Certain provisions not applicable to high income individuals.
Sec. 103. Related amendments.

  TITLE II--EXPENSING BY SMALL BUSINESSES OF CERTAIN DEPRECIABLE ASSETS

Sec. 201. Increased limitations on expensing by small businesses of 
          certain depreciable assets.

         TITLE III--EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF

Sec. 301. Extension of alternative minimum tax relief for nonrefundable 
          personal credits.
Sec. 302. Extension of increased alternative minimum tax exemption 
          amount.

                      TITLE IV--BUDGETARY PROVISION

Sec. 401. PAYGO compliance.

            TITLE I--MIDDLE CLASS TAX RELIEF MADE PERMANENT

SEC. 101. MIDDLE CLASS TAX RELIEF MADE PERMANENT.

  (a) In General.--Section 901 of the Economic Growth and Tax 
Relief Reconciliation Act of 2001 shall not apply to the 
following provisions of such Act (and to the amendments made by 
such provisions):
          (1) Title I (relating to individual income tax rate 
        reductions).
          (2) Title II (relating to tax benefits related to 
        children).
          (3) Title III (relating to marriage penalty relief).
          (4) Title IV (relating to affordable education 
        provisions).
  (b) Reduced Rates on Capital Gains and Dividends.--The Jobs 
and Growth Tax Relief Reconciliation Act of 2003 is amended by 
striking section 303.

SEC. 102. CERTAIN PROVISIONS NOT APPLICABLE TO HIGH INCOME INDIVIDUALS.

  (a) Individual Income Tax Rates.--Subsection (i) of section 1 
is amended by striking paragraph (2), by redesignating 
paragraph (3) as paragraph (4), and by inserting after 
paragraph (1) the following new paragraphs:
          ``(2) 25- and 28-percent rate brackets.--The tables 
        under subsections (a), (b), (c), (d), and (e) shall be 
        applied--
                  ``(A) by substituting `25%' for `28%' each 
                place it appears (before the application of 
                subparagraph (B)), and
                  ``(B) by substituting `28%' for `31%' each 
                place it appears.
          ``(3) 33-percent rate bracket.--
                  ``(A) In general.--In the case of taxable 
                years beginning after December 31, 2010--
                          ``(i) the rate of tax under 
                        subsections (a), (b), (c), and (d) on a 
                        taxpayer's taxable income in the fourth 
                        rate bracket shall be 33 percent to the 
                        extent such income does not exceed an 
                        amount equal to the excess of--
                                  ``(I) the applicable amount, 
                                over
                                  ``(II) the dollar amount at 
                                which such bracket begins, and
                          ``(ii) the 36 percent rate of tax 
                        under such subsections shall apply only 
                        to the taxpayer's taxable income in 
                        such bracket in excess of the amount to 
                        which clause (i) applies.
                  ``(B) Applicable amount.--For purposes of 
                this paragraph, the term `applicable amount' 
                means the excess of--
                          ``(i) the applicable threshold, over
                          ``(ii) the sum of the following 
                        amounts in effect for the taxable year:
                                  ``(I) the basic standard 
                                deduction (within the meaning 
                                of section 63(c)(2)), and
                                  ``(II) the exemption amount 
                                (within the meaning of section 
                                151(d)(1)) (or, in the case of 
                                subsection (a), 2 such 
                                exemption amounts).
                  ``(C) Applicable threshold.--For purposes of 
                this paragraph, the term `applicable threshold' 
                means--
                          ``(i) $250,000 in the case of 
                        subsection (a),
                          ``(ii) $200,000 in the case of 
                        subsections (b) and (c), and
                          ``(iii) \1/2\ the amount applicable 
                        under clause (i) (after adjustment, if 
                        any, under subparagraph (E)) in the 
                        case of subsection (d).
                  ``(D) Fourth rate bracket.--For purposes of 
                this paragraph, the term `fourth rate bracket' 
                means the bracket which would (determined 
                without regard to this paragraph) be the 36-
                percent rate bracket.
                  ``(E) Inflation adjustment.--For purposes of 
                this paragraph, a rule similar to the rule of 
                paragraph (1)(C) shall apply with respect to 
                taxable years beginning in calendar years after 
                2010, applied by substituting `2008' for `1992' 
                in subsection (f)(3)(B).''.
  (b) Phaseout of Personal Exemptions and Itemized 
Deductions.--
          (1) Overall limitation on itemized deductions.--
        Section 68 is amended--
                  (A) by striking ``the applicable amount'' the 
                first place it appears in subsection (a) and 
                inserting ``the applicable threshold in effect 
                under section 1(i)(3)'',
                  (B) by striking ``the applicable amount'' in 
                subsection (a)(1) and inserting ``such 
                applicable threshold'',
                  (C) by striking subsection (b) and 
                redesignating subsections (c), (d), and (e) as 
                subsections (b), (c), and (d), respectively, 
                and
                  (D) by striking subsections (f) and (g).
          (2) Phaseout of deductions for personal exemptions.--
                  (A) In general.--Paragraph (3) of section 
                151(d) is amended--
                          (i) by striking ``the threshold 
                        amount'' in subparagraphs (A) and (B) 
                        and inserting ``the applicable 
                        threshold in effect under section 
                        1(i)(3)'',
                          (ii) by striking subparagraph (C) and 
                        redesignating subparagraph (D) as 
                        subparagraph (C), and
                          (iii) by striking subparagraphs (E) 
                        and (F).
                  (B) Conforming amendment.--Paragraph (4) of 
                section 151(d) is amended--
                          (i) by striking subparagraph (B),
                          (ii) by redesignating clauses (i) and 
                        (ii) of subparagraph (A) as 
                        subparagraphs (A) and (B), 
                        respectively, and by indenting such 
                        subparagraphs (as so redesignated) 
                        accordingly, and
                          (iii) by striking all that precedes 
                        ``in a calendar year after 1989,'' and 
                        inserting the following:
          ``(4) Inflation adjustment.--In the case of any 
        taxable year beginning''.
  (c) Reduced Rate on Capital Gains and Dividends.--
          (1) In general.--Paragraph (1) of section (1)(h) is 
        amended by striking subparagraph (C), by redesignating 
        subparagraphs (D) and (E) as subparagraphs (E) and (F) 
        and by inserting after subparagraph (B) the following 
        new subparagraphs:
                  ``(C) 15 percent of the lesser of--
                          ``(i) so much of the adjusted net 
                        capital gain (or, if less, taxable 
                        income) as exceeds the amount on which 
                        a tax is determined under subparagraph 
                        (B), or
                          ``(ii) the excess (if any) of--
                                  ``(I) the amount of taxable 
                                income which would (without 
                                regard to this subsection) be 
                                taxed at a rate below 36 
                                percent, over
                                  ``(II) the sum of the amounts 
                                on which tax is determined 
                                under subparagraphs (A) and 
                                (B),
                  ``(D) 20 percent of the adjusted net capital 
                gain (or, if less, taxable income) in excess of 
                the sum of the amounts on which tax is 
                determined under subparagraphs (B) and (C),''.
          (2) Dividends.--Subparagraph (A) of section 1(h)(11) 
        is amended by striking ``qualified dividend income'' 
        and inserting ``so much of the qualified dividend 
        income as does not exceed the excess (if any) of--
                          ``(i) the amount of taxable income 
                        which would (without regard to this 
                        subsection) be taxed at a rate below 36 
                        percent, over
                          ``(ii) taxable income reduced by 
                        qualified dividend income.''.
          (3) Minimum tax.--Section 55 is amended by adding at 
        the end the following new subsection:
  ``(f) Application of Maximum Rate of Tax on Net Capital Gain 
of Noncorporate Taxpayers.--In the case of taxable years 
beginning after December 31, 2010, the amount determined under 
subparagraph (C) of subsection (b)(3) shall be the sum of--
          ``(1) 15 percent of the lesser of--
                  ``(A) so much of the adjusted net capital 
                gain (or, if less, taxable excess) as exceeds 
                the amount on which tax is determined under 
                subparagraph (B) of subsection (b)(3), or
                  ``(B) the excess described in section 
                1(h)(1)(C)(ii), plus
          ``(2) 20 percent of the adjusted net capital gain 
        (or, if less, taxable excess) in excess of the sum of 
        the amounts on which tax is determined under subsection 
        (b)(3)(B) and paragraph (1).''.
          (4) Conforming amendments.--
                  (A) The following provisions are amended by 
                striking ``15 percent'' and inserting ``20 
                percent'':
                          (i) Section 1445(e)(1).
                          (ii) The second sentence of section 
                        7518(g)(6)(A).
                          (iii) Section 53511(f)(2) of title 
                        46, United States Code.
                  (B) Sections 531 and 541 are each amended by 
                striking ``15 percent of'' and inserting ``the 
                product of the highest rate of tax under 
                section 1(c) and''.
                  (C) Section 1445(e)(6) is amended by striking 
                ``15 percent (20 percent in the case of taxable 
                years beginning after December 31, 2010)'' and 
                inserting ``20 percent''.
  (d) Effective Dates.--
          (1) In general.--Except as provided in paragraph (2), 
        the amendments made by this section shall apply to 
        taxable years beginning after December 31, 2010.
          (2) Withholding.--The amendments made by 
        subparagraphs (A)(i) and (C) of subsection (c)(4) shall 
        apply to amounts paid on or after January 1, 2011.

SEC. 103. RELATED AMENDMENTS.

  (a) Application of Increase in Refundable Portion of Child 
Tax Credit.--
          (1) In general.--Subsection (d) of section 24 is 
        amended--
                  (A) by striking ``$10,000'' in paragraph 
                (1)(B)(i) and inserting ``$3,000'', and
                  (B) by striking paragraphs (3) and (4).
          (2) Effective date.--The amendments made by this 
        subsection shall apply to taxable years beginning after 
        December 31, 2010.
  (b) Application of Increase in Earned Income Tax Credit.--
          (1) In general.--Subparagraph (B) of section 32(b)(2) 
        is amended to read as follows:
                  ``(B) Joint returns.--
                          ``(i) In general.--In the case of a 
                        joint return filed by an eligible 
                        individual and such individual's 
                        spouse, the phaseout amount determined 
                        under subparagraph (A) shall be 
                        increased by $5,000.
                          ``(ii) Inflation adjustment.--In the 
                        case of any taxable year beginning 
                        after 2010, the $5,000 amount in clause 
                        (i) shall be increased by an amount 
                        equal to--
                                  ``(I) such dollar amount, 
                                multiplied by
                                  ``(II) 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 
                                2008' for `calendar year 1992' 
                                in subparagraph (B) thereof.
                        Subparagraph (A) of subsection (j)(2) 
                        shall apply after taking into account 
                        any increase under the preceding 
                        sentence.''.
          (2) Conforming amendment.--Subsection (b) of section 
        32 is amended by striking paragraph (3).
          (3) Effective date.--The amendments made by this 
        subsection shall apply to taxable years beginning after 
        December 31, 2010.
  (c) Application to Adoption Credit and Adoption Assistance 
Programs.--Subsection (c) of section 10909 of the Patient 
Protection and Affordable Care Act is amended to read as 
follows:
  ``(c) The amendments made by this section shall not apply to 
taxable years beginning after December 31, 2011.''.

 TITLE II--EXPENSING BY SMALL BUSINESSES OF CERTAIN DEPRECIABLE ASSETS

SEC. 201. INCREASED LIMITATIONS ON EXPENSING BY SMALL BUSINESSES OF 
                    CERTAIN DEPRECIABLE ASSETS.

  (a) Dollar Limitation.--Subparagraph (C) of section 179(b)(1) 
is amended by striking ``$25,000'' and inserting ``$125,000''.
  (b) Threshold at Which Phaseout Begins.--Subparagraph (C) of 
section 179(b)(2) is amended by striking ``$200,000'' and 
inserting ``$500,000''.
  (c) Inflation Adjustment.--Subsection (b) of section 179 is 
amended by adding at the end the following new paragraph:
          ``(6) Inflation adjustments.--
                  ``(A) In general.--In the case of any taxable 
                beginning in a calendar year after 2011, the 
                $125,000 and $500,000 amounts in paragraphs 
                (1)(C) and (2)(C) shall each be increased by an 
                amount equal to--
                          ``(i) such dollar amount, multiplied 
                        by
                          ``(ii) 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 2006' for `calendar year 
                        1992' in subparagraph (B) thereof.
                  ``(B) Rounding.--
                          ``(i) Dollar limitation.--If the 
                        amount in paragraph (1) as increased 
                        under subparagraph (A) is not a 
                        multiple of $1,000, such amount shall 
                        be rounded to the nearest multiple of 
                        $1,000.
                          ``(ii) Phaseout amount.--If the 
                        amount in paragraph (2) as increased 
                        under subparagraph (A) is not a 
                        multiple of $10,000, such amount shall 
                        be rounded to the nearest multiple of 
                        $10,000.''.
  (d) Authority to Revoke Election Made Permanent.--Paragraph 
(2) of section 179(c) is amended by striking ``and before 
2012''.
  (e) Treatment of Certain Computer Software as Section 179 
Property Made Permanent.--Clause (ii) of section 179(d)(1)(A) 
is amended by striking ``and before 2012''.
  (f) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2011.

         TITLE III--EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF

SEC. 301. EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR NONREFUNDABLE 
                    PERSONAL CREDITS.

  (a) In General.--Paragraph (2) of section 26(a) is amended--
          (1) by striking ``2000, 2001, 2002, 2003, 2004, 2005, 
        2006, 2007, 2008, or 2009'' and inserting ``the period 
        beginning with calendar year 2000 and ending with 
        calendar year 2011'', and
          (2) by striking ``2009'' in the heading thereof and 
        inserting ``2011''.
  (b) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2009.

SEC. 302. EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION 
                    AMOUNT.

  (a) In General.--Paragraph (1) of section 55(d) is amended--
          (1) by striking ``($70,950 in the case of taxable 
        years beginning in 2009)'' in subparagraph (A) and 
        inserting ``($72,450 in the case of taxable years 
        beginning in 2010 or 2011)'', and
          (2) by striking ``($46,700 in the case of taxable 
        years beginning in 2009)'' in subparagraph (B) and 
        inserting ``($47,450 in the case of taxable years 
        beginning in 2010 or 2011)''.
  (b) Nonapplication of EGTRRA Sunset.--Section 901 of the 
Economic Growth and Tax Relief Reconciliation Act of 2001 shall 
not apply to the amendments made by section 701 of such Act.
  (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2009.

                     TITLE IV--BUDGETARY PROVISION

SEC. 401. PAYGO COMPLIANCE.

  The budgetary effects of this Act, for the purpose of 
complying with the Statutory Pay-As-You-Go-Act of 2010, shall 
be determined by reference to the latest statement titled 
``Budgetary Effects of PAYGO Legislation'' for this Act, 
submitted for printing in the Congressional Record by the 
Chairman of the House Budget Committee, provided that such 
statement has been submitted prior to the vote on passage.

                                  
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