I

104TH CONGRESS

1ST SESSION H. R. 2236

To amend the Internal Revenue Code of 1986 to provide for regional cost

of living adjustments.

IN THE HOUSE OF REPRESENTATIVES

AUGUST 4, 1995

Mr. NADLER (for himself and Mrs. LOWEY) 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 provide

for regional cost of living adjustments.

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 ‘‘Tax Equity Act’’.

5 SEC. 2. REGIONAL COST-OF-LIVING ADJUSTMENTS IN INDI6 VIDUAL INCOME TAX RATES.

7 (a) GENERAL RULE.—Subsection (f) of section 1 of

8 the Internal Revenue Code of 1986 (relating to adjust9 ments in tax tables so that inflation will not result in tax
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1 increases) is amended by adding at the end the following

2 new paragraphs:

3 ‘‘(8) REGIONAL COST-OF-LIVING ADJUST4 MENTS.—

5 ‘‘(A) IN GENERAL.—In the case of an indi6 vidual, the rate table otherwise in effect under

7 this section for any taxable year (determined

8 after the application of paragraph (1)) shall be

9 further adjusted as provided in subparagraph

10 (B).

11 ‘‘(B) METHOD OF MAKING REGIONAL AD12 JUSTMENT.—The rate table otherwise in effect

13 under this section with respect to any individual

14 for any taxable year shall be adjusted as fol15 lows:

16 ‘‘(i) The minimum and maximum dol17 lar amounts otherwise in effect for each

18 rate bracket shall be multiplied by the ap19 plicable multiplier (for the calendar year in

20 which the taxable year begins) which ap21 plies to the statistical area in which the in22 dividual’s primary place of abode during

23 the taxable year is located.
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1 ‘‘(ii) The rate applicable to any rate

2 bracket (as adjusted by clause (i)) shall

3 not be changed.

4 ‘‘(iii) The amount setting forth the

5 tax shall be adjusted to the extent nec6 essary to reflect the adjustments in the

7 rate brackets.

8 If any amount determined under clause (i) is

9 not a multiple of $50, such amount shall be

10 rounded to the nearest multiple of $50.

11 ‘‘(9) DETERMINATION OF MULTIPLIERS.—

12 ‘‘(A) IN GENERAL.—Not later than De13 cember 15 of each calendar year, the Secretary

14 shall prescribe an applicable multiplier for each

15 statistical area of the United States, which shall

16 apply to taxable years beginning during the suc17 ceeding calendar year.

18 ‘‘(B) DETERMINATION OF MULTIPLIERS.—

19 ‘‘(i) For each statistical area where

20 the cost-of-living differential for any cal21 endar year is greater than 100 percent, the

22 applicable multiplier for such calendar year

23 shall be 100 percent of such differential.

24 ‘‘(ii) For each statistical area where

25 the cost-of-living differential for any cal-
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1 endar year does not exceed 100 percent,

2 the applicable multiplier for such calendar

3 year shall be 1.

4 ‘‘(C) COST-OF-LIVING DIFFERENTIAL.—

5 The cost-of-living differential for any statistical

6 area for any calendar year is the percentage de7 termined by dividing—

8 ‘‘(i) the cost-of-living for such area for

9 the preceding calendar year, by

10 ‘‘(ii) the average cost-of-living for the

11 United States for the preceding calendar

12 year.

13 ‘‘(D) COST-OF-LIVING FOR AREA.—

14 ‘‘(i) IN GENERAL.—For each calendar

15 year beginning after 1995, the Secretary of

16 Labor shall determine and publish a cost17 of-living index for each statistical area.

18 ‘‘(ii) METHODOLOGY.—The cost-of-liv19 ing index determined under clause (i) for

20 any statistical area for any calendar year

21 shall be based on average market prices for

22 the area for the 12-month period ending

23 on August 31 of such calendar year. The

24 market prices taken into account under the

25 preceding sentence shall be selected and
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1 used under the same methodology as is

2 used by the Secretary of Labor in develop3 ing the Consumer Price Index for All

4 Urban Consumers.

5 ‘‘(E) STATISTICAL AREA.—For purposes of

6 this subsection, the term ‘statistical area’

7 means—

8 ‘‘(i) any metropolitan statistical area

9 as defined by the Secretary of Commerce,

10 and

11 ‘‘(ii) the portion of any State not

12 within a metropolitan statistical area as so

13 defined.

14 ‘‘(10) AREAS OUTSIDE THE UNITED STATES.—

15 The applicable multiplier for any area outside the

16 United States shall be 1.’’

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

18 this section shall apply to taxable years beginning after

19 the date of the enactment of this Act.

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