I 

112TH CONGRESS 

2D SESSION H. R. 5333 

To amend the Internal Revenue Code of 1986 to make permanent the 

deduction of State and local general sales taxes, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 7, 2012 

Ms. BERKLEY introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on the 

Budget, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to make 

permanent the deduction of State and local general sales 

taxes, 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, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Middle Class Tax Fairness Act of 2012’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title, etc. 


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TITLE I—PERMANENT EXTENSION OF DEDUCTION OF STATE 

AND LOCAL GENERAL SALES TAXES 

Sec. 101. Permanent extension of deduction of State and local general sales 

taxes. 

TITLE II—REVENUE OFFSETS 

Subtitle A—Fair Share Tax on High-Income Taxpayers 

Sec. 201. Fair share tax on high-income taxpayers. 

Subtitle B—Miscellaneous 

Sec. 211. Deficit reduction. 

Sec. 212. Budgetary effects. 

1 TITLE I—PERMANENT EXTEN2 SION OF DEDUCTION OF 

3 STATE AND LOCAL GENERAL 

4 SALES TAXES 

5 SEC. 101. PERMANENT EXTENSION OF DEDUCTION OF 

6 STATE AND LOCAL GENERAL SALES TAXES. 

7 (a) IN GENERAL.—Subparagraph (I) of section 

8 164(b)(5) of the Internal Revenue Code of 1986 is amend9 ed by striking ‘‘, and before January 1, 2012’’. 

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

11 subsection (a) shall apply to taxable years beginning after 

12 December 31, 2011. 


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1 TITLE II—REVENUE OFFSETS 

2 Subtitle A—Fair Share Tax on 

3 High-Income Taxpayers 

4 SEC. 201. FAIR SHARE TAX ON HIGH-INCOME TAXPAYERS. 

5 (a) IN GENERAL.—Subchapter A of chapter 1 of the 

6 Internal Revenue Code of 1986 is amended by adding at 

7 the end the following new part: 

8 ‘‘PART VII—FAIR SHARE TAX ON HIGH-INCOME 

9 TAXPAYERS 

‘‘Sec. 59B. Fair share tax. 

10 ‘‘SEC. 59B. FAIR SHARE TAX. 

11 ‘‘(a) GENERAL RULE.— 

12 ‘‘(1) PHASE-IN OF TAX.—In the case of any 

13 high-income taxpayer, there is hereby imposed for a 

14 taxable year (in addition to any other tax imposed 

15 by this subtitle) a tax equal to the product of— 

16 ‘‘(A) the amount determined under para17 graph (2), and 

18 ‘‘(B) a fraction (not to exceed 1)— 

19 ‘‘(i) the numerator of which is the ex20 cess of— 

21 ‘‘(I) the taxpayer’s adjusted 

22 gross income, over 

23 ‘‘(II) the dollar amount in effect 

24 under subsection (c)(1), and 


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1 ‘‘(ii) the denominator of which is the 

2 dollar amount in effect under subsection 

3 (c)(1). 

4 ‘‘(2) AMOUNT OF TAX.—The amount of tax de5 termined under this paragraph is an amount equal 

6 to the excess (if any) of— 

7 ‘‘(A) the tentative fair share tax for the 

8 taxable year, over 

9 ‘‘(B) the excess of— 

10 ‘‘(i) the sum of— 

11 ‘‘(I) the regular tax liability (as 

12 defined in section 26(b)) for the tax13 able year, 

14 ‘‘(II) the tax imposed by section 

15 55 for the taxable year, plus 

16 ‘‘(III) the payroll tax for the tax17 able year, over 

18 ‘‘(ii) the credits allowable under part 

19 IV of subchapter A (other than sections 

20 27(a), 31, and 34). 

21 ‘‘(b) TENTATIVE FAIR SHARE TAX.—For purposes 

22 of this section— 

23 ‘‘(1) IN GENERAL.—The tentative fair share tax 

24 for the taxable year is 30 percent of the excess of— 


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1 ‘‘(A) the adjusted gross income of the tax2 payer, over 

3 ‘‘(B) the modified charitable contribution 

4 deduction for the taxable year. 

5 ‘‘(2) MODIFIED CHARITABLE CONTRIBUTION

6 DEDUCTION.—For purposes of paragraph (1)— 

7 ‘‘(A) IN GENERAL.—The modified chari8 table contribution deduction for any taxable 

9 year is an amount equal to the amount which 

10 bears the same ratio to the deduction allowable 

11 under section 170 (section 642(c) in the case of 

12 a trust or estate) for such taxable year as— 

13 ‘‘(i) the amount of itemized deduc14 tions allowable under the regular tax (as 

15 defined in section 55) for such taxable 

16 year, determined after the application of 

17 section 68, bears to 

18 ‘‘(ii) such amount, determined before 

19 the application of section 68. 

20 ‘‘(B) TAXPAYER MUST ITEMIZE.—In the 

21 case of any individual who does not elect to 

22 itemize deductions for the taxable year, the 

23 modified charitable contribution deduction shall 

24 be zero. 


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1 ‘‘(c) HIGH-INCOME TAXPAYER.—For purposes of this 

2 section— 

3 ‘‘(1) IN GENERAL.—The term ‘high-income tax4 payer’ means, with respect to any taxable year, any 

5 taxpayer (other than a corporation) with an adjusted 

6 gross income for such taxable year in excess of 

7 $1,000,000 (50 percent of such amount in the case 

8 of a married individual who files a separate return). 

9 ‘‘(2) INFLATION ADJUSTMENT.— 

10 ‘‘(A) IN GENERAL.—In the case of a tax11 able year beginning after 2013, the $1,000,000 

12 amount under paragraph (1) shall be increased 

13 by an amount equal to— 

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

15 ‘‘(ii) the cost-of-living adjustment de16 termined under section 1(f)(3) for the cal17 endar year in which the taxable year be18 gins, determined by substituting ‘calendar 

19 year 2012’ for ‘calendar year 1992’ in sub20 paragraph (B) thereof. 

21 ‘‘(B) ROUNDING.—If any amount as ad22 justed under subparagraph (A) is not a multiple 

23 of $10,000, such amount shall be rounded to 

24 the next lowest multiple of $10,000. 


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1 ‘‘(d) PAYROLL TAX.—For purposes of this section, 

2 the payroll tax for any taxable year is an amount equal 

3 to the excess of— 

4 ‘‘(1) the taxes imposed on the taxpayer under 

5 sections 1401, 1411, 3101, 3201, and 3211(a) (to 

6 the extent such taxes are attributable to the rate of 

7 tax in effect under section 3101) with respect to 

8 such taxable year or wages or compensation received 

9 during the taxable year, over 

10 ‘‘(2) the deduction allowable under section 

11 164(f) for such taxable year. 

12 ‘‘(e) SPECIAL RULE FOR ESTATES AND TRUSTS.— 

13 For purposes of this section, in the case of an estate or 

14 trust, adjusted gross income shall be computed in the 

15 manner described in section 67(e). 

16 ‘‘(f) NOT TREATED AS TAX IMPOSED BY THIS CHAP17 TER FOR CERTAIN PURPOSES.—The tax imposed under 

18 this section shall not be treated as tax imposed by this 

19 chapter for purposes of determining the amount of any 

20 credit under this chapter (other than the credit allowed 

21 under section 27(a)) or for purposes of section 55.’’. 

22 (b) CONFORMING AMENDMENT.—Section 26(b)(2) of 

23 the Internal Revenue Code of 1986 is amended by redesig24 nating subparagraphs (C) through (X) as subparagraphs 


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1 (D) through (Y), respectively, and by inserting after sub2 paragraph (B) the following new subparagraph: 

3 ‘‘(C) section 59B (relating to fair share 

4 tax),’’. 

5 (c) CLERICAL AMENDMENT.—The table of parts for 

6 subchapter A of chapter 1 of the Internal Revenue Code 

7 of 1986 is amended by adding at the end the following 

8 new item: 

‘‘PART VII. FAIR SHARE TAX ON HIGH-INCOME TAXPAYERS’’. 

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2012. 

12 Subtitle B—Miscellaneous 

13 SEC. 211. DEFICIT REDUCTION. 

14 The net amount of any savings realized as a result 

15 of the enactment of this Act and the amendments made 

16 by this Act (after any expenditures authorized by this Act 

17 and the amendments made by this Act) shall be deposited 

18 in the Treasury and used for Federal budget deficit reduc19 tion or, if there is no Federal budget deficit, for reducing 

20 the Federal debt in such manner as the Secretary of the 

21 Treasury considers appropriate. 

22 SEC. 212. BUDGETARY EFFECTS. 

23 The budgetary effects of this Act, for the purpose of 

24 complying with the Statutory Pay-As-You-Go Act of 2010, 

25 shall be determined by reference to the latest statement 


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1 titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 

2 Act, submitted for printing in the Congressional Record 

3 by the Chairman of the House Budget Committee, pro4 vided that such statement has been submitted prior to the 

5 vote on passage. 

Æ 


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