I

104TH CONGRESS

1ST SESSION H. R. 214

To amend the Internal Revenue Code of 1986 to repeal the income taxation

of corporations, to impose a 10 percent tax on the earned income (and

only the earned income) of individuals, to repeal the estate and gift

taxes, to provide amnesty for all tax liability for prior taxable years,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. CRANE introduced the following bill; which was referred to the Committee

on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to repeal

the income taxation of corporations, to impose a 10

percent tax on the earned income (and only the earned

income) of individuals, to repeal the estate and gift taxes,

to provide amnesty for all tax liability for prior taxable

years, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Crane Tithe Tax Act

5 of 1995’’.
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1 SEC. 2. REPEAL OF TAXATION OF CORPORATIONS.

2 The following provisions of the Internal Revenue

3 Code of 1986 are hereby repealed:

4 (1) section 11 (relating to corporate income

5 tax),

6 (2) section 55 (relating to alternative minimum

7 tax) insofar as it applies to corporations,

8 (3) section 511 (relating to unrelated business

9 income tax),

10 (4) section 531 (relating to accumulated earn11 ings tax),

12 (5) section 541 (relating to personal holding

13 company tax),

14 (6) section 594 (relating to alternative tax for

15 certain mutual savings banks),

16 (7) section 801 (relating to tax imposed on life

17 insurance companies),

18 (8) section 821 (relating to tax imposed on cer19 tain mutual insurance companies),

20 (9) section 831 (relating to tax on certain other

21 insurance companies),

22 (10) section 852 (relating to tax on regulated

23 investment companies),

24 (11) section 857 (relating to tax on real estate

25 investment trusts), and
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1 (12) section 882 (relating to tax on income of

2 foreign corporations connected with United States

3 business).

4 SEC. 3. 10 PERCENT INCOME TAX RATE FOR INDIVIDUALS.

5 Section 1 of the Internal Revenue Code of 1986 (re6 lating to tax imposed on individuals) is amended to read

7 as follows:

8 ‘‘SECTION 1. TAX IMPOSED.

9 ‘‘(a) IN GENERAL.—There is hereby imposed on the

10 income of every individual a tax equal to 10 percent of

11 the excess of the earned income of such individual for the

12 taxable year over the exemption amount for such year.

13 ‘‘(b) DEFINITIONS.—For purposes of this section—

14 ‘‘(1) EXEMPTION AMOUNT.—

15 ‘‘(A) IN GENERAL.—The term ‘exemption

16 amount’ means, for any taxable year, $10,000

17 increased (for taxable years beginning after De18 cember 31, 1995) by an amount equal to

19 $10,000 multiplied by the cost-of-living adjust20 ment for the calendar year in which the taxable

21 year begins.

22 ‘‘(B) COST-OF-LIVING ADJUSTMENT.—For

23 purposes of this paragraph—
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1 ‘‘(i) IN GENERAL.—The cost-of-living

2 adjustment for any calendar year is the

3 percentage (if any) by which—

4 ‘‘(I) the CPI for October of the

5 preceding calendar year, exceeds

6 ‘‘(II) the CPI for October of

7 1994.

8 ‘‘(ii) CPI.—The term ‘CPI’ means the

9 last Consumer Price Index for all-urban

10 consumers published by the Department of

11 Labor.

12 ‘‘(C) ROUNDING.—If the increase deter13 mined under this paragraph is not a multiple of

14 $10, such increase shall be rounded to the near15 est multiple of $10 (or if such increase is a

16 multiple of $5, such increase shall be increased

17 to the next highest multiple of $10).

18 ‘‘(2) EARNED INCOME.—

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

20 subparagraph (B), the term ‘earned income’

21 means—

22 ‘‘(i) wages, salaries, and other em23 ployee compensation,
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1 ‘‘(ii) the amount of the taxpayer’s net

2 earnings from self-employment for the tax3 able year, and

4 ‘‘(iii) the amount of dividends which

5 are from a personal service corporation or

6 which are otherwise directly or indirectly

7 compensation for services.

8 ‘‘(B) EXCEPTIONS.—The term ‘earned in9 come’ does not include—

10 ‘‘(i) any amount received as a pension

11 or annuity, or

12 ‘‘(ii) any tip unless the amount of the

13 tip is not within the discretion of the serv14 ice-recipient.

15 ‘‘(C) FRINGE BENEFITS VALUED AT EM16 PLOYER COST.—The amount of any fringe ben17 efit which is included as earned income shall be

18 the cost to the employer of such benefit.’’

19 SEC. 4. AMNESTY FOR ALL PRIOR TAX LIABILITY.

20 (a) IN GENERAL.—No person shall be liable for any

21 tax imposed by chapter 1 of the Internal Revenue Code

22 of 1986 (or for penalties and interest with respect to such

23 tax) for any taxable year ending before January 1, 1994.

24 (b) EXCEPTIONS.—
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1 (1) AMOUNTS PAID.—Subsection (a) shall not

2 apply to amounts paid before the date of the enact3 ment of this Act.

4 (2) TAX ATTRIBUTABLE TO ILLEGAL ACTIVI5 TIES.—Subsection (a) shall not apply to any tax (in6 cluding penalties and interest with respect to such

7 tax) attributable to any business activity which is in

8 violation of any Federal, State, or local law.

9 SEC. 5. REPEAL OF SPECIAL DEDUCTIONS, CREDITS, AND

10 EXCLUSIONS FROM INCOME FOR INDIVID11 UALS.

12 Chapter 1 of the Internal Revenue Code of 1986 is

13 amended by striking out all specific exclusions from gross

14 income, all deductions, and all credits against income tax

15 to the extent related to the computation of individual in16 come tax liability.

17 SEC. 6. REPEAL OF ESTATE AND GIFT TAXES.

18 Subtitle B of the Internal Revenue Code of 1986 (re19 lating to estate, gift, and generation-skipping taxes) is

20 hereby repealed.

21 SEC. 7. EFFECTIVE DATES.

22 (a) IN GENERAL.—Except as provided in subsection

23 (b), the amendments made by this Act shall apply to tax24 able years beginning after the date of the enactment of

25 this Act.
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1 (b) REPEAL OF ESTATE AND GIFT TAXES.—The re2 peal made by section 6 shall apply to estates of decedents

3 dying, and transfers made, after the date of the enactment

4 of this Act.

5 (c) TECHNICAL AND CONFORMING CHANGES.—The

6 Secretary of the Treasury or his delegate shall, as soon

7 as practicable but in any event not later than 90 days

8 after the date of the enactment of this Act, submit to the

9 Committee on Ways and Means of the House of Rep10 resentatives a draft of any technical and conforming

11 changes in the Internal Revenue Code of 1986 which are

12 necessary to reflect throughout such Code the changes in

13 the substantive provisions of law made by this Act.

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