I

103D CONGRESS

1ST SESSION H. R. 3671

To amend the Internal Revenue Code of 1986 to provide for adjustments

in the individual income tax rates to reflect regional differences in the

cost-of-living.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 22, 1993

Mr. NADLER (for himself, Mrs. LOWEY, Mr. ENGEL, and Mr. SCHUMER) 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

for adjustments in the individual income tax rates to

reflect regional differences in the cost-of-living.

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 ‘‘Tax Equity Act of

5 1993’’.

6 SEC. 2. REGIONAL COST-OF-LIVING ADJUSTMENTS IN INDI7 VIDUAL INCOME TAX RATES.

8 (a) GENERAL RULE.—Subsection (f) of section 1 of

9 the Internal Revenue Code of 1986 (relating to adjust-
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1 ments in tax tables so that inflation will not result in tax

2 increases) is amended by adding at the end thereof the

3 following new paragraphs:

4 ‘‘(8) REGIONAL COST-OF-LIVING ADJUST5 MENTS.—

6 ‘‘(A) IN GENERAL.—In the case of an indi7 vidual, the rate table otherwise in effect under

8 this section for any taxable year (determined

9 after the application of paragraph (1)) shall be

10 further adjusted as provided in subparagraph

11 (B).

12 ‘‘(B) METHOD OF MAKING REGIONAL AD13 JUSTMENT.—The rate table otherwise in effect

14 under this section with respect to any individual

15 for any taxable year shall be adjusted as fol16 lows:

17 ‘‘(i) The minimum and maximum dol18 lar amounts otherwise in effect for each

19 rate bracket shall be multiplied by the ap20 plicable multiplier (for the calendar year in

21 which the taxable year begins) which ap22 plies to the statistical area in which the in23 dividual’s primary place of abode during

24 the taxable year is located.
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1 ‘‘(ii) The rate applicable to any rate

2 bracket (as adjusted by clause (i)) shall

3 not be changed.

4 ‘‘(iii) The amount setting forth the

5 tax shall be adjusted to the extent nec6 essary to reflect the adjustments in the

7 rate brackets.

8 If any amount determined under clause (i) is

9 not a multiple of $50, such amount shall be

10 rounded to the nearest multiple of $50.

11 ‘‘(9) DETERMINATION OF MULTIPLIERS.—

12 ‘‘(A) IN GENERAL.—Not later than De13 cember 15 of each calendar year, the Secretary

14 shall prescribe an applicable multiplier for each

15 statistical area of the United States which shall

16 apply to taxable years beginning during the suc17 ceeding calendar year.

18 ‘‘(B) DETERMINATION OF MULTIPLIERS.—

19 ‘‘(i) For each statistical area where

20 the cost-of-living differential for any cal21 endar year is greater than 125 percent, the

22 applicable multiplier for such calendar year

23 is 90 percent of such differential.

24 ‘‘(ii) For each statistical area where

25 the cost-of-living differential for any cal-
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1 endar year exceeds 97 percent but does not

2 exceed 125 percent, the applicable multi3 plier for such calendar year is 1.05.

4 (iii) For each statistical area not de5 scribed in clause (i) or (ii), the applicable

6 multiplier is the cost-of-living differential

7 for the calendar year.

8 ‘‘(C) COST-OF-LIVING DIFFERENTIAL.—

9 The cost-of-living differential for any statistical

10 area for any calendar year is the percentage de11 termined by dividing—

12 ‘‘(i) the cost-of-living for such area for

13 the preceding calendar year; by

14 ‘‘(ii) the average cost-of-living for the

15 United States for the preceding calendar

16 year.

17 ‘‘(D) COST-OF-LIVING FOR AREA.—

18 ‘‘(i) IN GENERAL.—For each calendar

19 year beginning after 1993, the Secretary of

20 Labor shall determine and publish a cost21 of-living index for each statistical area.

22 ‘‘(ii) METHODOLOGY.—The cost-of-liv23 ing index determined under clause (i) for

24 any statistical area for any calendar year

25 shall be based on average market prices for
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1 the area for the 12-month period ending

2 on August 31 of such calendar year. The

3 market prices taken into account under the

4 preceding sentence shall be selected and

5 used under the same methodology as is

6 used by the Secretary of Labor in develop7 ing the Consumer Price Index for All

8 Urban Consumers.

9 ‘‘(E) STATISTICAL AREA.—For purposes of

10 this subsection the term ‘statistical area’ means

11 ‘‘(i) any metropolitan statistical area

12 as defined by the Secretary of Commerce,

13 and

14 ‘‘(ii) the portion of any State not

15 within a metropolitan statistical area as so

16 defined.

17 ‘‘(10) AREAS OUTSIDE THE UNITED STATES.—

18 The area applicable multiplier for any area outside

19 the United States shall be 1.’’

20 (b) EFFECTIVE DATE.—

21 (1) IN GENERAL.—The amendment made by

22 this section shall apply to taxable years beginning

23 after December 31, 1993.

24 (2) TRANSITION RULE.—Notwithstanding sec25 tion 1(f)(9)(A) of the Internal Revenue Code (as
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1 added by this section), the date for prescribing ap2 plicable multipliers for taxable years beginning in

3 calendar year 1994 shall be the date 1 year after the

4 date of the enactment of this Act.

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