II 

113TH CONGRESS 

1ST SESSION S. 1616 

To amend the Internal Revenue Code of 1986 to provide for simplification, 

to reduce the number of tax brackets, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 30, 2013 

Mr. LEE 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 provide 

for simplification, to reduce the number of tax brackets, 

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 ‘‘Family Fairness and 

5 Opportunity Tax Reform Act’’. 

6 SEC. 2. CONSOLIDATION OF TAX BRACKETS AND MODIFICA7 TIONS TO TAX RATES. 

8 (a) IN GENERAL.—Section 1 of the Internal Revenue 

9 Code of 1986 is amended by striking subsections (a) 

10 through (d) and inserting the following: 


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1 ‘‘(a) IN GENERAL.—There is hereby imposed on the 

2 taxable income of every individual a tax determined in ac3 cordance with the following table: 

‘‘If taxable income is: The tax is: 

Not over the first bracket dollar 

limit.

15% of taxable income. 

Over the first bracket dollar limit An amount equal to 15% of the first 

bracket dollar limit, plus 35% of 

the excess over such first bracket 

dollar limit. 

4 ‘‘(b) FIRST BRACKET DOLLAR LIMIT.—For purposes 

5 of this section, the first bracket dollar limit is— 

6 ‘‘(1) in the case of— 

7 ‘‘(A) a married individual (as defined in 

8 section 7703) who makes a single return jointly 

9 with the individual’s spouse under section 6013, 

10 or 

11 ‘‘(B) a surviving spouse (as defined in sec12 tion 2(a)), 

13 200 percent of the amount determined under para14 graph (2), and 

15 ‘‘(2) in the case of any other individual, 

16 $87,850. 

17 ‘‘(c) INFLATION ADJUSTMENT FOR RATES APPLICA18 BLE TO INDIVIDUALS.— 

19 ‘‘(1) IN GENERAL.—In the case of any taxable 

20 year beginning in a calendar year after 2013, the 

21 dollar amount in subsection (b)(2) shall be increased 

22 by an amount equal to— 


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1 ‘‘(A) such dollar amount, multiplied by 

2 ‘‘(B) the cost-of-living adjustment deter3 mined under subsection (f)(3) for the calendar 

4 year in which the taxable year begins, by sub5 stituting ‘calendar year 2012’ for ‘calendar year 

6 1992’ in subparagraph (B) thereof. 

7 ‘‘(2) ROUNDING.—If any increase determined 

8 under paragraph (1) is not a multiple of $50, such 

9 amount shall be rounded to the next lowest multiple 

10 of $50.’’. 

11 (b) TREATMENT OF CAPITAL GAINS RATE.— 

12 (1) ZERO PERCENT RATE.—Clause (i) of sec13 tion 1(h)(1)(B) of the Internal Revenue Code of 

14 1986 is amended to read as follows: 

15 ‘‘(i) $36,250 (200 percent of such 

16 amount in the case of a joint return or a 

17 surviving spouse (as defined in section 

18 2(a))), over’’. 

19 (2) 20 PERCENT RATE.—Subclause (I) of sec20 tion 1(h)(1)(C)(ii) of such Code is amended to read 

21 as follows: 

22 ‘‘(I) $400,000 ($450,000 in the 

23 case of a joint return or a surviving 

24 spouse (as defined in section 2(a))), 

25 over’’. 


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1 (3) INFLATION ADJUSTMENT.—Subsection (h) 

2 of section 1 of such Code is amended by adding at 

3 the end the following new paragraph: 

4 ‘‘(12) INFLATION ADJUSTMENT.— 

5 ‘‘(A) IN GENERAL.—In the case of any 

6 taxable year beginning in a calendar year after 

7 2013, each of the dollar amounts in subpara8 graphs (B)(i) and (C)(ii)(I) of paragraph (1) 

9 shall be increased by an amount equal to— 

10 ‘‘(i) such dollar amount, multiplied by 

11 ‘‘(ii) the cost-of-living adjustment de12 termined under subsection (f)(3) for the 

13 calendar year in which the taxable year be14 gins, by substituting ‘calendar year 2012’ 

15 for ‘calendar year 1992’ in subparagraph 

16 (B) thereof. 

17 ‘‘(B) ROUNDING.—If any increase deter18 mined under paragraph (1) is not a multiple of 

19 $50, such amount shall be rounded to the next 

20 lowest multiple of $50.’’. 

21 (c) CONFORMING AMENDMENTS.— 

22 (1) Subsection (f) of section 1 of such Code is 

23 amended— 


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1 (A) by striking the heading and inserting 

2 ‘‘INFLATION ADJUSTMENTS FOR ESTATES AND

3 TRUSTS’’, 

4 (B) in paragraph (1), by striking ‘‘sub5 sections (a), (b), (c), (d), and (e)’’ and inserting 

6 ‘‘subsection (e)’’, 

7 (C) in paragraph (2)— 

8 (i) by striking ‘‘subsection (a), (b), 

9 (c), (d), and (e), as the case may be,’’ and 

10 inserting ‘‘subsection (e)’’, and 

11 (ii) by striking ‘‘except as provided in 

12 paragraph (8),’’, and 

13 (D) by striking paragraphs (6), (7), and 

14 (8) and inserting the following: 

15 ‘‘(6) ROUNDING.—If any increase determined 

16 under paragraph (2)(A) is not a multiple of $50, 

17 such increase shall be rounded to the next lowest 

18 multiple of $50.’’. 

19 (2) Section 1 of such Code is amended by strik20 ing subsection (i). 

21 (3) Section 2 of such Code is amended by strik22 ing subsection (b). 

23 (4) Paragraph (2) of section 25B(b) of the In24 ternal Revenue Code of 1986 is amended to read as 

25 follows: 


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1 ‘‘(2) OTHER RETURNS.—In the case of any tax2 payer not described in paragraph (1), the applicable 

3 percentage shall be determined under paragraph (1) 

4 except that such paragraph shall be applied by sub5 stituting for each dollar amount therein (as adjusted 

6 under paragraph (3)) a dollar amount equal to 50 

7 percent of such dollar amount.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2013. 

11 SEC. 3. REPEAL OF ALTERNATIVE MINIMUM TAX. 

12 (a) IN GENERAL.—Subsection (a) of section 55 of the 

13 Internal Revenue Code of 1986 is amended by adding at 

14 the end the following new flush sentence: 

15 ‘‘No tax shall be imposed by this section for any taxable 

16 year beginning after December 31, 2013, and the tentative 

17 minimum tax of any taxpayer for any such taxable year 

18 shall be zero for purposes of this title.’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2013. 

22 SEC. 4. ADDITIONAL CHILD TAX CREDIT. 

23 (a) IN GENERAL.—Section 24 of the Internal Rev24 enue Code of 1986 is amended by adding at the end the 

25 following new subsection: 


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1 ‘‘(g) ADDITIONAL REFUNDABLE CREDIT.— 

2 ‘‘(1) IN GENERAL.—In addition to the amount 

3 allowed under subsection (a), there shall be allowed 

4 as a credit against tax imposed by this chapter for 

5 the taxable year with respect to each qualifying child 

6 of the taxpayer an amount equal to $2,500. 

7 ‘‘(2) INFLATION ADJUSTMENT.— 

8 ‘‘(A) IN GENERAL.—In the case of any 

9 taxable year beginning in a calendar year after 

10 2013, the dollar amount in paragraph (1) shall 

11 be the greater of the amount in effect under 

12 such paragraph for the preceding taxable year 

13 or the amount determined under subparagraph 

14 (B). 

15 ‘‘(B) ADJUSTMENT.— 

16 ‘‘(i) IN GENERAL.—Not later than 

17 November 1 of 2013, and each subsequent 

18 calendar year, the Secretary shall make 

19 and publish the determination under this 

20 subparagraph for the succeeding calendar 

21 year. 

22 ‘‘(ii) AMOUNT DETERMINED.—The 

23 amount determined under this subpara24 graph for any calendar year is an amount 

25 equal to— 


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1 ‘‘(I) $2,500, multiplied by 

2 ‘‘(II) the ratio of the national av3 erage wage index (as defined in sec4 tion 209(k)(1) of the Social Security 

5 Act) for the calendar year before the 

6 calendar year in which the determina7 tion under this subparagraph is made 

8 to the national average wage index (as 

9 so defined) for 2012. 

10 ‘‘(iii) ROUNDING.—If any increase de11 termined under clause (i) is not a multiple 

12 of $50, such amount shall be rounded to 

13 the next lowest multiple of $50. 

14 ‘‘(3) PORTION OF ADDITIONAL CREDIT RE15 FUNDABLE.— 

16 ‘‘(A) IN GENERAL.—The aggregate credits 

17 allowed to a taxpayer under subpart C shall be 

18 increased by the lesser of— 

19 ‘‘(i) the credit which would be allowed 

20 under this section without regard to this 

21 subsection and the limitation under section 

22 26(a), or 

23 ‘‘(ii) the amount by which the aggre24 gate amount of credits allowed by this sub25 part (determined without regard to this 


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1 subsection) would increase if the limitation 

2 imposed by section 26(a) were increased by 

3 the excess (if any) of— 

4 ‘‘(I) the taxpayer’s social security 

5 taxes for the taxable year, over 

6 ‘‘(II) the credit allowed under 

7 section 32 for the taxable year. 

8 The amount of the credit allowed under 

9 this paragraph shall not be treated as a 

10 credit allowed under this subpart and shall 

11 reduce the amount of credit otherwise al12 lowable under paragraph (1) without re13 gard to section 26(a). 

14 ‘‘(B) SOCIAL SECURITY TAXES.—For pur15 poses of subparagraph (A), the term ‘social se16 curity taxes’ has the meaning given such term 

17 under subsection (d)(2), except that— 

18 ‘‘(i) such term shall include the 

19 amount of taxes imposed by section 3111 

20 and 3221(a) on amounts paid with respect 

21 to such taxpayer during the calendar year 

22 in which the taxable year begins, and 

23 ‘‘(ii) in applying clauses (ii) and (iii) 

24 of subparagraph (A) thereof, ‘100 percent’ 


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1 shall be substituted for ‘50 percent’ each 

2 place it appears. 

3 ‘‘(C) COORDINATION WITH SUBSECTION

4 (a).—For purposes of this title, the amount of 

5 any refundable credit allowed by reason of sub6 section (d) shall be taken into account before 

7 the application of this paragraph.’’. 

8 (b) CONFORMING AMENDMENTS.— 

9 (1) Subsection (a) of section 24 of the Internal 

10 Revenue Code of 1986 is amended by striking ‘‘for 

11 which the taxpayer is allowed a deduction under sec12 tion 151’’. 

13 (2) Subparagraph (A) of section 24(d)(1) of 

14 such Code is amended by striking ‘‘section’’ and in15 serting ‘‘subsection (a)’’. 

16 (c) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2013. 

19 SEC. 5. PERSONAL CREDIT. 

20 (a) IN GENERAL.— 

21 (1) ALLOWANCE OF CREDIT.—Subpart A of 

22 part IV of subchapter A of chapter 1 of the Internal 

23 Revenue Code of 1986 is amended by inserting after 

24 section 25D the following new section: 


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1 ‘‘SEC. 25E. PERSONAL CREDIT. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual, there shall be allowed a credit against the tax 

4 imposed by this chapter for the taxable year an amount 

5 equal to— 

6 ‘‘(1) in the case of an individual who does not 

7 file a joint return, $2,000, and 

8 ‘‘(2) in the case of an individual who files a 

9 joint return or a surviving spouse (as defined in sec10 tion 2(a)), 200 percent of the amount in effect 

11 under paragraph (1). 

12 ‘‘(b) LIMITATION.—No credit shall be allowed under 

13 subsection (a) to any individual who is a qualifying child 

14 (as defined in section 24(c)) with respect to whom a credit 

15 is allowed under section 24 to another taxpayer for any 

16 taxable year beginning in the same calendar year as such 

17 taxable year. 

18 ‘‘(c) INFLATION ADJUSTMENT.— 

19 ‘‘(1) IN GENERAL.—In the case of any taxable 

20 year beginning in a calendar year after 2013, the 

21 dollar amount under subsection (a)(1) shall be in22 creased by an amount equal to— 

23 ‘‘(A) such dollar amount, multiplied by 

24 ‘‘(B) the cost-of-living adjustment deter25 mined under section 1(f)(3) for the calendar 

26 year in which the taxable year begins, by subVerDate Mar 15 2010 06:20 Nov 01, 2013 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1616.IS S1616

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1 stituting ‘calendar year 2012’ for ‘calendar year 

2 1992’ in subparagraph (B) thereof. 

3 ‘‘(2) ROUNDING.—If any increase determined 

4 under paragraph (1) is not a multiple of $50, such 

5 amount shall be rounded to the next lowest multiple 

6 of $50.’’. 

7 (2) CONFORMING AMENDMENT.—The table of 

8 sections for subpart A of part IV of subchapter A 

9 of chapter 1 of such Code is amended by inserting 

10 after the item relating to section 25D the following 

11 new item: 

‘‘Sec. 25E. Personal credit.’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to taxable years beginning after 

14 December 31, 2013. 

15 SEC. 6. REPEAL OF STANDARD DEDUCTION, CERTAIN PER16 SONAL EXEMPTIONS, AND ITEMIZED DEDUC17 TIONS OTHER THAN THE MORTGAGE INTER18 EST DEDUCTION AND CHARITABLE CON19 TRIBUTION DEDUCTION. 

20 (a) REPEAL OF STANDARD DEDUCTION AND

21 ITEMIZED DEDUCTIONS.— 

22 (1) IN GENERAL.—Section 63 of the Internal 

23 Revenue Code of 1986 is amended by striking sub24 sections (b) through (g) and inserting the following: 


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1 ‘‘(b) ITEMIZED DEDUCTIONS NOT ALLOWED FOR IN2 DIVIDUALS.— 

3 ‘‘(1) IN GENERAL.—In the case of an indi4 vidual, no deduction shall be allowed for any 

5 itemized deduction. 

6 ‘‘(2) ITEMIZED DEDUCTIONS.—For purposes of 

7 this subtitle, the term ‘itemized deductions’ means 

8 the deductions allowable under this chapter other 

9 than— 

10 ‘‘(A) the deduction for qualified residence 

11 interest (as defined in section 163(h)(3)), 

12 ‘‘(B) the deduction allowed under section 

13 170, and 

14 ‘‘(C) any other deductions allowable in ar15 riving at adjusted gross income.’’. 

16 (2) CONFORMING AMENDMENT.—Subsection (a) 

17 of section 63 is amended by striking ‘‘(other than 

18 the standard deduction)’’. 

19 (b) REPEAL OF PERSONAL EXEMPTIONS FOR TAX20 PAYER AND SPOUSE.—Section 151 of such Code is amend21 ed by striking subsection (b). 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2013. 


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1 SEC. 7. MODIFICATIONS TO MORTGAGE INTEREST DEDUC2 TION. 

3 (a) IN GENERAL.—Clause (ii) of section 

4 163(h)(3)(B) of the Internal Revenue Code of 1986 is 

5 amended— 

6 (1) by striking ‘‘$1,000,000 ($500,000 in the 

7 case of a married individual filing a separate return’’ 

8 and inserting ‘‘$300,000’’, and 

9 (2) by striking ‘‘$1,000,000’’ in the heading 

10 and inserting ‘‘$300,000’’. 

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

12 this section shall apply to indebtedness incurred in taxable 

13 years beginning after December 31, 2013. 

14 SEC. 8. REPEAL OF ADDITIONAL HEALTH TAXES. 

15 (a) REPEAL OF ADDITIONAL HOSPITAL INSURANCE

16 TAX ON HIGH-INCOME TAXPAYERS.— 

17 (1) FICA.— 

18 (A) IN GENERAL.—Section 3101(b) of the 

19 Internal Revenue Code of 1986 is amended to 

20 read as follows: 

21 ‘‘(b) HOSPITAL INSURANCE.—In addition to the tax 

22 imposed by the preceding subsection, there is hereby im23 posed on the income of every individual a tax equal to 1.45 

24 percent of the wages (as defined in section 3121(a)) re25 ceived by him with respect to employment (as defined in 

26 section 3121(b)).’’. 


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1 (B) CONFORMING AMENDMENTS.— 

2 (i) Section 3102 of such Code is 

3 amended by striking subsection (f). 

4 (ii) Section 6654 of the Internal Rev5 enue Code of 1986 is amended by striking 

6 subsection (m) and by redesignating sub7 sections (n) as subsection (m). 

8 (2) SECA.— 

9 (A) IN GENERAL.—Section 1401(b) of the 

10 Internal Revenue Code of 1986 is amended to 

11 read as follows: 

12 ‘‘(b) HOSPITAL INSURANCE.—In addition to the tax 

13 imposed by the preceding subsection, there is hereby im14 posed for each taxable year, on the self-employment in15 come of every individual, a tax equal to 2.90 percent of 

16 the amount of the self-employment income for such tax17 able year.’’. 

18 (B) CONFORMING AMENDMENTS.— 

19 (i) Section 164(f) of such Code is 

20 amended by striking ‘‘(other than the taxes 

21 imposed by section 1402(b)(2))’’. 

22 (ii) Section 1402(a)(12)(B) of such 

23 Code is amended by striking ‘‘(determined 

24 without regard to the rate imposed under 

25 paragraph (2) of section 1401(b))’’. 


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1 (3) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply with respect to remu3 neration received, and taxable years beginning after, 

4 December 31, 2013. 

5 (b) REPEAL OF UNEARNED INCOME MEDICARE CON6 TRIBUTION.— 

7 (1) IN GENERAL.—Subtitle A of the Internal 

8 Revenue Code of 1986 is amended by striking chap9 ter 2A. 

10 (2) CONFORMING AMENDMENTS.— 

11 (A) Section 6654 of the Internal Revenue 

12 Code of 1986 is amended— 

13 (i) in subsection (a), by striking ‘‘the 

14 tax under chapter 2, and the tax under 

15 chapter 2A’’ and inserting ‘‘and the tax 

16 imposed under chapter 2’’, and 

17 (ii) in subsection (f)— 

18 (I) by striking paragraph (3) and 

19 redesignating paragraph (4) as para20 graph (3), and 

21 (II) by striking ‘‘plus’’ at the end 

22 of paragraph (2) and inserting 

23 ‘‘minus’’. 


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1 (B) The table of chapters for subchapter A 

2 of chapter 1 of such Code is amended by strik3 ing the item relating to chapter 2A. 

4 (3) EFFECTIVE DATE.—The amendments made 

5 by this subsection shall apply to taxable years begin6 ning after December 31, 2013. 

7 SEC. 9. TECHNICAL AND CONFORMING AMENDMENTS. 

8 The Secretary of the Treasury or the Secretary’s del9 egate shall, not later than 90 days after the date of the 

10 enactment of this Act, submit to the Committee on Ways 

11 and Means of the House of Representatives and the Com12 mittee on Finance of the Senate a draft of any technical 

13 and conforming changes in the Internal Revenue Code of 

14 1986 which are necessary to reflect throughout such Code 

15 the purposes of the provisions of, and amendments made 

16 by, this Act. 

Æ 


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