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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1927 Introduced in Senate (IS)]

109th CONGRESS
  1st Session
                                S. 1927

 To amend the Internal Revenue Code of 1986 to make the Federal income 
  tax system simpler, fairer, and more fiscally responsible, and for 
                            other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 27, 2005

   Mr. Wyden 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 make the Federal income 
  tax system simpler, fairer, and more fiscally responsible, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Fair Flat Tax Act 
of 2005''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.
Sec. 2. Purpose.
                 TITLE I--INDIVIDUAL INCOME TAX REFORMS

Sec. 101. 3 progressive individual income tax rates for all forms of 
                            income.
Sec. 102. Increase in basic standard deduction.
Sec. 103. Refundable credit for State and local income, sales, and real 
                            and personal property taxes.
Sec. 104. Earned income child credit and earned income credit for 
                            childless taxpayers.
Sec. 105. Repeal of individual alternative minimum tax.
Sec. 106. Termination of various exclusions, exemptions, deductions, 
                            and credits.
          TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

Sec. 201. Corporate flat tax.
Sec. 202. Treatment of travel on corporate aircraft.
Sec. 203. Termination of various preferential treatments.
Sec. 204. Elimination of tax expenditures that subsidize inefficiencies 
                            in the health care system.
Sec. 205. Pass-through business entity transparency.
         TITLE III--TECHNICAL AND CONFORMING AMENDMENTS; SUNSET

Sec. 301. Technical and conforming amendments.
Sec. 302. Sunset.

SEC. 2. PURPOSE.

    The purpose of this Act is to amend the Internal Revenue Code of 
1986--
            (1) to make the Federal individual income tax system 
        simpler, fairer, and more transparent by--
                    (A) recognizing the overall Federal, State, and 
                local tax burden on individual Americans, especially 
                the regressive nature of State and local taxes, and 
                providing a Federal income tax credit for State and 
                local income, sales, and property taxes,
                    (B) providing for an earned income tax credit for 
                childless taxpayers and a new earned income child 
                credit,
                    (C) repealing the individual alternative minimum 
                tax,
                    (D) increasing the basic standard deduction and 
                maintaining itemized deductions for principal residence 
                mortgage interest and charitable contributions,
                    (E) reducing the number of exclusions, exemptions, 
                deductions, and credits, and
                    (F) treating all income equally,
            (2) to make the Federal corporate income tax rate a flat 35 
        percent and eliminate special tax preferences that favor 
        particular types of businesses or activities, and
            (3) to partially offset the Federal budget deficit through 
        the increased revenues resulting from these reforms.

                 TITLE I--INDIVIDUAL INCOME TAX REFORMS

SEC. 101. 3 PROGRESSIVE INDIVIDUAL INCOME TAX RATES FOR ALL FORMS OF 
              INCOME.

    (a) Married Individuals Filing Joint Returns and Surviving 
Spouses.--The table contained in section 1(a) is amended to read as 
follows:

``If taxable income is:             The tax is:
    Not over $25,000...............
                                        15% of taxable income. 
    Over $25,000 but not over 
        $120,000.
                                        $3,750, plus 25% of the excess 
                                                over $25,000 
    Over $120,000..................
                                        $27,500, plus 35% of the excess 
                                                over $120,000''.
    (b) Heads of Households.--The table contained in section 1(b) is 
amended to read as follows:

``If taxable income is:             The tax is:
    Not over $16,000...............
                                        15% of taxable income. 
    Over $16,000 but not over 
        $105,000.
                                        $2,400, plus 25% of the excess 
                                                over $16,000 
    Over $105,000..................
                                        $24,650, plus 35% of the excess 
                                                over $105,000''.
    (c) Unmarried Individuals (Other Than Surviving Spouses and Heads 
of Households).--The table contained in section 1(c) is amended to read 
as follows:

``If taxable income is:             The tax is:
    Not over $15,000...............
                                        15% of taxable income. 
    Over $15,000 but not over 
        $70,000.
                                        $2,250, plus 25% of the excess 
                                                over $15,000 
    Over $70,000...................
                                        $16,000, plus 35% of the excess 
                                                over $70,000''.
    (d) Married Individuals Filing Separate Returns.--The table 
contained in section 1(d) is amended to read as follows:

``If taxable income is:             The tax is:
    Not over $12,500...............
                                        15% of taxable income. 
    Over $12,500 but not over 
        $60,000.
                                        $1,875, plus 25% of the excess 
                                                over $12,500 
    Over $60,000...................
                                        $13,750, plus 35% of the excess 
                                                over $60,000''.
    (e) Conforming Amendments to Inflation Adjustment.--Section 1(f) is 
amended--
            (1) by striking ``1993''in paragraph (1) and inserting 
        ``2006'',
            (2) by striking ``except as provided in paragraph (8)'' in 
        paragraph (2)(A),
            (3) by striking ``1992'' in paragraph (3)(B) and inserting 
        ``2005'',
            (4) by striking paragraphs (7) and (8), and
            (5) by striking ``Phaseout of Marriage Penalty in 15-
        Percent Bracket;'' in the heading thereof.
    (f) Repeal of Rate Differential for Capital Gains and Dividends.--
            (1) Repeal of 2003 rate reduction.--Section 303 of the Jobs 
        and Growth Tax Relief Reconciliation Act of 2003 is amended by 
        striking ``December 3, 2008'' and inserting ``December 31, 
        2005''.
            (2) Termination of pre-2003 capital gain rate 
        differential.--Section 1(h) is amended (after the application 
        of paragraph (1)) by adding at the end the following new 
        paragraph:
            ``(13) Termination.--This section shall not apply to 
        taxable years beginning after December 31, 2005.''.
    (g) Additional Conforming Amendments.--
            (1) Section 1 is amended by striking subsection (i).
            (2) The Internal Revenue Code of 1986 is amended by 
        striking ``calendar year 1992'' each place it appears and 
        inserting ``calendar year 2005''.
            (3) Section 1445(e)(1) (after the application of subsection 
        (g)(1)) is amended by striking ``(or, to the extent provided in 
        regulations, 20 percent)''.
    (h) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 102. INCREASE IN BASIC STANDARD DEDUCTION.

    (a) In General.--Paragraph (2) of section 63(c) (defining standard 
deduction) is amended to read as follows:
            ``(2) Basic standard deduction.--For purposes of paragraph 
        (1), the basic standard deduction is--
                    ``(A) 200 percent of the dollar amount in effect 
                under subparagraph (C) for the taxable year in the case 
                of--
                            ``(i) a joint return, or
                            ``(ii) a surviving spouse (as defined in 
                        section 2(a)),
                    ``(B) $26,250 in the case of a head of household 
                (as defined in section 2(b)), or
                    ``(C) $15,000 in any other case.''.
    (b) Conforming Amendment to Inflation Adjustment.--Section 
63(c)(4)(B)(i) is amended by striking ``(2)(B), (2)(C), or''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 103. REFUNDABLE CREDIT FOR STATE AND LOCAL INCOME, SALES, AND REAL 
              AND PERSONAL PROPERTY TAXES.

    (a) General Rule.--Subpart C of part IV of subchapter A of chapter 
1 (relating to refundable credits) is amended by redesignating section 
36 as section 37 and by inserting after section 35 the following new 
section:

``SEC. 36. CREDIT FOR STATE AND LOCAL INCOME, SALES, AND REAL AND 
              PERSONAL PROPERTY TAXES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year an amount equal to 10 percent of the qualified 
State and local taxes paid by the taxpayer for such year.
    ``(b) Qualified State and Local Taxes.--For purposes of this 
section, the term `qualified State and local taxes' means--
            ``(1) State and local income taxes,
            ``(2) State and local general sales taxes,
            ``(3) State and local real property taxes, and
            ``(4) State and local personal property taxes.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) State or local taxes.--A State or local tax includes 
        only a tax imposed by a State, a possession of the United 
        States, or a political subdivision of any of the foregoing, or 
        by the District of Columbia.
            ``(2) General sales taxes.--
                    ``(A) In general.--The term `general sales tax' 
                means a tax imposed at one rate with respect to the 
                sale at retail of a broad range of classes of items.
                    ``(B) Application of rules.--Rules similar to the 
                rules under subparagraphs (C), (D), (E), (F), (G), and 
                (H) of section 164(b)(5) shall apply.
            ``(3) Personal property taxes.--The term `personal property 
        tax' means an ad valorem tax which is imposed on an annual 
        basis in respect of personal property.
            ``(4) Application of rules to property taxes.--Rules 
        similar to the rules of subsections (c) and (d) of section 164 
        shall apply.
            ``(5) No credit for married individuals filing separate 
        returns.--If the taxpayer is a married individual (within the 
        meaning of section 7703), this section shall apply only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(6) Denial of credit to dependents.--No credit shall be 
        allowed under this section to any individual with respect to 
        whom a deduction under section 151 is allowable to another 
        taxpayer for a taxable year beginning in the calendar year in 
        which such individual's taxable year begins.
            ``(7) Denial of double benefit.--Any amount taken into 
        account in determining the credit allowable under this section 
        may not be taken into account in determining any credit or 
        deduction under any other provision of this chapter.''.
    (b) Technical Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``or from section 36 of 
        such Code'' before the period at the end.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 is amended by striking the item 
        relating to section 36 and inserting the following:

``Sec. 36. Credit for state and local income, sales, and real and 
                            personal property taxes.
``Sec. 37. Overpayments of tax.''.
    (c) Report Regarding Use of Credit by Renters.--Not later than 180 
days after the date of the enactment of this Act, the Secretary of the 
Treasury shall report to the Committee on Finance of the Senate and the 
Committee on Ways and Means of the House of Representatives 
recommendations regarding the treatment of a portion of rental payments 
in a manner similar to real property taxes under section 36 of the 
Internal Revenue Code of 1986 (as added by this section).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 104. EARNED INCOME CHILD CREDIT AND EARNED INCOME CREDIT FOR 
              CHILDLESS TAXPAYERS.

    (a) In General.--Subsection (a) of section 32 (relating to earned 
income) is amended to read as follows:
    ``(a) Allowance of Earned Income Child Credit and Earned Income 
Credit.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this subtitle for the taxable year--
                    ``(A) in the case of any eligible individual with 1 
                or more qualifying children, an amount equal to the 
                earned income child credit amount, and
                    ``(B) in the case of any eligible individual with 
                no qualifying children, an amount equal to the earned 
                income credit amount.
            ``(2) Earned income child credit amount.--For purposes of 
        this section, the earned income child credit amount is equal to 
        the sum of--
                    ``(A) the credit percentage of so much of the 
                taxpayer's earned income for the taxable year as does 
                not exceed the earned income limit amount, plus
                    ``(B) the supplemental child credit amount 
                determined under subsection (n) for such taxable year.
            ``(3) Earned income credit amount.--For purposes of this 
        section, the earned income credit amount is equal to the credit 
        percentage of so much of the taxpayer's earned income for the 
        taxable year as does not exceed the earned income limit amount.
            ``(4) Limitation.--The amount of the credit allowable to a 
        taxpayer under paragraph (2)(A) or (3) for any taxable year 
        shall not exceed the excess (if any) of--
                    ``(A) the credit percentage of the earned income 
                amount, over
                    ``(B) the phaseout percentage of so much of the 
                adjusted gross income (or, if greater, the earned 
                income) of the taxpayer for the taxable year as exceeds 
                the phaseout amount.''.
    (b) Supplemental Child Credit Amount.--Section 32 is amended by 
adding at the end the following new subsection:
    ``(n) Supplemental Child Credit Amount.--
            ``(1) In general.--For purposes of subsection (a)(2)(B), 
        the supplemental child credit amount for any taxable year is 
        equal to the lesser of--
                    ``(A) the credit which would be allowed under 
                section 24 for such taxable year without regard to the 
                limitation under section 24(b)(3) with respect to any 
                qualifying child as defined under subsection (c)(3), or
                    ``(B) the amount by which the aggregate amount of 
                credits allowed by subpart A for such taxable year 
                would increase if the limitation imposed by section 
                24(b)(3) were increased by the excess (if any) of--
                            ``(i) 15 percent of so much of the 
                        taxpayer's earned income which is taken into 
                        account in computing taxable income for the 
                        taxable year as exceeds $10,000, or
                            ``(ii) in the case of a taxpayer with 3 or 
                        more qualifying children (as so defined), the 
                        excess (if any) of--
                                    ``(I) the taxpayer's social 
                                security taxes for the taxable year, 
                                over
                                    ``(II) the credit allowed under 
                                this section for the taxable year.
        The amount of the credit allowed under this subsection shall 
        not be treated as a credit allowed under subpart A and shall 
        reduce the amount of credit otherwise allowable under section 
        24(a) without regard to section 24(b)(3).
            ``(2) Social security taxes.--For purposes of paragraph 
        (1)--
                    ``(A) In general.--The term `social security taxes' 
                means, with respect to any taxpayer for any taxable 
                year--
                            ``(i) the amount of the taxes imposed by 
                        section 3101 and 3201(a) on amounts received by 
                        the taxpayer during the calendar year in which 
                        the taxable year begins,
                            ``(ii) 50 percent of the taxes imposed by 
                        section 1401 on the self-employment income of 
                        the taxpayer for the taxable year, and
                            ``(iii) 50 percent of the taxes imposed by 
                        section 3211(a)(1) on amounts received by the 
                        taxpayer during the calendar year in which the 
                        taxable year begins.
                    ``(B) Coordination with special refund of social 
                security taxes.--The term `social security taxes' shall 
                not include any taxes to the extent the taxpayer is 
                entitled to a special refund of such taxes under 
                section 6413(c).
                    ``(C) Special rule.--Any amounts paid pursuant to 
                an agreement under section 3121(l) (relating to 
                agreements entered into by American employers with 
                respect to foreign affiliates) which are equivalent to 
                the taxes referred to in subparagraph (A)(i) shall be 
                treated as taxes referred to in such paragraph.
            ``(3) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2005, the $10,000 
        amount contained in paragraph (1)(B) shall be increased by an 
        amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2000' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $50.''.
    (c) Conforming Amendment.--Section 24(d) is amended by adding at 
the end the following new paragraph:
            ``(4) Termination.--This subsection shall not apply with 
        respect to any taxable year beginning after December 31, 
        2005.''.
    (d) Certain Treatment of Earned Income Made Permanent.--Clause (vi) 
of section 32(c)(2)(B) is amended to read as follows:
                            ``(vi) a taxpayer may elect to treat 
                        amounts excluded from gross income by reason of 
                        section 112 as earned income.''.
    (e) Repeal of Disqualified Investment Income Test.--Subsection (i) 
of section 32 is repealed.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 105. REPEAL OF INDIVIDUAL ALTERNATIVE MINIMUM TAX.

    (a) In General.--Section 55(a) (relating to alternative minimum tax 
imposed) is amended by adding at the end the following new flush 
sentence:
``For purposes of this title, the tentative minimum tax on any taxpayer 
other than a corporation for any taxable year beginning after December 
31, 2005, shall be zero.''.
    (b) Modification of Limitation on Use of Credit for Prior Year 
Minimum Tax Liability.--Subsection (c) of section 53 (relating to 
credit for prior year minimum tax liability) is amended to read as 
follows:
    ``(c) Limitation.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        credit allowable under subsection (a) for any taxable year 
        shall not exceed the excess (if any) of--
                    ``(A) the regular tax liability of the taxpayer for 
                such taxable year reduced by the sum of the credits 
                allowable under subparts A, B, D, E, and F of this 
                part, over
                    ``(B) the tentative minimum tax for the taxable 
                year.
            ``(2) Taxable years beginning after 2005.--In the case of 
        any taxable year beginning after 2005, the credit allowable 
        under subsection (a) to a taxpayer other than a corporation for 
        any taxable year shall not exceed 90 percent of the regular tax 
        liability of the taxpayer for such taxable year reduced by the 
        sum of the credits allowable under subparts A, B, D, E, and F 
        of this part.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 106. TERMINATION OF VARIOUS EXCLUSIONS, EXEMPTIONS, DEDUCTIONS, 
              AND CREDITS.

    (a) In General.--Subchapter C of chapter 90 (relating to provisions 
affecting more than one subtitle) is amended by adding at the end the 
following new section:

``SEC. 7875. TERMINATION OF CERTAIN PROVISIONS.

    ``The following provisions shall not apply to taxable years 
beginning after December 31, 2005:
            ``(1) Section 44 (relating to credit for expenditures to 
        provide access to disabled individuals).
            ``(2) Section 62(a)(2)(D) (relating to deduction for 
        certain expenses of elementary and secondary school teachers).
            ``(3) Section 67 (relating to 2-percent floor on 
        miscellaneous itemized deductions).
            ``(4) Section 74(c) (relating to exclusion of certain 
        employee achievement awards).
            ``(5) Section 79 (relating to exclusion of group-term life 
        insurance purchased for employees).
            ``(6) Section 104(a)(1) (relating to exclusion of workmen's 
        compensation).
            ``(7) Section 104(a)(2) (relating to exclusion of damages 
        for physical injuries and sickness).
            ``(8) Section 107 (relating to exclusion of rental value of 
        parsonages).
            ``(9) Section 119 (relating to exclusion of meals or 
        lodging furnished for the convenience of the employer).
            ``(10) Section 125 (relating to exclusion of cafeteria plan 
        benefits).
            ``(11) Section 132 (relating to certain fringe benefits), 
        except with respect to subsection (a)(5) thereof (relating to 
        exclusion of qualified transportation fringe).
            ``(12) Section 163(h)(4)(A)(i)(II) (relating to definition 
        of qualified residence).
            ``(13) Section 165(d) (relating to deduction for wagering 
        losses).
            ``(14) Section 217 (relating to deduction for moving 
        expenses).
            ``(15) Section 454 (relating to deferral of tax on 
        obligations issued at discount).
            ``(16) Section 501(c)(9) (relating to tax-exempt status of 
        voluntary employees' beneficiary associations).
            ``(17) Section 911 (relating to exclusion of earned income 
        of citizens or residents of the United States living abroad).
            ``(18) Section 912 (relating to exemption for certain 
        allowances).''.
    (b) Conforming Amendment.--The table of sections for subchapter C 
of chapter 90 is amended by adding at the end the following new item:

        ``Sec. 7875. Termination of certain provisions.''.

          TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

SEC. 201. CORPORATE FLAT TAX.

    (a) In General.--Subsection (b) of section 11 (relating to tax 
imposed) is amended to read as follows:
    ``(b) Amount of Tax.--The amount of tax imposed by subsection (a) 
shall be equal to 35 percent of the taxable income.''.
    (b) Conforming Amendments.--
            (1) Section 280C(c)(3)(B)(ii)(II) is amended by striking 
        ``maximum rate of tax under section 11(b)(1)'' and inserting 
        ``rate of tax under section 11(b)''.
            (2) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 
        860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 1446(b)(2)(B), and 
        7874(e)(1)(B) are each amended by striking ``highest rate of 
        tax specified in section 11(b)(1)'' and inserting ``rate of tax 
        specified in section 11(b)''.
            (3) Section 904(b)(3)(D)(ii) is amended by striking 
        ``(determined without regard to the last sentence of section 
        11(b)(1))''.
            (4) Section 962 is amended by striking subsection (c) and 
        by redesignating subsection (d) as subsection (c).
            (5) Section 1201(a) is amended by striking ``(determined 
        without regard to the last 2 sentences of section 11(b)(1))''.
            (6) Section 1561(a) is amended--
                    (A) by striking paragraph (1) and by redesignating 
                paragraphs (2), (3), and (4) as paragraphs (1), (2), 
                and (3), respectively,
                    (B) by striking ``The amounts specified in 
                paragraph (1), the'' and inserting ``The'',
                    (C) by striking ``paragraph (2)'' and inserting 
                ``paragraph (1)'',
                    (D) by striking ``paragraph (3)'' both places it 
                appears and inserting ``paragraph (2)'',
                    (E) by striking ``paragraph (4)'' and inserting 
                ``paragraph (3)'', and
                    (F) by striking the fourth sentence.
            (7) Subsection (b) of section 1561 is amended to read as 
        follows:
    ``(b) Certain Short Taxable Years.--If a corporation has a short 
taxable year which does not include a December 31 and is a component 
member of a controlled group of corporations with respect to such 
taxable year, then for purposes of this subtitle, the amount to be used 
in computing the accumulated earnings credit under section 535(c)(2) 
and (3) of such corporation for such taxable year shall be the amount 
specified in subsection (a)(1) divided by the number of corporations 
which are component members of such group on the last day of such 
taxable year. For purposes of the preceding sentence, section 1563(b) 
shall be applied as if such last day were substituted for December 
31.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 202. TREATMENT OF TRAVEL ON CORPORATE AIRCRAFT.

    (a) In General.--Section 162 (relating to trade or business 
expenses) is amended by redesignating subsection (q) as subsection (r) 
and b inserting after subsection (p) the following new subsection:
    ``(q) Treatment of Travel on Corporate Aircraft.--The rate at which 
an amount allowable as a deduction under this chapter for the use of an 
aircraft owned by the taxpayer is determined shall not exceed the rate 
at which an amount paid or included in income by an employee of such 
taxpayer for the personal use of such aircraft is determined.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 203. TERMINATION OF VARIOUS PREFERENTIAL TREATMENTS.

    (a) In General.--Section 7875, as added by section 106, is 
amended--
            (1) by inserting ``(or transactions in the case of sections 
        referred to in paragraphs (21), (22), (23), (24), and (27))'' 
        after ``taxable years beginning'', and
            (2) by adding at the end the following new paragraphs:
            ``(19) Section 43 (relating to enhanced oil recovery 
        credit).
            ``(20) Section 263(c) (relating to intangible drilling and 
        development costs in the case of oil and gas wells and 
        geothermal wells).
            ``(21) Section 382(l)(5) (relating to exception from net 
        operating loss limitations for corporations in bankruptcy 
        proceeding).
            ``(22) Section 451(i) (relating to special rules for sales 
        or dispositions to implement Federal Energy Regulatory 
        Commission or State electric restructuring policy).
            ``(23) Section 453A (relating to special rules for 
        nondealers), but only with respect to the dollar limitation 
        under subsection (b)(1) thereof and subsection (b)(3) thereof 
        (relating to exception for personal use and farm property).
            ``(24) Section 460(e)(1) (relating to special rules for 
        long-term home construction contracts or other short-term 
        construction contracts).
            ``(25) Section 613A (relating to percentage depletion in 
        case of oil and gas wells).
            ``(26) Section 616 (relating to development costs).
            ``(27) Sections 861(a)(6), 862(a)(6), 863(b)(2), 863(b)(3), 
        and 865(b) (relating to inventory property sales source rule 
        exception).''.
    (b) Full Tax Rate on Nuclear Decommissioning Reserve Fund.--
Subparagraph (B) of section 468A(e)(2) is amended to read as follows:
                    ``(B) Rate of tax.--For purposes of subparagraph 
                (A), the rate set forth in this subparagraph is 35 
                percent.''.
    (c) Deferral of Active Income of Controlled Foreign Corporations.--
Section 952 (relating to subpart F income defined) is amended by adding 
at the end the following new subsection:
    ``(e) Special Application of Subpart.--
            ``(1) In general.--For taxable years beginning after 
        December 31, 2005, notwithstanding any other provision of this 
        subpart, the term `subpart F income' means, in the case of any 
        controlled foreign corporation, the income of such corporation 
        derived from any foreign country.
            ``(2) Applicable rules.--Rules similar to the rules under 
        the last sentence of subsection (a) and subsection (d) shall 
        apply to this subsection.''.
    (d) Deferral of Active Financing Income.--Section 953(e)(10) is 
amended--
            (1) by striking ``2006'' and inserting ``2005'', and
            (2) by striking ``2007'' and inserting ``2006''.
    (e) Depreciation on Equipment in Excess of Alternative Depreciation 
System.--Section 168(g)(1) (relating to alternative depreciation 
system) is amended by striking ``and'' at the end of subparagraph (D), 
by adding ``and'' at the end of subparagraph (E), and by inserting 
after subparagraph (E) the following new subparagraph:
                    ``(F) notwithstanding subsection (a), any tangible 
                property placed in service after December 31, 2005,''.
    (f) Effective Date.--The amendments made by subsections (b), (c), 
and (d) shall apply to taxable years beginning after December 31, 2005.

SEC. 204. ELIMINATION OF TAX EXPENDITURES THAT SUBSIDIZE INEFFICIENCIES 
              IN THE HEALTH CARE SYSTEM.

    Not later than 180 days after the date of the enactment of this 
Act, the Secretary of the Treasury shall report to the Committee on 
Finance of the Senate and the Committee on Ways and Means of the House 
of Representatives recommendations regarding the elimination of Federal 
tax incentives which subsidize inefficiencies in the health care system 
and if eliminated would result in Federal budget savings of not less 
than $10,000,000,000 annually.

SEC. 205. PASS-THROUGH BUSINESS ENTITY TRANSPARENCY.

    Not later than 90 days after the date of the enactment of this Act, 
the Secretary of the Treasury shall report to the Committee on Finance 
of the Senate and the Committee on Ways and Means of the House of 
Representatives regarding the implementation of additional reporting 
requirements with respect to any pass-through entity with the goal of 
the reduction of tax avoidance through the use of such entities, In 
addition, the Secretary shall develop procedures to share such report 
data with State revenue agencies under the disclosure requirements of 
section 6103(d) of the Internal Revenue Code of 1986.

         TITLE III--TECHNICAL AND CONFORMING AMENDMENTS; SUNSET

SEC. 301. TECHNICAL AND CONFORMING AMENDMENTS.

    The Secretary of the Treasury or the Secretary's delegate shall not 
later than 90 days after the date of the enactment of this Act, submit 
to the Committee on Ways and Means of the House of Representatives and 
the Committee on Finance of the Senate a draft of any technical and 
conforming changes in the Internal Revenue Code of 1986 which are 
necessary to reflect throughout such Code the purposes of the 
provisions of, and amendments made by, this Act.

SEC. 302. SUNSET.

    (a) In General.--All provisions of, and amendments made by, this 
Act shall not apply to taxable years beginning after December 31, 2010.
    (b) Application of Code.--The Internal Revenue Code of 1986 shall 
be applied and administered to taxable years described in subsection 
(a) as if the provisions of, and amendments made by, this Act had never 
been enacted.
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