II

106TH CONGRESS

1ST SESSION S. 539

To amend the Internal Revenue Code of 1986 to increase the maximum

taxable income for the 15 percent rate bracket, to replace the Consumer

Price Index with the national average wage index for purposes of costof-living adjustments, to lessen the impact of the noncorporate alternative

minimum tax, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 4, 1999

Mr. BROWNBACK 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 increase

the maximum taxable income for the 15 percent rate

bracket, to replace the Consumer Price Index with the

national average wage index for purposes of cost-of-living

adjustments, to lessen the impact of the noncorporate

alternative minimum tax, 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. INCREASE IN MAXIMUM TAXABLE INCOME FOR

4 15 PERCENT RATE BRACKET.

5 (a) IN GENERAL.—Section 1(f) of the Internal Reve6 nue Code of 1986 (relating to adjustments in tax tables
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1 so that inflation will not result in tax increases) is

2 amended—

3 (1) in paragraph (2)—

4 (A) by redesignating subparagraphs (B)

5 and (C) as subparagraphs (C) and (D),

6 (B) by inserting after subparagraph (A)

7 the following:

8 ‘‘(B) for taxable years beginning in any

9 calendar year after 1999 and before 2010—

10 ‘‘(i) in the case of the table contained

11 in subsection (c), by increasing the maxi12 mum dollar amount for the 15 percent rate

13 bracket and the minimum dollar amount

14 for the 28 percent rate bracket otherwise

15 determined under subparagraph (A) by the

16 applicable dollar amount for such calendar

17 year, and

18 ‘‘(ii) in the case of the tables con19 tained in subsections (a), (b), and (d), by

20 increasing the maximum and minimum

21 dollar amounts for the 15 and 28 percent

22 rate brackets, respectively, by an amount

23 which maintains the same proportionate

24 differential in such dollar amounts among
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1 the tables in subsections (a), (b), (c), and

2 (d) as existed in calendar year 1999,’’, and

3 (C) by striking ‘‘subparagraph (A)’’ in

4 subparagraph (C) (as so redesignated) and in5 serting ‘‘subparagraphs (A) and (B)’’, and

6 (2) by adding at the end the following:

7 ‘‘(8) APPLICABLE DOLLAR AMOUNT.—

8 ‘‘(A) IN GENERAL.—For purposes of para9 graph (2)(B), the applicable dollar amount for

10 any calendar year is equal to the applicable per11 centage of the excess of—

12 ‘‘(i) the contribution and benefit base

13 (as determined under section 230 of the

14 Social Security Act) for the calendar year,

15 over

16 ‘‘(ii) the maximum dollar amount for

17 the 15 percent rate bracket for the table

18 contained in subsection (c) for the calendar

19 year otherwise determined under para20 graph (2)(A).

21 ‘‘(B) APPLICABLE PERCENTAGE.—For

22 purposes of subparagraph (A), the applicable

23 percentage for any calendar year shall be deter24 mined as follows:

Applicable

‘‘Calendar year: Percentage:

2000 ......................................................................................... 10
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Applicable

‘‘Calendar year: Percentage:

2001 ......................................................................................... 20

2002 ......................................................................................... 30

2003 ......................................................................................... 40

2004 ......................................................................................... 50

2005 ......................................................................................... 60

2006 ......................................................................................... 70

2007 ......................................................................................... 80

2008 ......................................................................................... 90

2009 ......................................................................................... 100.’’

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

2 this section shall take effect on the date of the enactment

3 of this Act.

4 SEC. 2. USE OF NATIONAL AVERAGE WAGE INDEX FOR

5 COST-OF-LIVING ADJUSTMENTS.

6 (a) IN GENERAL.—Section 1(f) of the Internal Reve7 nue Code of 1986 (relating to adjustments in tax tables

8 so that inflation will not result in tax increases) is amend9 ed by striking paragraphs (3), (4), and (5) and inserting

10 the following:

11 ‘‘(3) COST-OF-LIVING ADJUSTMENT.—For pur12 poses of paragraph (2), the cost-of-living adjustment

13 for any calendar year is the percentage (if any) by

14 which—

15 ‘‘(A) the national average wage index for

16 the preceding calendar year, exceeds

17 ‘‘(B) such index for calendar year 1998.

18 ‘‘(4) NATIONAL AVERAGE WAGE INDEX FOR

19 ANY CALENDAR YEAR.—For purposes of paragraph

20 (3), the national average wage index for any cal-
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1 endar year is the average of such index as of the

2 close of the 12-month period ending on August 31

3 of such calendar year.

4 ‘‘(5) NATIONAL AVERAGE WAGE INDEX.—For

5 purposes of this subsection, the term ‘national aver6 age wage index’ has the meaning given such term by

7 section 209(k)(1) of the Social Security Act, as in

8 effect on the date of the enactment of this para9 graph.’’

10 (b) CONFORMING AMENDMENTS TO TAX TABLES TO

11 RESTART INFLATION ADJUSTMENT.—Section 1 of the In12 ternal Revenue Code of 1986 (relating to tax imposed) is

13 amended by striking subsections (a) through (e) and in14 serting the following:

15 ‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS

16 AND SURVIVING SPOUSES.—There is hereby imposed on

17 the taxable income of—

18 ‘‘(1) every married individual (as defined in sec19 tion 7703) who makes a single return jointly with

20 his spouse under section 6013, and

21 ‘‘(2) every surviving spouse (as defined in sec22 tion 2(a)),

23 a tax determined in accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $43,050 .......................... 15% of taxable income.

Over $43,050 but not over

$104,050.

$6,457.50, plus 28% of the excess

over $43,050.
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‘‘If taxable income is: The tax is:

Over $104,050 but not over

$158,550.

$23,537.50, plus 31% of the excess

over $104,050.

Over $158,550 but not over

$283,150.

$40,432.50, plus 36% of the excess

over $158,550.

Over $283,150 ............................... $85,288.50 plus 39.6% of the excess

over $283,150.

1 ‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im2 posed on the taxable income of every head of a household

3 (as defined in section 2(b)) a tax determined in accordance

4 with the following table:

‘‘If taxable income is: The tax is:

Not over $34,550 .......................... 15% of taxable income.

Over $34,550 but not over

$89,150.

$5,182.50, plus 28% of the excess

over $34,550.

Over $89,150 but not over

$144,400.

$20,470.50, plus 31% of the excess

over $89,150.

Over $144,400 but not over

$283,150.

$37,598, plus 36% of the excess over

$144,400.

Over $283,150 ............................... $87,548 plus 39.6% of the excess

over $283,150.

5 ‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SUR6 VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—There

7 is hereby imposed on the taxable income of every individ8 ual (other than a married individual (as defined in section

9 7703) filing a joint return or a separate return, a surviv10 ing spouse as defined in section 2(a), or a head of house11 hold as defined in section 2(b)) a tax determined in ac12 cordance with the following table:

‘‘If taxable income is: The tax is:

Not over $25,750 .......................... 15% of taxable income.

Over $25,750 but not over

$62,450.

$3,862.50, plus 28% of the excess

over $25,450.

Over $62,450 but not over

$130,250.

$14,138.50, plus 31% of the excess

over $62,450.

Over $130,250 but not over

$283,150.

$35,156.50, plus 36% of the excess

over $130,250.

Over $283,150 ............................... $90,200.50 plus 39.6% of the excess

over $283,150.
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1 ‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RE2 TURNS.—There is hereby imposed on the taxable income

3 of every married individual (as defined in section 7703)

4 who does not make a single return jointly with his spouse

5 under section 6013, a tax determined in accordance with

6 the following table:

‘‘If taxable income is: The tax is:

Not over $21,175 .......................... 15% of taxable income.

Over $21,175 but not over

$52,025.

$3,228.75, plus 28% of the excess

over $21,175.

Over $52,025 but not over

$79,275.

$11,768.75, plus 31% of the excess

over $52,025.

Over $79,275 but not over

$141,575.

$20,216.20, plus 36% of the excess

over $79,275.

Over $141,575 ............................... $42,644.25 plus 39.6% of the excess

over $141,575.

7 ‘‘(e) ESTATES AND TRUSTS.—There is hereby im8 posed on the taxable income of—

9 ‘‘(1) every estate, and

10 ‘‘(2) every trust,

11 taxable under this subsection a tax determined in accord12 ance with the following table:

‘‘If taxable income is: The tax is:

Not over $1,750 ............................ 15% of taxable income.

Over $1,750 but not over $4,050 .. $262.50, plus 28% of the excess over

$1,750.

Over $4,050 but not over $6,200 .. $906.50, plus 31% of the excess over

$4,050.

Over $6,200 but not over $8,450 .. $1,573, plus 36% of the excess over

$6,200.

Over $8,450 ................................... $2,383, plus 39.6% of the excess over

$8,450.’’

13 (c) INFLATION ADJUSTMENT TO APPLY IN DETER14 MINING RATES FOR 2000.—Section 1(f) of the Internal

15 Revenue Code of 1986 is amended—
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1 (1) by striking ‘‘1993’’ in paragraph (1) and in2 serting ‘‘1999’’,

3 (2) by striking ‘‘1992’’ in paragraph (3)(B) and

4 inserting ‘‘1998’’, and

5 (3) by striking paragraph (7).

6 (d) CONFORMING AMENDMENTS.—

7 (1) The following provisions of the Internal

8 Revenue Code of 1986 are each amended by striking

9 ‘‘1992’’ and inserting ‘‘1998’’ each place it appears:

10 (A) Section 25A(h).

11 (B) Section 32(j)(1)(B).

12 (C) Section 41(e)(5)(C).

13 (D) Section 59(j)(2)(B).

14 (E) Section 63(c)(4)(B).

15 (F) Section 68(b)(2)(B).

16 (G) Section 135(b)(2)(B)(ii).

17 (H) Section 151(d)(4).

18 (I) Section 220(g)(2).

19 (J) Section 221(g)(1)(B).

20 (K) Section 512(d)(2)(B).

21 (L) Section 513(h)(2)(C)(ii).

22 (M) Section 685(c)(3)(B).

23 (N) Section 877(a)(2).

24 (O) Section 911(b)(2)(D)(ii)(II).

25 (P) Section 2032A(a)(3)(B).
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1 (Q) Section 2503(b)(2)(B).

2 (R) Section 2631(c)(1)(B).

3 (S) Section 4001(e)(1)(B).

4 (T) Section 4261(e)(4)(A)(ii).

5 (U) Section 6039F(d).

6 (V) Section 6323(i)(4)(B).

7 (W) Section 6601(j)(3)(B).

8 (X) Section 7430(c)(1).

9 (2) Subclause (II) of section 42(h)(6)(G)(i) of

10 such Code is amended by striking ‘‘1987’’ and in11 serting ‘‘1998’’.

12 (3) Clause (ii) of section 132(f)(6)(A) of such

13 Code, as amended by section 9010(b)(1) of the

14 Transportation Equity Act for the 21st Century, is

15 amended by striking ‘‘, by substituting ‘calendar

16 year 1998’ for ‘calendar year 1992’.’’ and by insert17 ing a period.

18 (4) Subparagraph (A) of section 132(f)(6) of

19 such Code, as amended by section 9010(c)(2) of the

20 Transportation Equity Act for the 21st Century, is

21 amended by striking clause (ii) and all that follows

22 through ‘‘paragraph (2)(A).’’ and inserting:

23 ‘‘(ii) the cost-of-living adjustment de24 termined under section 1(f)(3) for the cal25 endar year in which the taxable year be-
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1 gins. In the case of any taxable year begin2 ning in a calendar year after 2002, section

3 1(f)(3) shall be applied by substituting

4 ‘calendar year 2001’ for ‘calendar year

5 1998’ for purposes of adjusting the dollar

6 amount contained in paragraph (2)(A).’’.

7 (5) Subparagraph (B) of section 6334(g)(1) of

8 such Code is amended by striking ‘‘, by substituting

9 ‘calendar year 1998’ for ‘calendar year 1992’ in sub10 paragraph (B) thereof’’.

11 (e) ADDITIONAL CONFORMING AMENDMENTS.—

12 (1) Section 42(h)(6)(G)(ii) of the Internal Rev13 enue Code of 1986 is amended—

14 (A) by striking ‘‘the CPI’’ the first and

15 third places it appears and inserting ‘‘the na16 tional average wage index’’,

17 (B) by striking ‘‘the CPI’’ the second place

18 it appears and inserting ‘‘such index’’, and

19 (C) by striking ‘‘section 1(f)(4)’’ and in20 serting ‘‘section 1(f)(5)’’.

21 (2) Section 162(p)(2) of such Code is amended

22 by striking ‘‘(as defined in section 1(f)(5))’’.

23 (3) Section 213(d)(10)(B)(ii)(I) of such Code is

24 amended by striking ‘‘(as defined in section

25 1(f)(5))’’.
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1 (4) The last sentence of section 936(j)(4)(C) of

2 such Code is amended by inserting ‘‘, as in effect for

3 taxable years beginning before January 1, 1999’’ be4 fore the period.

5 (f) EFFECTIVE DATE.—

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by this section

8 shall apply to taxable years beginning after Decem9 ber 31, 1998.

10 (2) CONFORMING AMENDMENT.—The amend11 ment made by subsection (d)(4) shall apply to tax12 able years beginning after December 31, 2001.

13 SEC. 3. INFLATION ADJUSTMENT FOR INDIVIDUAL ALTER14 NATIVE MINIMUM TAX EXEMPTION

15 AMOUNTS.

16 (a) IN GENERAL.—Section 55(d) of the Internal Rev17 enue Code of 1986 (relating to exemption amount) is

18 amended by adding at the end the following:

19 ‘‘(4) INFLATION ADJUSTMENT.—

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

21 taxable year beginning after 1999, each of the

22 dollar amounts contained in paragraph (1) and

23 paragraph (3) (other than subparagraph (A)(ii)

24 thereof) shall be increased by an amount equal

25 to—
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1 ‘‘(i) such dollar amount, multiplied by

2 ‘‘(ii) the cost-of-living adjustment de3 termined under section 1(f)(3) for such

4 calendar year.

5 ‘‘(B) ROUNDING.—If any increase deter6 mined under subparagraph (A) is not a multiple

7 of $50, such increase shall be rounded to the

8 nearest multiple of $50.’’

9 (b) CONFORMING AMENDMENT.—Section

10 55(d)(3)(A) of the Internal Revenue Code of 1986 is

11 amended to read as follows:

12 ‘‘(A) $150,000 in the case of a taxpayer

13 described in—

14 ‘‘(i) paragraph (1)(A), or

15 ‘‘(ii) paragraph (2),’’.

16 (c) EFFECTIVE DATES.—

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

18 subsection (a) shall apply to taxable years beginning

19 after December 31, 1999.

20 (2) CONFORMING AMENDMENT.—The amend21 ment made by subsection (b) shall apply to taxable

22 years beginning after December 31, 1998.

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