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Joint Committee on Taxation

July 21, 1999

 JCX-49-99

Description of Proposed Modifications to 

H.R. 2488, as reported by the

House Committee on Ways and Means

on July 16, 1999, including statutory language

Section 101 (10 percent reduction in individual income tax rates) would be modified to

phase in the 10-percent across-the-board rate reduction as follows: 1.0 percent for 2001 through

2003, 2.5 percent for 2004, 5.0 percent for 2005 through 2007, 7.5 percent for 2008, and 10

percent for 2009 and thereafter.

Section 121 (repeal of individual alternative minimum tax on individuals) would be

modified so that, during the period when the individual alternative minimum tax (“AMT”) is being

phased out, taxpayers would pay the following percentages of individual AMT liability: 80 percent

in 2005, 70 percent in 2006, 60 percent in 2007, 50 percent in 2008, and 0 percent in 2009 and

thereafter.

Section 201 (exemption of certain interest and dividend income from tax) would be

modified to provide the following exclusion from income: $50 ($100 in the case of a married

couple filing a joint return) for 2001 through 2002, $100 ($200 in the case of a married couple

filing a joint return) for 2003 through 2004, and $200 ($400 in the case of a married couple filing a

joint return) for 2005 and thereafter.

Section 301 (reduction in corporate capital gain tax rate) would be modified to reduce the

tax on capital gains of corporations to 30 percent in 2005 and thereafter.

Section 302(a) (repeal of alternative minimum tax on corporations) would be modified to

allow AMT credit carryovers to offset the current year’s minimum tax liability as follows: 20

percent in 2005, 30 percent in 2006, 40 percent in 2007, 50 percent in 2008, and 100 percent in

2009 and thereafter.

Section 601 (repeal of estate, gift, and generation-skipping taxes) and section 611

(additional reductions of estate and gift tax rates) would be modified to phase in the repeal of the

estate, gift, and generation-skipping taxes as follows: in 2001, repeal rates in excess of 53 percent;

in 2002, repeal rates in excess of 50 percent; in 2003 through 2006, reduce all rates by 1

percentage point per year; in 2007, reduce all rates by 1.5 percentage point; and in 2008, reduce all

rates by 2 percentage points.

Sections 1205 (reduced PBGC premium for new plans of small employers), section 1206

(reduction of additional PBGC premium for new and small plans), 1243 (missing participants), and

section 1254 (substantial owner benefits in terminated plans) would be deleted.
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 A new provision would be added to Title XII–Provisions Relating to Pensions–to provide

that the 100 percent of compensation limitation does not apply to multiemployer defined benefit

pension plans. The modification would be effective with respect to years beginning after December

31, 2000.

A new Title XVII–Commitment to Debt Reduction would be added. This title contains a

provision regarding the commitment of the Congress to debt reduction. The provision would

reflect the sense of the Congress that: (1) the national debt of the United States held by the public is

$3.619 trillion as of fiscal year 1999; (2) the Federal budget is projected to produce a surplus each

year in the next 10 fiscal years; (3) refunding taxes and reducing the national debt held by the

public will assure continued economic growth and financial freedom for future generations; and (4)

the national debt held by the public shall be reduced from $3.619 trillion to a level below $1.61

trillion by fiscal year 2009.

A new Title XVIII–Budgetary Treatment would be added. This title contains a provision

that would provide that, upon enactment of the Act, the Director of the Office of Management and

Budget shall not make any estimate of the changes in direct spending outlays and receipts under

section 252(d) of the Balanced Budget and Emergency Deficit Control Act of 1985 resulting from

the enactment of the Act.
H.L.C.

AMENDMENTS TO H.R. 2488, AS REPORTED

OFFERED BY MR. ARCHER OF TEXAS

Page 10, strike the table after line 18 and insert the

following:

‘‘For taxable years beginning The applicable

in calendar year— percentage is—

2001 through 2003 ...................................................... 1.0

2004 ............................................................................. 2.5

2005 through 2007 ...................................................... 5.0

2008 ............................................................................. 7.5

2009 and thereafter ..................................................... 10.0.

1 In the case of taxable years beginning in calendar

2 year 2001, the rounding referred to in the preceding

3 sentence shall be to the next highest tenth.’’

Page 16, line 24, strike ‘‘2007’’ and insert ‘‘2008’’.

Page 17, line 7, strike ‘‘2002’’ and insert ‘‘2004’’.

Page 17, line 8, strike ‘‘2008’’ and insert ‘‘2009’’.

Page 17, strike the table after line 13 and insert the

following new table:

‘‘For taxable years beginning The applicable

in calendar year— percentage is—

2005 ..................................................................................... 80

2006 ..................................................................................... 70

2007 ..................................................................................... 60

2008 ..................................................................................... 50.’’

Page 18, lines 18 and 19, strike ‘‘2007’’ and insert

‘‘2008’’.

Page 20, strike lines 1 through 6 and insert the following:

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1 ‘‘(A) in the case of any taxable year begin2 ning in 2001 or 2002, $50 ($100 in the case

3 of a joint return),

4 ‘‘(B) in the case of any taxable year begin5 ning in 2003 or 2004, $100 ($200 in the case

6 of a joint return), and

7 ‘‘(C) in the case of any taxable year begin8 ning after 2004, $200 ($400 in the case of a

9 joint return).

Page 38, strike line 24 and all that follows through

page 40, line 17, and insert the following:

‘‘(2) a tax of 30 percent of the net capital gain

(or, if less, taxable income).

10 ‘‘(b) CROSS REFERENCES.—For computation of the

11 alternative tax—

12 ‘‘(1) in the case of life insurance companies, see

13 section 801(a)(2),

14 ‘‘(2) in the case of regulated investment compa15 nies and their shareholders, see section 852(b)(3)(A)

16 and (D), and

17 ‘‘(3) in the case of real estate investment

18 trusts, see section 857(b)(3)(A).’’

19 (b) TECHNICAL AMENDMENTS.—

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1 (1) Paragraphs (1) and (2) of section 1445(e)

2 are each amended by striking ‘‘35 percent’’ and in3 serting ‘‘30 percent’’.

4 (2)(A) The second sentence of section

5 7518(g)(6)(A) is amended by striking ‘‘34 percent’’

6 and inserting ‘‘30 percent’’.

7 (B) The second sentence of section

8 607(h)(6)(A) of the Merchant Marine Act, 1936, is

9 amended by striking ‘‘34 percent’’ and inserting ‘‘30

10 percent’’.

11 (c) EFFECTIVE DATES.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section

14 shall apply to taxable years beginning after Decem15 ber 31, 2004.

16 (2) WITHHOLDING.—The amendment made by

17 subsection (b)(1) shall apply to amounts paid after

18 December 31, 2004.

Page 41, strike line 16 and all that follows through

the end of the page and insert the following:

19 ‘‘(2) CORPORATIONS FOR TAXABLE YEARS BE20 GINNING AFTER 2004.—In the case of a corporation

21 for any taxable year beginning after 2004 and before

22 2009, the limitation under paragraph (1) shall be in23 creased by the applicable percentage (determined in

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1 accordance with the following table) of the tentative

2 minimum tax for the taxable year.

‘‘For taxable years beginning The applicable

in calendar year— percentage is—

2005 ..................................................................................... 20

2006 ..................................................................................... 30

2007 ..................................................................................... 40

2008 ..................................................................................... 50.

Page 42, line 17, strike ‘‘2002’’ and insert ‘‘2004’’.

Page 42, line 24, strike ‘‘2007’’ and insert ‘‘2008’’.

Page 85, strike line 20 and all that follows through

page 88, line 7, and insert the following new section:

3 SEC. 611. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT

4 TAX RATES.

5 (a) MAXIMUM RATE OF TAX REDUCED TO 50 PER6 CENT.—

7 (1) IN GENERAL.—The table contained in sec8 tion 2001(c)(1) is amended by striking the 2 highest

9 brackets and inserting the following:

‘‘Over $2,500,000 .......................... $1,025,800, plus 50% of the excess

over $2,500,000.’’

10 (2) PHASE-IN OF REDUCED RATE.—Subsection

11 (c) of section 2001 is amended by adding at the end

12 the following new paragraph:

13 ‘‘(3) PHASE-IN OF REDUCED RATE.—In the

14 case of decedents dying, and gifts made, during

15 2001, the last item in the table contained in paraF:\M6\ARCHER\ARCHER.036

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1 graph (1) shall be applied by substituting ‘53%’ for

2 ‘50%’.’’

3 (b) REPEAL OF PHASEOUT OF GRADUATED

4 RATES.—Subsection (c) of section 2001 is amended by

5 striking paragraph (2) and redesignating paragraph (3),

6 as added by subsection (a), as paragraph (2).

7 (c) ADDITIONAL REDUCTIONS OF RATES OF TAX.—

8 Subsection (c) of section 2001, as so amended, is amended

9 by adding at the end the following new paragraph:

10 ‘‘(3) PHASEDOWN OF TAX.—In the case of es11 tates of decedents dying, and gifts made, during any

12 calendar year after 2004 and before 2009—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 subparagraph (C), the tentative tax under this

15 subsection shall be determined by using a table

16 prescribed by the Secretary (in lieu of using the

17 table contained in paragraph (1)) which is the

18 same as such table; except that—

19 ‘‘(i) each of the rates of tax shall be

20 reduced by the number of percentage

21 points determined under subparagraph

22 (B), and

23 ‘‘(ii) the amounts setting forth the tax

24 shall be adjusted to the extent necessary to

25 reflect the adjustments under clause (i).

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1 ‘‘(B) PERCENTAGE POINTS OF REDUC2 TION.—

The number of

‘‘For calendar year: percentage points is:

2003 ............................................................................. 1.0

2004 ............................................................................. 2.0

2005 ............................................................................. 3.0

2006 ............................................................................. 4.0

2007 ............................................................................. 5.5

2008 ............................................................................. 7.5.

3 ‘‘(C) COORDINATION WITH INCOME TAX

4 RATES.—The reductions under subparagraph

5 (A)—

6 ‘‘(i) shall not reduce any rate under

7 paragraph (1) below the lowest rate in sec8 tion 1(c), and

9 ‘‘(ii) shall not reduce the highest rate

10 under paragraph (1) below the highest rate

11 in section 1(c).

12 ‘‘(D) COORDINATION WITH CREDIT FOR

13 STATE DEATH TAXES.—Rules similar to the

14 rules of subparagraph (A) shall apply to the

15 table contained in section 2011(b) except that

16 the Secretary shall prescribe percentage point

17 reductions which maintain the proportionate re18 lationship (as in effect before any reduction

19 under this paragraph) between the credit under

20 section 2011 and the tax rates under subsection

21 (c).’’

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1 (d) EFFECTIVE DATES.—

2 (1) SUBSECTIONS (a) AND (b).—The amend3 ments made by subsections (a) and (b) shall apply

4 to estates of decedents dying, and gifts made, after

5 December 31, 2000.

6 (2) SUBSECTION (c).—The amendment made by

7 subsection (c) shall apply to estates of decedents

8 dying, and gifts made, after December 31, 2004.

Page 278, strike line 1 and all that follows through

page 282, line 6.

Page 334, strike line 6 and all that follows through

page 336, line 13.

Page 345, strike line 10 and all that follows through

page 349, line 15.

Page 358, after line 2, insert the following new section:

9 SEC. 1264. TREATMENT OF MULTIEMPLOYER PLANS UNDER

10 SECTION 415.

11 (a) IN GENERAL.—Paragraph (11) of section 415(b)

12 (relating to limitation for defined benefit plans) is amend13 ed to read as follows:

14 ‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN15 MENTAL AND MULTIEMPLOYER PLANS.—In the case

16 of a governmental plan (as defined in section

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1 414(d)) or a multiemployer plan (as defined in sec2 tion 414(f)), subparagraph (B) of paragraph (1)

3 shall not apply.’’.

4 (b) EFFECTIVE DATE.—The amendment made by

5 this section shall apply to years beginning after December

6 31, 2000.

At the end of the bill insert the following new titles:

7 TITLE XVII—COMMITMENT TO

8 DEBT REDUCTION

9 SEC. 1701. COMMITMENT TO DEBT REDUCTION.

10 It is the sense of the Congress that—

11 (1) the national debt of the United States held

12 by the public is $3.619 trillion as of fiscal year

13 1999,

14 (2) the Federal budget is projected to produce

15 a surplus each year in the next 10 fiscal years,

16 (3) refunding taxes and reducing the national

17 debt held by the public will assure continued eco18 nomic growth and financial freedom for future gen19 erations, and

20 (4) the national debt held by the public shall be

21 reduced from $3.619 trillion to a level below $1.61

22 trillion by fiscal year 2009.

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H.L.C.

1 TITLE XVIII—BUDGETARY

2 TREATMENT

3 SEC. 1801. EXCLUSION OF EFFECTS OF THIS ACT FROM

4 PAYGO SCORECARD.

5 Upon the enactment of this Act, the Director of the

6 Office of Management and Budget shall not make any es7 timate of changes in direct spending outlays and receipts

8 under section 252(d) of the Balanced Budget and Emer9 gency Deficit Control Act of 1985 resulting from the en10 actment of this Act.

Conform the section numbering and the table of contents accordingly.

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