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103D CONGRESS

1ST SESSION H. R. 958

To amend the Internal Revenue Code to simplify the earned income credit.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 17, 1993

Mrs. KENNELLY introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code to simplify the earned

income credit.

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

3 SECTION 1. SIMPLIFICATION OF EARNED INCOME CREDIT.

4 (a) GENERAL RULE.—Section 32 of the Internal

5 Revenue Code of 1986 (relating to earned income credit)

6 is amended by striking subsections (a) and (b) and insert7 ing the following:

8 ‘‘(a) ALLOWANCE OF CREDIT.—

9 ‘‘(1) IN GENERAL.—In the case of an eligible

10 individual, there shall be allowed as a credit against

11 the tax imposed by this subtitle for the taxable year
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1 an amount equal to the credit percentage of so much

2 of the taxpayer’s earned income for the taxable year

3 as does not exceed $5,714.

4 ‘‘(2) LIMITATION.—The amount of the credit

5 allowable to a taxpayer under paragraph (1) for any

6 taxable year shall not exceed the excess (if any) of—

7 ‘‘(A) the credit percentage of $5,714, over

8 ‘‘(B) the phaseout percentage of so much

9 of the adjusted gross income (or, if greater, the

10 earned income) of the taxpayer for the taxable

11 year as exceeds $9,000.

12 ‘‘(b) PERCENTAGES.—For purposes of subsection

13 (a)—

14 ‘‘(1) IN GENERAL.—Except as otherwise pro15 vided in this subsection—

‘‘In the case of an eligible individual

with: The credit percentage is:

The phaseout percentage is:

1 qualifying child .............................. 23.0 ............................ 16.43

2 qualifying children ......................... 29.0 ............................ 20.71

3 or more qualifying children ........... 33.01 .......................... 23.56

16 ‘‘(2) TRANSITIONAL PERCENTAGES.—In the

17 case of a taxable year beginning in 1993:

‘‘In the case of an eligible individual

with:

The credit percentage

is:

The

phaseout

percentage

is:

1 qualifying child ............................. 18.5 ............................. 13.21

2 qualifying children ........................ 23.5 ............................. 16.78

3 or more qualifying children .......... 28.5 ............................. 20.35’’

18 (b) CONFORMING AMENDMENTS.—
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1 (1) Paragraph (2) of section 32(f) is amended

2 by striking ‘‘subsection (b)’’ each place it appears

3 and inserting ‘‘subsection (a)(2)’’.

4 (2) Subparagraph (B) of section 32(i)(2) is

5 amended—

6 (A) by striking ‘‘subsection (b)(1)’’ in

7 clause (i) and inserting ‘‘subsection (a)’’, and

8 (B) by striking ‘‘subsection (b)(1)(B)(ii)’’

9 in clause (ii) and inserting ‘‘subsection (a)(2)’’.

10 (3) Paragraph (3) of section 162(l) is amended

11 to read as follows:

12 ‘‘(3) COORDINATION WITH MEDICAL DEDUC13 TION.—Any amount paid by a taxpayer for insur14 ance to which paragraph (1) applies shall not be

15 taken into account in computing the amount allow16 able to the taxpayer as a deduction under section

17 213(a).’’

18 (4) Section 213 is amended by striking sub19 section (f).

20 (5) Subparagraph (B) of section 3507(c)(2) is

21 amended by striking clauses (i) and (ii) and insert22 ing the following:

23 ‘‘(i) of not more than the percentage

24 (in effect under section 32(a)(1) for an eli25 gible individual with 1 qualifying child) of
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1 earned income not in excess of the amount

2 of earned income taken into account under

3 section 32(a)(1), which

4 ‘‘(ii) phases out between the amount

5 of earned income at which the phaseout be6 gins under subsection (a)(2) of section 32

7 and the amount of earned income at which

8 the credit under section 32 is phased out

9 under such subsection for an individual

10 with 1 qualifying child, or’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 1992.

14 SEC. 2. REQUIRED EXPLANATION OF ADVANCE PAYMENT

15 PROVISIONS.

16 (a) GENERAL RULE.—Section 3507 of the Internal

17 Revenue Code of 1986 is amended by adding at the end

18 thereof the following new subsection:

19 ‘‘(f) REQUIRED EXPLANATION OF ADVANCE PAY20 MENT PROVISIONS.—The Secretary shall include with any

21 refund of an overpayment of tax made to an individual

22 eligible for the credit provided by section 32—

23 ‘‘(1) an explanation of the provisions of this

24 section, and
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1 ‘‘(2) a copy of the form to be used in furnishing

2 an earned income eligibility certificate to the individ3 ual’s employer.’’

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

5 subsection (a) shall take effect on December 31, 1993.

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