II

107TH CONGRESS

1ST SESSION S. 1492

To amend the Internal Revenue Code of 1986 to repeal the tax relief sunset

and to reduce the maximum capital gains rates for individual taxpayers,

and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 3, 2001

Mr. GRAMM (for himself and Mr. MILLER) introduced the following bill; which

was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to repeal

the tax relief sunset and to reduce the maximum capital

gains rates for individual taxpayers, 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 ‘‘Economic Revitaliza5 tion Tax Cut Act’’.

6 SEC. 2. REPEAL OF SUNSET.

7 (a) IN GENERAL.—Title IX of the Economic Growth

8 and Tax Relief Reconciliation Act of 2001 is repealed.
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1 (b) EFFECTIVE DATE.—The repeal made by sub2 section (a) shall take effect on and after the date of the

3 enactment of this Act.

4 SEC. 3. REDUCTION OF MAXIMUM CAPITAL GAINS RATES

5 FOR INDIVIDUALS.

6 (a) IN GENERAL.—Section 1(h) of the Internal Rev7 enue Code of 1986 (relating to maximum capital gains

8 rate) is amended to read as follows:

9 ‘‘(h) MAXIMUM CAPITAL GAINS RATE.—

10 ‘‘(1) IN GENERAL.—If a taxpayer has a net

11 capital gain for any taxable year, the tax imposed by

12 this section for such taxable year shall not exceed

13 the sum of—

14 ‘‘(A) a tax computed on taxable income re15 duced by the net capital gain, at the rates and

16 in the same manner as if this subsection had

17 not been enacted,

18 ‘‘(B) 7.5 percent of so much of the tax19 payer’s net capital gain (or, if less, taxable in20 come) as does not exceed the excess (if any)

21 of—

22 ‘‘(i) the amount of taxable income

23 which would (without regard to this para24 graph) be taxed at a rate of 15 percent or

25 less, over
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1 ‘‘(ii) the amount on which tax is de2 termined under subparagraph (A), plus

3 ‘‘(C) 15 percent of the taxpayer’s net cap4 ital gain (or, if less, taxable income) in excess

5 of the amount of capital gain on which tax is

6 determined under subparagraph (B).

7 ‘‘(2) NET CAPITAL GAIN TAKEN INTO ACCOUNT

8 AS INVESTMENT INCOME.—For purposes of this sub9 section, the net capital gain for any taxable year

10 shall be reduced (but not below zero) by the amount

11 which the taxpayer elects to take into account as in12 vestment income for the taxable year under section

13 163(d)(4)(B)(iii).’’.

14 (b) MINIMUM TAX.—

15 (1) IN GENERAL.—Subparagraph (A) of section

16 55(b)(1) of the Internal Revenue Code of 1986 (re17 lating to amount of tentative tax) is amended by re18 designating clauses (ii) and (iii) as clauses (iii) and

19 (iv), respectively, and by inserting after clause (i)

20 the following new clause:

21 ‘‘(ii) MAXIMUM RATE OF TAX ON NET

22 CAPITAL GAIN.—The amount determined

23 under the first sentence of clause (i) shall

24 not exceed the sum of—
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1 ‘‘(I) the amount determined

2 under such first sentence computed at

3 the rates and in the same manner as

4 if this clause had not been enacted on

5 the taxable excess reduced by the net

6 capital gain, plus

7 ‘‘(II) a tax of 15 percent of the

8 lesser of the net capital gain or the

9 taxable excess.’’

10 (2) CONFORMING AMENDMENT.—Section 55(b)

11 of such Code is amended by striking paragraph (3).

12 (c) CONFORMING AMENDMENTS.—

13 (1) Section 57(a)(7) of the Internal Revenue

14 Code of 1986 is amended by striking the last sen15 tence.

16 (2) Paragraph (1) of section 1445(e) of such

17 Code is amended by striking ‘‘20 percent’’ and in18 serting ‘‘15 percent’’.

19 (3)(A) The second sentence of section

20 7518(g)(6)(A) of such Code is amended by striking

21 ‘‘20 percent’’ and inserting ‘‘15 percent’’.

22 (B) The second sentence of section

23 607(h)(6)(A) of the Merchant Marine Act, 1936 is

24 amended by striking ‘‘20 percent’’ and inserting ‘‘15

25 percent’’.
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1 (d) EFFECTIVE DATES.—

2 (1) IN GENERAL.—The amendments made by

3 this section shall apply to taxable years ending after

4 December 31, 2001.

5 (2) WITHHOLDING.—The amendment made by

6 subsection (c)(2) shall apply to amounts paid after

7 the date of the enactment of this Act.

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