I

107TH CONGRESS

1ST SESSION H. R. 872

To amend the Internal Revenue Code of 1986 to provide individual and

corporate income tax rate reductions.

IN THE HOUSE OF REPRESENTATIVES

MARCH 6, 2001

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 provide

individual and corporate income tax rate reductions.

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; ETC.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Corporation Income Tax Rate Reduction Act of 2001’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 (c) SECTION 15 NOT TO APPLY.—No amendment

4 made by this Act shall be treated as a change in a rate

5 of tax for purposes of section 15 of the Internal Revenue

6 Code of 1986.

7 SEC. 2. REDUCTION IN MARGINAL INCOME TAX RATES FOR

8 INDIVIDUALS.

9 (a) RATES FOR 2002.—Section 1 (relating to tax im10 posed) is amended by striking subsections (a) through (d)

11 and inserting the following:

12 ‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS

13 AND SURVIVING SPOUSES.—There is hereby imposed on

14 the taxable income of—

15 ‘‘(1) every married individual (as defined in sec16 tion 7703) who makes a single return jointly with

17 his spouse under section 6013, and

18 ‘‘(2) every surviving spouse (as defined in sec19 tion 2(a)),

20 a tax determined in accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $12,000 .......................... 14% of taxable income.

Over $12,000 but not over

$45,200.

$1,680, plus 15% of the excess over

$12,000.

Over $45,200 but not over

$109,250.

$6,660, plus 27% of the excess over

$45,200.

Over $109,250 but not over

$166,450.

$23,953.50, plus 30% of the excess

over $109,250.

Over $166,450 but not over

$297,300.

$41,113.50, plus 35% of the excess

over $166,450.

Over $297,300 ............................... $86,911, plus 38% of the excess over

$297,300.
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1 ‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im2 posed on the taxable income of every head of a household

3 (as defined in section 2(b)) a tax determined in accordance

4 with the following table:

‘‘If taxable income is: The tax is:

Not over $10,000 .......................... 14% of taxable income.

Over $10,000 but not over

$36,250.

$1,400, plus 15% of the excess over

$10,000.

Over $36,250 but not over

$93,600.

$5,337.50, plus 27% of the excess

over $36,250.

Over $93,600 but not over

$151,600.

$20,822, plus 30% of the excess over

$93,600.

Over $151,600 but not over

$297,300.

$38,222, plus 35% of the excess over

$151,600.

Over $297,300 ............................... $89,217, plus 38% of the excess over

$297,300.

5 ‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SUR6 VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—There

7 is hereby imposed on the taxable income of every indi8 vidual (other than a surviving spouse as defined in section

9 2(a) or the head of a household as defined in section 2(b))

10 who is not a married individual (as defined in section

11 7703) a tax determined in accordance with the following

12 table:

‘‘If taxable income is: The tax is:

Not over $6,000 ............................ 14% of taxable income.

Over $6,000 but not over $27,050 $840, plus 15% of the excess over

$6,000.

Over $27,050 but not over

$65,550.

$3,997.50, plus 27% of the excess

over $27,050.

Over $65,550 but not over

$136,750.

$14,362.50, plus 30% of the excess

over $65,550.

Over $136,750 but not over

$297,300.

$35,752.50, plus 35% of the excess

over $136,750.

Over $297,300 ............................... $91,945, plus 38% of the excess over

$297,300.

13 ‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RE14 TURNS.—There is hereby imposed on the taxable income
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1 of every married individual (as defined in section 7703)

2 who does not make a single return jointly with his spouse

3 under section 6013, a tax determined in accordance with

4 the following table:

‘‘If taxable income is: The tax is:

Not over $6,000 ............................ 14% of taxable income.

Over $6,000 but not over $22,600 $840, plus 15% of the excess over

$6,000.

Over $22,600 but not over

$54,625.

$3,330, plus 27% of the excess over

$22,600.

Over $54,625 but not over

$83,225.

$11,976.75, plus 30% of the excess

over $54,625.

Over $83,225 but not over

$148,650.

$20,556.75, plus 35% of the excess

over $83,225.

Over $148,650 ............................... $43,455.50, plus 38% of the excess

over $148,650.’’.

5 (b) PHASEIN OF RATE REDUCTIONS.—Section 1 is

6 amended by adding at the end the following new sub7 section:

8 ‘‘(i) PHASEIN OF 2006 RATES OF 10, 15, 25, AND

9 33 PERCENT.—

10 ‘‘(1) IN GENERAL.—In the case of taxable years

11 beginning in a calendar year after 2002, the tax

12 rates determined under subsection (a), (b), (c), or

13 (d) shall be the tax rates imposed by such subsection

14 in taxable years beginning in calendar year 2002,

15 reduced—

16 ‘‘(A) in the case of the 14 percent rate, by

17 1 percentage point in each taxable year begin18 ning in a calendar year after 2002 and before

19 2007,
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1 ‘‘(B) in the case of the 27 and 35 percent

2 rates, by 1 percentage point in taxable years be3 ginning in calendar year 2004, and by an addi4 tional 1 percentage point in taxable years begin5 ning in calendar year 2006, and

6 ‘‘(C) in the case of the 30 and 38 percent

7 rate, by 1 percentage point in each taxable year

8 beginning in a calendar year after 2002 and be9 fore 2006, and by an additional 2 percentage

10 points in taxable years beginning in calendar

11 year 2006.

12 ‘‘(2) ADJUSTMENT OF TABLES.—The Secretary

13 shall adjust the tables prescribed under subsection

14 (f) to carry out the reductions under this sub15 section.’’.

16 (c) INFLATION ADJUSTMENT TO APPLY IN DETER17 MINING RATES FOR 2002.—Subsection (f) of section 1 is

18 amended—

19 (1) by striking ‘‘1993’’ in paragraph (1) and in20 serting ‘‘2001’’,

21 (2) by striking ‘‘1992’’ in paragraph (3)(B) and

22 inserting ‘‘2000’’, and

23 (3) by striking paragraph (7) and inserting the

24 following new paragraph:

25 ‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—
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1 ‘‘(A) CALENDAR YEARS 2002 THROUGH

2 2006.—In prescribing the tables under para3 graph (1) which apply with respect to taxable

4 years beginning in calendar years after 2001

5 and before 2007, the Secretary shall make no

6 adjustment to the dollar amounts at which the

7 first rate bracket begins or at which the second

8 rate bracket begins under any table contained

9 in subsection (a), (b), (c), or (d).

10 ‘‘(B) LATER CALENDAR YEARS.—In pre11 scribing the tables under paragraph (1) which

12 apply with respect to taxable years beginning in

13 a calendar year after 2006, the cost-of-living

14 adjustment used in making adjustments to the

15 dollar amounts referred to in subparagraph (A)

16 shall be determined under paragraph (3) by

17 substituting ‘2005’ for ‘2000’.’’.

18 (d) CONFORMING AMENDMENTS.—

19 (1) The following provisions are each amended

20 by striking ‘‘1992’’ and inserting ‘‘2000’’ each place

21 it appears:

22 (A) Section 32(j)(1)(B).

23 (B) Section 41(e)(5)(C).

24 (C) Section 42(h)(3)(H)(i)(II).

25 (D) Section 59(j)(2)(B).
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1 (E) Section 63(c)(4)(B).

2 (F) Section 68(b)(2)(B).

3 (G) Section 132(f)(6)(A)(ii).

4 (H) Section 135(b)(2)(B)(ii).

5 (I) Section 146(d)(2)(B).

6 (J) Section 151(d)(4).

7 (K) Section 220(g)(2).

8 (L) Section 221(g)(1)(B).

9 (M) Section 512(d)(2)(B).

10 (N) Section 513(h)(2)(C)(ii).

11 (O) Section 685(c)(3)(B).

12 (P) Section 877(a)(2).

13 (Q) Section 911(b)(2)(D)(ii)(II).

14 (R) Section 2032A(a)(3)(B).

15 (S) Section 2503(b)(2)(B).

16 (T) Section 2631(c)(2).

17 (U) Section 4001(e)(1)(B).

18 (V) Section 4261(e)(4)(A)(ii).

19 (W) Section 6039F(d).

20 (X) Section 6323(i)(4)(B).

21 (Y) Section 6334(g)(1)(B).

22 (Z) Section 6601(j)(3)(B).

23 (AA) Section 7430(c)(1).
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1 (2) Sections 25A(h)(1)(A)(ii) and

2 25A(h)(2)(A)(ii) are each amended by striking ‘‘be3 gins,’’ and all that follows through ‘‘thereof’’.

4 (3) Subclause (II) of section 42(h)(6)(G)(i) is

5 amended by striking ‘‘1987’’ and inserting ‘‘2000’’.

6 (e) ADDITIONAL CONFORMING AMENDMENTS.—

7 (1) Section 1(g)(7)(B)(ii)(II) is amended by

8 striking ‘‘15 percent’’ and inserting ‘‘10 percent’’.

9 (2) Section 1(h) is amended—

10 (A) by striking ‘‘28 percent’’ both places it

11 appears in paragraphs (1)(A)(ii)(I) and

12 (1)(B)(i) and inserting ‘‘15 percent’’, and

13 (B) by striking paragraph (13).

14 (3) Section 531 is amended by striking ‘‘39.6

15 percent’’ and inserting ‘‘33 percent’’.

16 (4) Section 541 of such Code is amended by

17 striking ‘‘39.6 percent’’ and inserting ‘‘33 percent’’.

18 (5) Section 3402(p)(1)(B) is amended by strik19 ing ‘‘7, 15, 28, or 31 percent’’ and inserting ‘‘5, 10,

20 15, or 25 percent’’.

21 (6) Section 3402(p)(2) is amended by striking

22 ‘‘15 percent’’ and inserting ‘‘10 percent’’.

23 (7) Section 3402(q)(1) is amended by striking

24 ‘‘28 percent’’ and inserting ‘‘15 percent’’.
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1 (8) Section 3402(r)(3) is amended by striking

2 ‘‘31 percent’’ and inserting ‘‘25 percent’’.

3 (9) Section 3406(a)(1) is amended by striking

4 ‘‘31 percent’’ and inserting ‘‘25 percent’’.

5 (10) The Secretary of the Treasury may pre6 scribe percentages which shall apply in lieu of the

7 percentages specified in the amendments made by

8 this subsection in order to coordinate those percent9 ages with the percentages specified in the tables pre10 scribed under the last sentence of section 1(i)(1) of

11 the Internal Revenue Code of 1986, as added by this

12 section.

13 (f) EFFECTIVE DATES.—

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this section

16 shall apply to taxable years beginning after Decem17 ber 31, 2001.

18 (2) AMENDMENTS TO WITHHOLDING PROVI19 SIONS.—The amendments made by paragraphs (5),

20 (6), (7), (8), and (9) of subsection (e) shall apply to

21 amounts paid after December 31, 2001.

22 SEC. 3. REDUCTION IN INCOME TAX RATES FOR CORPORA23 TIONS.

24 (a) REGULAR TAX RATE REDUCTION.—
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1 (1) IN GENERAL.—Paragraph (1) of section

2 11(b) is amended by adding ‘‘and’’ at the end of

3 subparagraph (B) and by striking subparagraphs

4 (C) and (D) and inserting the following new sub5 paragraph:

6 ‘‘(C) 33 percent (34 percent for taxable

7 years beginning during 2002 or 2003) of so

8 much of the taxable income as exceeds

9 $75,000.’’

10 (2) CONFORMING AMENDMENTS.—

11 (A) Paragraph (1) of section 11(b) is

12 amended—

13 (i) by striking the last sentence, and

14 (ii) by striking ‘‘$11,750’’ and insert15 ing ‘‘$11,000 ($11,750 for taxable years

16 beginning during 2002 or 2003)’’.

17 (B) Paragraph (2) of section 11(b) is

18 amended by striking ‘‘35 percent’’ and inserting

19 ‘‘33 percent (34 percent for taxable years be20 ginning during 2002 or 2003)’’.

21 (C) Subsection (a) of section 1201 is

22 amended—

23 (i) by striking ‘‘35 percent’’ each

24 place it appears and inserting ‘‘33 percent
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1 (34 percent for taxable years beginning

2 during 2002 or 2003)’’, and

3 (ii) by striking ‘‘the last 2 sentences’’

4 and inserting ‘‘the last sentence’’.

5 (b) MINIMUM TAX RATE REDUCTION.—Subpara6 graph (B) of section 55(b)(1) is amended by striking ‘‘20

7 percent’’ and inserting ‘‘19 percent’’.

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after

10 December 31, 2001.

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