II

106TH CONGRESS

1ST SESSION S. 822

To amend the Internal Revenue Code of 1986 to impose a flat tax only

on individual taxable earned income and business taxable income, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 15, 1999

Mr. SPECTER 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 impose

a flat tax only on individual taxable earned income and

business taxable income, 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; TABLE OF CONTENTS; AMEND4 MENT OF 1986 CODE.

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

6 ‘‘Flat Tax Act of 1999’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents; amendment of 1986 Code.
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Sec. 2. Flat tax on individual taxable earned income and business taxable income.

Sec. 3. Repeal of estate and gift taxes.

Sec. 4. Additional repeals.

Sec. 5. Effective dates.

1 (c) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this Act an amend3 ment or repeal is expressed in terms of an amendment

4 to, or repeal of, a section or other provision, the reference

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986.

7 SEC. 2. FLAT TAX ON INDIVIDUAL TAXABLE EARNED IN8 COME AND BUSINESS TAXABLE INCOME.

9 (a) IN GENERAL.—Subchapter A of chapter 1 of sub10 title A is amended to read as follows:

11 ‘‘Subchapter A—Determination of Tax

12 Liability

‘‘Part I. Tax on individuals.

‘‘Part II. Tax on business activities.

13 ‘‘PART I—TAX ON INDIVIDUALS

‘‘Sec. 1. Tax imposed.

‘‘Sec. 2. Standard deduction.

‘‘Sec. 3. Deduction for cash charitable contributions.

‘‘Sec. 4. Deduction for home acquisition indebtedness.

‘‘Sec. 5. Definitions and special rules.

14 ‘‘SECTION 1. TAX IMPOSED.

15 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed

16 on every individual a tax equal to 20 percent of the taxable

17 earned income of such individual.
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1 ‘‘(b) TAXABLE EARNED INCOME.—For purposes of

2 this section, the term ‘taxable earned income’ means the

3 excess (if any) of—

4 ‘‘(1) the earned income received or accrued dur5 ing the taxable year, over

6 ‘‘(2) the sum of—

7 ‘‘(A) the standard deduction,

8 ‘‘(B) the deduction for cash charitable con9 tributions, and

10 ‘‘(C) the deduction for home acquisition in11 debtedness,

12 for such taxable year.

13 ‘‘(c) EARNED INCOME.—For purposes of this

14 section—

15 ‘‘(1) IN GENERAL.—The term ‘earned income’

16 means wages, salaries, or professional fees, and

17 other amounts received from sources within the

18 United States as compensation for personal services

19 actually rendered, but does not include that part of

20 compensation derived by the taxpayer for personal

21 services rendered by the taxpayer to a corporation

22 which represents a distribution of earnings or profits

23 rather than a reasonable allowance as compensation

24 for the personal services actually rendered.
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1 ‘‘(2) TAXPAYER ENGAGED IN TRADE OR BUSI2 NESS.—In the case of a taxpayer engaged in a trade

3 or business in which both personal services and cap4 ital are material income-producing factors, under

5 regulations prescribed by the Secretary, a reasonable

6 allowance as compensation for the personal services

7 rendered by the taxpayer, not in excess of 30 per8 cent of the taxpayer’s share of the net profits of

9 such trade or business, shall be considered as earned

10 income.

11 ‘‘SEC. 2. STANDARD DEDUCTION.

12 ‘‘(a) IN GENERAL.—For purposes of this subtitle, the

13 term ‘standard deduction’ means the sum of—

14 ‘‘(1) the basic standard deduction, plus

15 ‘‘(2) the additional standard deduction.

16 ‘‘(b) BASIC STANDARD DEDUCTION.—For purposes

17 of subsection (a), the basic standard deduction is—

18 ‘‘(1) $17,500 in the case of—

19 ‘‘(A) a joint return, and

20 ‘‘(B) a surviving spouse (as defined in sec21 tion 5(a)),

22 ‘‘(2) $15,000 in the case of a head of household

23 (as defined in section 5(b)), and

24 ‘‘(3) $10,000 in the case of an individual—
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1 ‘‘(A) who is not married and who is not a

2 surviving spouse or head of household, or

3 ‘‘(B) who is a married individual filing a

4 separate return.

5 ‘‘(c) ADDITIONAL STANDARD DEDUCTION.—For pur6 poses of subsection (a), the additional standard deduction

7 is $5,000 for each dependent (as defined in section

8 5(d))—

9 ‘‘(1) whose earned income for the calendar year

10 in which the taxable year of the taxpayer begins is

11 less than the basic standard deduction specified in

12 subsection (b)(3), or

13 ‘‘(2) who is a child of the taxpayer and who—

14 ‘‘(A) has not attained the age of 19 at the

15 close of the calendar year in which the taxable

16 year of the taxpayer begins, or

17 ‘‘(B) is a student who has not attained the

18 age of 24 at the close of such calendar year.

19 ‘‘(d) INFLATION ADJUSTMENT.—

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

21 year beginning in a calendar year after 1999, each

22 dollar amount contained in subsections (b) and (c)

23 shall be increased by an amount equal to—

24 ‘‘(A) such dollar amount, multiplied by
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1 ‘‘(B) the cost-of-living adjustment under

2 section 1(f)(3) for the calendar year in which

3 the taxable year begins, determined by sub4 stituting ‘calendar year 1998’ for ‘calendar year

5 1992’ in subparagraph (B) of such section.

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

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

8 amount shall be rounded to the next lowest multiple

9 of $50.

10 ‘‘SEC. 3. DEDUCTION FOR CASH CHARITABLE CONTRIBU11 TIONS.

12 ‘‘(a) GENERAL RULE.—For purposes of this part,

13 there shall be allowed as a deduction any charitable con14 tribution (as defined in subsection (b)) not to exceed

15 $2,500 ($1,250, in the case of a married individual filing

16 a separate return), payment of which is made within the

17 taxable year.

18 ‘‘(b) CHARITABLE CONTRIBUTION DEFINED.—For

19 purposes of this section, the term ‘charitable contribution’

20 means a contribution or gift of cash or its equivalent to

21 or for the use of the following:

22 ‘‘(1) A State, a possession of the United States,

23 or any political subdivision of any of the foregoing,

24 or the United States or the District of Columbia,
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1 but only if the contribution or gift is made for exclu2 sively public purposes.

3 ‘‘(2) A corporation, trust, or community chest,

4 fund, or foundation—

5 ‘‘(A) created or organized in the United

6 States or in any possession thereof, or under

7 the law of the United States, any State, the

8 District of Columbia, or any possession of the

9 United States,

10 ‘‘(B) organized and operated exclusively

11 for religious, charitable, scientific, literary, or

12 educational purposes, or to foster national or

13 international amateur sports competition (but

14 only if no part of its activities involve the provi15 sion of athletic facilities or equipment), or for

16 the prevention of cruelty to children or animals,

17 ‘‘(C) no part of the net earnings of which

18 inures to the benefit of any private shareholder

19 or individual, and

20 ‘‘(D) which is not disqualified for tax ex21 emption under section 501(c)(3) by reason of

22 attempting to influence legislation, and which

23 does not participate in, or intervene in (includ24 ing the publishing or distributing of state-
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1 ments), any political campaign on behalf of (or

2 in opposition to) any candidate for public office.

3 A contribution or gift by a corporation to a trust,

4 chest, fund, or foundation shall be deductible by rea5 son of this paragraph only if it is to be used within

6 the United States or any of its possessions exclu7 sively for purposes specified in subparagraph (B).

8 Rules similar to the rules of section 501(j) shall

9 apply for purposes of this paragraph.

10 ‘‘(3) A post or organization of war veterans, or

11 an auxiliary unit or society of, or trust or foundation

12 for, any such post or organization—

13 ‘‘(A) organized in the United States or any

14 of its possessions, and

15 ‘‘(B) no part of the net earnings of which

16 inures to the benefit of any private shareholder

17 or individual.

18 ‘‘(4) In the case of a contribution or gift by an

19 individual, a domestic fraternal society, order, or as20 sociation, operating under the lodge system, but only

21 if such contribution or gift is to be used exclusively

22 for religious, charitable, scientific, literary, or edu23 cational purposes, or for the prevention of cruelty to

24 children or animals.
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1 ‘‘(5) A cemetery company owned and operated

2 exclusively for the benefit of its members, or any

3 corporation chartered solely for burial purposes as a

4 cemetery corporation and not permitted by its char5 ter to engage in any business not necessarily inci6 dent to that purpose, if such company or corporation

7 is not operated for profit and no part of the net

8 earnings of such company or corporation inures to

9 the benefit of any private shareholder or individual.

10 For purposes of this section, the term ‘charitable contribu11 tion’ also means an amount treated under subsection (d)

12 as paid for the use of an organization described in para13 graph (2), (3), or (4).

14 ‘‘(c) DISALLOWANCE OF DEDUCTION IN CERTAIN

15 CASES AND SPECIAL RULES.—

16 ‘‘(1) SUBSTANTIATION REQUIREMENT FOR CER17 TAIN CONTRIBUTIONS.—

18 ‘‘(A) GENERAL RULE.—No deduction shall

19 be allowed under subsection (a) for any con20 tribution of $250 or more unless the taxpayer

21 substantiates the contribution by a contempora22 neous written acknowledgment of the contribu23 tion by the donee organization that meets the

24 requirements of subparagraph (B).
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1 ‘‘(B) CONTENT OF ACKNOWLEDGMENT.—

2 An acknowledgment meets the requirements of

3 this subparagraph if it includes the following

4 information:

5 ‘‘(i) The amount of cash contributed.

6 ‘‘(ii) Whether the donee organization

7 provided any goods or services in consider8 ation, in whole or in part, for any contribu9 tion described in clause (i).

10 ‘‘(iii) A description and good faith es11 timate of the value of any goods or services

12 referred to in clause (ii) or, if such goods

13 or services consist solely of intangible reli14 gious benefits, a statement to that effect.

15 For purposes of this subparagraph, the term

16 ‘intangible religious benefit’ means any intan17 gible religious benefit which is provided by an

18 organization organized exclusively for religious

19 purposes and which generally is not sold in a

20 commercial transaction outside the donative

21 context.

22 ‘‘(C) CONTEMPORANEOUS.—For purposes

23 of subparagraph (A), an acknowledgment shall

24 be considered to be contemporaneous if the tax-
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1 payer obtains the acknowledgment on or before

2 the earlier of—

3 ‘‘(i) the date on which the taxpayer

4 files a return for the taxable year in which

5 the contribution was made, or

6 ‘‘(ii) the due date (including exten7 sions) for filing such return.

8 ‘‘(D) SUBSTANTIATION NOT REQUIRED

9 FOR CONTRIBUTIONS REPORTED BY THE

10 DONEE ORGANIZATION.—Subparagraph (A)

11 shall not apply to a contribution if the donee

12 organization files a return, on such form and in

13 accordance with such regulations as the Sec14 retary may prescribe, which includes the infor15 mation described in subparagraph (B) with re16 spect to the contribution.

17 ‘‘(E) REGULATIONS.—The Secretary shall

18 prescribe such regulations as may be necessary

19 or appropriate to carry out the purposes of this

20 paragraph, including regulations that may pro21 vide that some or all of the requirements of this

22 paragraph do not apply in appropriate cases.

23 ‘‘(2) DENIAL OF DEDUCTION WHERE CON24 TRIBUTION FOR LOBBYING ACTIVITIES.—No deduc25 tion shall be allowed under this section for a con-
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1 tribution to an organization which conducts activities

2 to which section 11(d)(2)(C)(i) applies on matters of

3 direct financial interest to the donor’s trade or busi4 ness, if a principal purpose of the contribution was

5 to avoid Federal income tax by securing a deduction

6 for such activities under this section which would be

7 disallowed by reason of section 11(d)(2)(C) if the

8 donor had conducted such activities directly. No de9 duction shall be allowed under section 11(d) for any

10 amount for which a deduction is disallowed under

11 the preceding sentence.

12 ‘‘(d) AMOUNTS PAID TO MAINTAIN CERTAIN STU13 DENTS AS MEMBERS OF TAXPAYER’S HOUSEHOLD.—

14 ‘‘(1) IN GENERAL.—Subject to the limitations

15 provided by paragraph (2), amounts paid by the tax16 payer to maintain an individual (other than a de17 pendent, as defined in section 5(d), or a relative of

18 the taxpayer) as a member of such taxpayer’s house19 hold during the period that such individual is—

20 ‘‘(A) a member of the taxpayer’s household

21 under a written agreement between the tax22 payer and an organization described in para23 graph (2), (3), or (4) of subsection (b) to imple24 ment a program of the organization to provide
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1 educational opportunities for pupils or students

2 in private homes, and

3 ‘‘(B) a full-time pupil or student in the

4 twelfth or any lower grade at an educational or5 ganization located in the United States which

6 normally maintains a regular faculty and cur7 riculum and normally has a regularly enrolled

8 body of pupils or students in attendance at the

9 place where its educational activities are regu10 larly carried on,

11 shall be treated as amounts paid for the use of the

12 organization.

13 ‘‘(2) LIMITATIONS.—

14 ‘‘(A) AMOUNT.—Paragraph (1) shall apply

15 to amounts paid within the taxable year only to

16 the extent that such amounts do not exceed $50

17 multiplied by the number of full calendar

18 months during the taxable year which fall with19 in the period described in paragraph (1). For

20 purposes of the preceding sentence, if 15 or

21 more days of a calendar month fall within such

22 period such month shall be considered as a full

23 calendar month.

24 ‘‘(B) COMPENSATION OR REIMBURSE25 MENT.—Paragraph (1) shall not apply to any
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1 amount paid by the taxpayer within the taxable

2 year if the taxpayer receives any money or

3 other property as compensation or reimburse4 ment for maintaining the individual in the tax5 payer’s household during the period described

6 in paragraph (1).

7 ‘‘(3) RELATIVE DEFINED.—For purposes of

8 paragraph (1), the term ‘relative of the taxpayer’

9 means an individual who, with respect to the tax10 payer, bears any of the relationships described in

11 subparagraphs (A) through (H) of section 5(d)(1).

12 ‘‘(4) NO OTHER AMOUNT ALLOWED AS DEDUC13 TION.—No deduction shall be allowed under sub14 section (a) for any amount paid by a taxpayer to

15 maintain an individual as a member of the tax16 payer’s household under a program described in

17 paragraph (1)(A) except as provided in this sub18 section.

19 ‘‘(e) DENIAL OF DEDUCTION FOR CERTAIN TRAVEL

20 EXPENSES.—No deduction shall be allowed under this sec21 tion for traveling expenses (including amounts expended

22 for meals and lodging) while away from home, whether

23 paid directly or by reimbursement, unless there is no sig24 nificant element of personal pleasure, recreation, or vaca25 tion in such travel.
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1 ‘‘(f) DISALLOWANCE OF DEDUCTIONS IN CERTAIN

2 CASES.—For disallowance of deductions for contributions

3 to or for the use of Communist controlled organizations,

4 see section 11(a) of the Internal Security Act of 1950 (50

5 U.S.C. 790).

6 ‘‘(g) TREATMENT OF CERTAIN AMOUNTS PAID TO OR

7 FOR THE BENEFIT OF INSTITUTIONS OF HIGHER EDU8 CATION.—

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, 80 percent of any amount described in para11 graph (2) shall be treated as a charitable contribu12 tion.

13 ‘‘(2) AMOUNT DESCRIBED.—For purposes of

14 paragraph (1), an amount is described in this para15 graph if—

16 ‘‘(A) the amount is paid by the taxpayer to

17 or for the benefit of an educational

18 organization—

19 ‘‘(i) which is described in subsection

20 (d)(1)(B), and

21 ‘‘(ii) which is an institution of higher

22 education (as defined in section 3304(f)),

23 and

24 ‘‘(B) such amount would be allowable as a

25 deduction under this section but for the fact
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1 that the taxpayer receives (directly or indi2 rectly) as a result of paying such amount the

3 right to purchase tickets for seating at an ath4 letic event in an athletic stadium of such insti5 tution.

6 If any portion of a payment is for the purchase of

7 such tickets, such portion and the remaining portion

8 (if any) of such payment shall be treated as separate

9 amounts for purposes of this subsection.

10 ‘‘(h) OTHER CROSS REFERENCES.—

11 ‘‘(1) For treatment of certain organizations

12 providing child care, see section 501(k).

13 ‘‘(2) For charitable contributions of partners,

14 see section 702.

15 ‘‘(3) For treatment of gifts for benefit of or use

16 in connection with the Naval Academy as gifts to or

17 for the use of the United States, see section 6973

18 of title 10, United States Code.

19 ‘‘(4) For treatment of gifts accepted by the

20 Secretary of State, the Director of the International

21 Communication Agency, or the Director of the

22 United States International Development Coop23 eration Agency, as gifts to or for the use of the

24 United States, see section 25 of the State Depart25 ment Basic Authorities Act of 1956.
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1 ‘‘(5) For treatment of gifts of money accepted

2 by the Attorney General for credit to the ‘Com3 missary Funds, Federal Prisons’ as gifts to or for

4 the use of the United States, see section 4043 of

5 title 18, United States Code.

6 ‘‘(6) For charitable contributions to or for the

7 use of Indian tribal governments (or subdivisions of

8 such governments), see section 7871.

9 ‘‘SEC. 4. DEDUCTION FOR HOME ACQUISITION INDEBTED10 NESS.

11 ‘‘(a) GENERAL RULE.—For purposes of this part,

12 there shall be allowed as a deduction all qualified residence

13 interest paid or accrued within the taxable year.

14 ‘‘(b) QUALIFIED RESIDENCE INTEREST DEFINED.—

15 The term ‘qualified residence interest’ means any interest

16 which is paid or accrued during the taxable year on acqui17 sition indebtedness with respect to any qualified residence

18 of the taxpayer. For purposes of the preceding sentence,

19 the determination of whether any property is a qualified

20 residence of the taxpayer shall be made as of the time

21 the interest is accrued.

22 ‘‘(c) ACQUISITION INDEBTEDNESS.—

23 ‘‘(1) IN GENERAL.—The term ‘acquisition in24 debtedness’ means any indebtedness which—
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1 ‘‘(A) is incurred in acquiring, constructing,

2 or substantially improving any qualified resi3 dence of the taxpayer, and

4 ‘‘(B) is secured by such residence.

5 Such term also includes any indebtedness secured by

6 such residence resulting from the refinancing of in7 debtedness meeting the requirements of the pre8 ceding sentence (or this sentence); but only to the

9 extent the amount of the indebtedness resulting

10 from such refinancing does not exceed the amount of

11 the refinanced indebtedness.

12 ‘‘(2) $100,000 LIMITATION.—The aggregate

13 amount treated as acquisition indebtedness for any

14 period shall not exceed $100,000 ($50,000 in the

15 case of a married individual filing a separate re16 turn).

17 ‘‘(d) TREATMENT OF INDEBTEDNESS INCURRED ON

18 OR BEFORE OCTOBER 13, 1987.—

19 ‘‘(1) IN GENERAL.—In the case of any pre-Oc20 tober 13, 1987, indebtedness—

21 ‘‘(A) such indebtedness shall be treated as

22 acquisition indebtedness, and

23 ‘‘(B) the limitation of subsection (c)(2)

24 shall not apply.
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1 ‘‘(2) REDUCTION IN $100,000 LIMITATION.—The

2 limitation of subsection (c)(2) shall be reduced (but

3 not below zero) by the aggregate amount of out4 standing pre-October 13, 1987, indebtedness.

5 ‘‘(3) PRE-OCTOBER 13, 1987, INDEBTEDNESS.—

6 The term ‘pre-October 13, 1987, indebtedness’

7 means—

8 ‘‘(A) any indebtedness which was incurred

9 on or before October 13, 1987, and which was

10 secured by a qualified residence on October 13,

11 1987, and at all times thereafter before the in12 terest is paid or accrued, or

13 ‘‘(B) any indebtedness which is secured by

14 the qualified residence and was incurred after

15 October 13, 1987, to refinance indebtedness de16 scribed in subparagraph (A) (or refinanced in17 debtedness meeting the requirements of this

18 subparagraph) to the extent (immediately after

19 the refinancing) the principal amount of the in20 debtedness resulting from the refinancing does

21 not exceed the principal amount of the refi22 nanced indebtedness (immediately before the re23 financing).
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1 ‘‘(4) LIMITATION ON PERIOD OF REFI2 NANCING.—Subparagraph (B) of paragraph (3)

3 shall not apply to any indebtedness after—

4 ‘‘(A) the expiration of the term of the in5 debtedness described in paragraph (3)(A), or

6 ‘‘(B) if the principal of the indebtedness

7 described in paragraph (3)(A) is not amortized

8 over its term, the expiration of the term of the

9 first refinancing of such indebtedness (or if ear10 lier, the date which is 30 years after the date

11 of such first refinancing).

12 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

13 For purposes of this section—

14 ‘‘(1) QUALIFIED RESIDENCE.—For purposes of

15 this subsection—

16 ‘‘(A) IN GENERAL.—Except as provided in

17 subparagraph (C), the term ‘qualified residence’

18 means the principal residence of the taxpayer.

19 ‘‘(B) MARRIED INDIVIDUALS FILING SEPA20 RATE RETURNS.—If a married couple does not

21 file a joint return for the taxable year—

22 ‘‘(i) such couple shall be treated as 1

23 taxpayer for purposes of subparagraph

24 (A), and
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1 ‘‘(ii) each individual shall be entitled

to take into account 1 2 ⁄2 of the principal

3 residence unless both individuals consent

4 in writing to 1 individual taking into ac5 count the principal residence.

6 ‘‘(C) PRE-OCTOBER 13, 1987, INDEBTED7 NESS.—In the case of any pre-October 13,

8 1987, indebtedness, the term ‘qualified resi9 dence’ has the meaning given that term in sec10 tion 163(h)(4), as in effect on the day before

11 the date of enactment of this subparagraph.

12 ‘‘(2) SPECIAL RULE FOR COOPERATIVE HOUS13 ING CORPORATIONS.—Any indebtedness secured by

14 stock held by the taxpayer as a tenant-stockholder in

15 a cooperative housing corporation shall be treated as

16 secured by the house or apartment which the tax17 payer is entitled to occupy as such a tenant-stock18 holder. If stock described in the preceding sentence

19 may not be used to secure indebtedness, indebted20 ness shall be treated as so secured if the taxpayer

21 establishes to the satisfaction of the Secretary that

22 such indebtedness was incurred to acquire such

23 stock.

24 ‘‘(3) UNENFORCEABLE SECURITY INTERESTS.—

25 Indebtedness shall not fail to be treated as secured
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1 by any property solely because, under any applicable

2 State or local homestead or other debtor protection

3 law in effect on August 16, 1986, the security inter4 est is ineffective or the enforceability of the security

5 interest is restricted.

6 ‘‘(4) SPECIAL RULES FOR ESTATES AND

7 TRUSTS.—For purposes of determining whether any

8 interest paid or accrued by an estate or trust is

9 qualified residence interest, any residence held by

10 such estate or trust shall be treated as a qualified

11 residence of such estate or trust if such estate or

12 trust establishes that such residence is a qualified

13 residence of a beneficiary who has a present interest

14 in such estate or trust or an interest in the resid15 uary of such estate or trust.

16 ‘‘SEC. 5. DEFINITIONS AND SPECIAL RULES.

17 ‘‘(a) DEFINITION OF SURVIVING SPOUSE.—

18 ‘‘(1) IN GENERAL.—For purposes of this part,

19 the term ‘surviving spouse’ means a taxpayer—

20 ‘‘(A) whose spouse died during either of

21 the taxpayer’s 2 taxable years immediately pre22 ceding the taxable year, and

23 ‘‘(B) who maintains as the taxpayer’s

24 home a household which constitutes for the tax-
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1 able year the principal place of abode (as a

2 member of such household) of a dependent—

3 ‘‘(i) who (within the meaning of sub4 section (d)) is a son, stepson, daughter, or

5 stepdaughter of the taxpayer, and

6 ‘‘(ii) with respect to whom the tax7 payer is entitled to a deduction for the tax8 able year under section 2.

9 For purposes of this paragraph, an individual shall

10 be considered as maintaining a household only if

11 over one-half of the cost of maintaining the house12 hold during the taxable year is furnished by such in13 dividual.

14 ‘‘(2) LIMITATIONS.—Notwithstanding para15 graph (1), for purposes of this part a taxpayer shall

16 not be considered to be a surviving spouse—

17 ‘‘(A) if the taxpayer has remarried at any

18 time before the close of the taxable year, or

19 ‘‘(B) unless, for the taxpayer’s taxable

20 year during which the taxpayer’s spouse died, a

21 joint return could have been made under the

22 provisions of section 6013 (without regard to

23 subsection (a)(3) thereof).

24 ‘‘(3) SPECIAL RULE WHERE DECEASED SPOUSE

25 WAS IN MISSING STATUS.—If an individual was in a
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1 missing status (within the meaning of section

2 6013(f)(3)) as a result of service in a combat zone

3 and if such individual remains in such status until

4 the date referred to in subparagraph (A) or (B),

5 then, for purposes of paragraph (1)(A), the date on

6 which such individual dies shall be treated as the

7 earlier of the date determined under subparagraph

8 (A) or the date determined under subparagraph (B):

9 ‘‘(A) The date on which the determination

10 is made under section 556 of title 37 of the

11 United States Code or under section 5566 of

12 title 5 of such Code (whichever is applicable)

13 that such individual died while in such missing

14 status.

15 ‘‘(B) Except in the case of the combat

16 zone designated for purposes of the Vietnam

17 conflict, the date which is 2 years after the date

18 designated as the date of termination of com19 batant activities in that zone.

20 ‘‘(b) DEFINITION OF HEAD OF HOUSEHOLD.—

21 ‘‘(1) IN GENERAL.—For purposes of this part,

22 an individual shall be considered a head of a house23 hold if, and only if, such individual is not married

24 at the close of such individual’s taxable year, is not
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1 a surviving spouse (as defined in subsection (a)),

2 and either—

3 ‘‘(A) maintains as such individual’s home a

4 household which constitutes for more than one5 half of such taxable year the principal place of

6 abode, as a member of such household, of—

7 ‘‘(i) a son, stepson, daughter, or step8 daughter of the taxpayer, or a descendant

9 of a son or daughter of the taxpayer, but

10 if such son, stepson, daughter, step11 daughter, or descendant is married at the

12 close of the taxpayer’s taxable year, only if

13 the taxpayer is entitled to a deduction for

14 the taxable year for such person under sec15 tion 2 (or would be so entitled but for sub16 paragraph (B) or (D) of subsection

17 (d)(5)), or

18 ‘‘(ii) any other person who is a de19 pendent of the taxpayer, if the taxpayer is

20 entitled to a deduction for the taxable year

21 for such person under section 2, or

22 ‘‘(B) maintains a household which con23 stitutes for such taxable year the principal place

24 of abode of the father or mother of the tax25 payer, if the taxpayer is entitled to a deduction
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1 for the taxable year for such father or mother

2 under section 2.

3 For purposes of this paragraph, an individual shall

4 be considered as maintaining a household only if

5 over one-half of the cost of maintaining the house6 hold during the taxable year is furnished by such in7 dividual.

8 ‘‘(2) DETERMINATION OF STATUS.—For pur9 poses of this subsection—

10 ‘‘(A) a legally adopted child of a person

11 shall be considered a child of such person by

12 blood,

13 ‘‘(B) an individual who is legally separated

14 from such individual’s spouse under a decree of

15 divorce or of separate maintenance shall not be

16 considered as married,

17 ‘‘(C) a taxpayer shall be considered as not

18 married at the close of such taxpayer’s taxable

19 year if at any time during the taxable year such

20 taxpayer’s spouse is a nonresident alien, and

21 ‘‘(D) a taxpayer shall be considered as

22 married at the close of such taxpayer’s taxable

23 year if such taxpayer’s spouse (other than a

24 spouse described in subparagraph (C)) died

25 during the taxable year.
27

•S 822 IS

1 ‘‘(3) LIMITATIONS.—Notwithstanding para2 graph (1), for purposes of this part, a taxpayer shall

3 not be considered to be a head of a household—

4 ‘‘(A) if at any time during the taxable year

5 the taxpayer is a nonresident alien, or

6 ‘‘(B) by reason of an individual who would

7 not be a dependent for the taxable year but

8 for—

9 ‘‘(i) subparagraph (I) of subsection

10 (d)(1), or

11 ‘‘(ii) paragraph (3) of subsection (d).

12 ‘‘(c) CERTAIN MARRIED INDIVIDUALS LIVING

13 APART.—For purposes of this part, an individual shall be

14 treated as not married at the close of the taxable year

15 if such individual is so treated under the provisions of sec16 tion 7703(b).

17 ‘‘(d) DEPENDENT DEFINED.—

18 ‘‘(1) GENERAL DEFINITION.—For purposes of

19 this part, the term ‘dependent’ means any of the fol20 lowing individuals over one-half of whose support,

21 for the calendar year in which the taxable year of

22 the taxpayer begins, was received from the taxpayer

23 (or is treated under paragraph (3) or (5) as received

24 from the taxpayer):
28

•S 822 IS

1 ‘‘(A) A son or daughter of the taxpayer, or

2 a descendant of either.

3 ‘‘(B) A stepson or stepdaughter of the tax4 payer.

5 ‘‘(C) A brother, sister, stepbrother, or

6 stepsister of the taxpayer.

7 ‘‘(D) The father or mother of the taxpayer,

8 or an ancestor of either.

9 ‘‘(E) A stepfather or stepmother of the

10 taxpayer.

11 ‘‘(F) A son or daughter of a brother or sis12 ter of the taxpayer.

13 ‘‘(G) A brother or sister of the father or

14 mother of the taxpayer.

15 ‘‘(H) A son-in-law, daughter-in-law, father16 in-law, mother-in-law, brother-in-law, or sister17 in-law of the taxpayer.

18 ‘‘(I) An individual (other than an indi19 vidual who at any time during the taxable year

20 was the spouse, determined without regard to

21 section 7703, of the taxpayer) who, for the tax22 able year of the taxpayer, has as such individ23 ual’s principal place of abode the home of the

24 taxpayer and is a member of the taxpayer’s

25 household.
29

•S 822 IS

1 ‘‘(2) RULES RELATING TO GENERAL DEFINI2 TION.—For purposes of this section—

3 ‘‘(A) BROTHER; SISTER.—The terms

4 ‘brother’ and ‘sister’ include a brother or sister

5 by the halfblood.

6 ‘‘(B) CHILD.—In determining whether any

7 of the relationships specified in paragraph (1)

8 or subparagraph (A) of this paragraph exists, a

9 legally adopted child of an individual (and a

10 child who is a member of an individual’s house11 hold, if placed with such individual by an au12 thorized placement agency for legal adoption by

13 such individual), or a foster child of an indi14 vidual (if such child satisfies the requirements

15 of paragraph (1)(I) with respect to such indi16 vidual), shall be treated as a child of such indi17 vidual by blood.

18 ‘‘(C) CITIZENSHIP.—The term ‘dependent’

19 does not include any individual who is not a cit20 izen or national of the United States unless

21 such individual is a resident of the United

22 States or of a country contiguous to the United

23 States. The preceding sentence shall not ex24 clude from the definition of ‘dependent’ any

25 child of the taxpayer legally adopted by such
30

•S 822 IS

1 taxpayer, if, for the taxable year of the tax2 payer, the child has as such child’s principal

3 place of abode the home of the taxpayer and is

4 a member of the taxpayer’s household, and

5 if the taxpayer is a citizen or national of the

6 United States.

7 ‘‘(D) ALIMONY, ETC.—A payment to a wife

8 which is alimony or separate maintenance shall

9 not be treated as a payment by the wife’s hus10 band for the support of any dependent.

11 ‘‘(E) UNLAWFUL ARRANGEMENTS.—An in12 dividual is not a member of the taxpayer’s

13 household if at any time during the taxable

14 year of the taxpayer the relationship between

15 such individual and the taxpayer is in violation

16 of local law.

17 ‘‘(3) MULTIPLE SUPPORT AGREEMENTS.—For

18 purposes of paragraph (1), over one-half of the sup19 port of an individual for a calendar year shall be

20 treated as received from the taxpayer if—

21 ‘‘(A) no one person contributed over one22 half of such support,

23 ‘‘(B) over one-half of such support was re24 ceived from persons each of whom, but for the

25 fact that such person did not contribute over
31

•S 822 IS

1 one-half of such support, would have been enti2 tled to claim such individual as a dependent for

3 a taxable year beginning in such calendar year,

4 ‘‘(C) the taxpayer contributed over 10 per5 cent of such support, and

6 ‘‘(D) each person described in subpara7 graph (B) (other than the taxpayer) who con8 tributed over 10 percent of such support files a

9 written declaration (in such manner and form

10 as the Secretary may by regulations prescribe)

11 that such person will not claim such individual

12 as a dependent for any taxable year beginning

13 in such calendar year.

14 ‘‘(4) SPECIAL SUPPORT TEST IN CASE OF STU15 DENTS.—For purposes of paragraph (1), in the case

16 of any individual who is—

17 ‘‘(A) a son, stepson, daughter, or step18 daughter of the taxpayer (within the meaning

19 of this subsection), and

20 ‘‘(B) a student,

21 amounts received as scholarships for study at an

22 educational organization described in section

23 3(d)(1)(B) shall not be taken into account in deter24 mining whether such individual received more than
32

•S 822 IS

1 one-half of such individual’s support from the tax2 payer.

3 ‘‘(5) SUPPORT TEST IN CASE OF CHILD OF DI4 VORCED PARENTS, ETC.—

5 ‘‘(A) CUSTODIAL PARENT GETS EXEMP6 TION.—Except as otherwise provided in this

7 paragraph, if—

8 ‘‘(i) a child receives over one-half of

9 such child’s support during the calendar

10 year from such child’s parents—

11 ‘‘(I) who are divorced or legally

12 separated under a decree of divorce or

13 separate maintenance,

14 ‘‘(II) who are separated under a

15 written separation agreement, or

16 ‘‘(III) who live apart at all times

17 during the last 6 months of the cal18 endar year, and

19 ‘‘(ii) such child is in the custody of 1

20 or both of such child’s parents for more

21 than one-half of the calendar year,

22 such child shall be treated, for purposes of

23 paragraph (1), as receiving over one-half of

24 such child’s support during the calendar year

25 from the parent having custody for a greater
33

•S 822 IS

1 portion of the calendar year (hereafter in this

2 paragraph referred to as the ‘custodial parent’).

3 ‘‘(B) EXCEPTION WHERE CUSTODIAL PAR4 ENT RELEASES CLAIM TO EXEMPTION FOR THE

5 YEAR.—A child of parents described in sub6 paragraph (A) shall be treated as having re7 ceived over one-half of such child’s support dur8 ing a calendar year from the noncustodial par9 ent if—

10 ‘‘(i) the custodial parent signs a writ11 ten declaration (in such manner and form

12 as the Secretary may by regulations pre13 scribe) that such custodial parent will not

14 claim such child as a dependent for any

15 taxable year beginning in such calendar

16 year, and

17 ‘‘(ii) the noncustodial parent attaches

18 such written declaration to the noncusto19 dial parent’s return for the taxable year

20 beginning during such calendar year.

21 For purposes of this paragraph, the term ‘non22 custodial parent’ means the parent who is not

23 the custodial parent.

24 ‘‘(C) EXCEPTION FOR MULTIPLE-SUPPORT

25 AGREEMENT.—This paragraph shall not apply
34

•S 822 IS

1 in any case where over one-half of the support

2 of the child is treated as having been received

3 from a taxpayer under the provisions of para4 graph (3).

5 ‘‘(D) EXCEPTION FOR CERTAIN PRE-1985

6 INSTRUMENTS.—

7 ‘‘(i) IN GENERAL.—A child of parents

8 described in subparagraph (A) shall be

9 treated as having received over one-half

10 such child’s support during a calendar year

11 from the noncustodial parent if—

12 ‘‘(I) a qualified pre-1985 instru13 ment between the parents applicable

14 to the taxable year beginning in such

15 calendar year provides that the non16 custodial parent shall be entitled to

17 any deduction allowable under section

18 2 for such child, and

19 ‘‘(II) the noncustodial parent

20 provides at least $600 for the support

21 of such child during such calendar

22 year.

23 For purposes of this clause, amounts ex24 pended for the support of a child or chil25 dren shall be treated as received from the
35

•S 822 IS

1 noncustodial parent to the extent that such

2 parent provided amounts for such support.

3 ‘‘(ii) QUALIFIED PRE-1985 INSTRU4 MENT.—For purposes of this subpara5 graph, the term ‘qualified pre-1985 instru6 ment’ means any decree of divorce or sepa7 rate maintenance or written agreement—

8 ‘‘(I) which is executed before

9 January 1, 1985,

10 ‘‘(II) which on such date contains

11 the provision described in clause

12 (i)(I), and

13 ‘‘(III) which is not modified on

14 or after such date in a modification

15 which expressly provides that this sub16 paragraph shall not apply to such de17 cree or agreement.

18 ‘‘(E) SPECIAL RULE FOR SUPPORT RE19 CEIVED FROM NEW SPOUSE OF PARENT.—For

20 purposes of this paragraph, in the case of the

21 remarriage of a parent, support of a child re22 ceived from the parent’s spouse shall be treated

23 as received from the parent.

24 ‘‘PART II—TAX ON BUSINESS ACTIVITIES

‘‘Sec. 11. Tax imposed on business activities.
36

•S 822 IS

1 ‘‘SEC. 11. TAX IMPOSED ON BUSINESS ACTIVITIES.

2 ‘‘(a) TAX IMPOSED.—There is hereby imposed on

3 every person engaged in a business activity located in the

4 United States a tax equal to 20 percent of the business

5 taxable income of such person.

6 ‘‘(b) LIABILITY FOR TAX.—The tax imposed by this

7 section shall be paid by the person engaged in the business

8 activity, whether such person is an individual, partnership,

9 corporation, or otherwise.

10 ‘‘(c) BUSINESS TAXABLE INCOME.—

11 ‘‘(1) IN GENERAL.—For purposes of this sec12 tion, the term ‘business taxable income’ means gross

13 active income reduced by the deductions specified in

14 subsection (d).

15 ‘‘(2) GROSS ACTIVE INCOME.—For purposes of

16 paragraph (1), the term ‘gross active income’ means

17 gross income other than investment income.

18 ‘‘(d) DEDUCTIONS.—

19 ‘‘(1) IN GENERAL.—The deductions specified in

20 this subsection are—

21 ‘‘(A) the cost of business inputs for the

22 business activity,

23 ‘‘(B) the compensation (including contribu24 tions to qualified retirement plans but not in25 cluding other fringe benefits) paid for employ26 ees performing services in such activity, and
37

•S 822 IS

1 ‘‘(C) the cost of personal and real property

2 used in such activity.

3 ‘‘(2) BUSINESS INPUTS.—

4 ‘‘(A) IN GENERAL.—For purposes of para5 graph (1)(A), the term ‘cost of business inputs’

6 means—

7 ‘‘(i) the actual cost of goods, services,

8 and materials, whether or not resold dur9 ing the taxable year, and

10 ‘‘(ii) the actual cost, if reasonable, of

11 travel and entertainment expenses for busi12 ness purposes.

13 ‘‘(B) PURCHASES OF GOODS AND SERV14 ICES EXCLUDED.—Such term shall not include

15 purchases of goods and services provided to em16 ployees or owners.

17 ‘‘(C) CERTAIN LOBBYING AND POLITICAL

18 EXPENDITURES EXCLUDED.—

19 ‘‘(i) IN GENERAL.—Such term shall

20 not include any amount paid or incurred in

21 connection with—

22 ‘‘(I) influencing legislation,

23 ‘‘(II) participation in, or inter24 vention in, any political campaign on
38

•S 822 IS

1 behalf of (or in opposition to) any

2 candidate for public office,

3 ‘‘(III) any attempt to influence

4 the general public, or segments there5 of, with respect to elections, legislative

6 matters, or referendums, or

7 ‘‘(IV) any direct communication

8 with a covered executive branch offi9 cial in an attempt to influence the of10 ficial actions or positions of such offi11 cial.

12 ‘‘(ii) EXCEPTION FOR LOCAL LEGISLA13 TION.—In the case of any legislation of

14 any local council or similar governing

15 body—

16 ‘‘(I) clause (i)(I) shall not apply,

17 and

18 ‘‘(II) such term shall include all

19 ordinary and necessary expenses (in20 cluding, but not limited to, traveling

21 expenses described in subparagraph

22 (A)(iii) and the cost of preparing tes23 timony) paid or incurred during the

24 taxable year in carrying on any trade

25 or business—
39

•S 822 IS

1 ‘‘(aa) in direct connection

2 with appearances before, submis3 sion of statements to, or sending

4 communications to the commit5 tees, or individual members, of

6 such council or body with respect

7 to legislation or proposed legisla8 tion of direct interest to the tax9 payer, or

10 ‘‘(bb) in direct connection

11 with communication of informa12 tion between the taxpayer and an

13 organization of which the tax14 payer is a member with respect

15 to any such legislation or pro16 posed legislation which is of di17 rect interest to the taxpayer and

18 to such organization, and that

19 portion of the dues so paid or in20 curred with respect to any orga21 nization of which the taxpayer is

22 a member which is attributable

23 to the expenses of the activities

24 carried on by such organization.
40

•S 822 IS

1 ‘‘(iii) APPLICATION TO DUES OF TAX2 EXEMPT ORGANIZATIONS.—Such term

3 shall include the portion of dues or other

4 similar amounts paid by the taxpayer to an

5 organization which is exempt from tax

6 under this subtitle which the organization

7 notifies the taxpayer under section

8 6033(e)(1)(A)(ii) is allocable to expendi9 tures to which clause (i) applies.

10 ‘‘(iv) INFLUENCING LEGISLATION.—

11 For purposes of this subparagraph—

12 ‘‘(I) IN GENERAL.—The term ‘in13 fluencing legislation’ means any at14 tempt to influence any legislation

15 through communication with any

16 member or employee of a legislative

17 body, or with any government official

18 or employee who may participate in

19 the formulation of legislation.

20 ‘‘(II) LEGISLATION.—The term

21 ‘legislation’ has the meaning given

22 that term in section 4911(e)(2).

23 ‘‘(v) OTHER SPECIAL RULES.—

24 ‘‘(I) EXCEPTION FOR CERTAIN

25 TAXPAYERS.—In the case of any tax-
41

•S 822 IS

1 payer engaged in the trade or busi2 ness of conducting activities described

3 in clause (i), clause (i) shall not apply

4 to expenditures of the taxpayer in

5 conducting such activities directly on

6 behalf of another person (but shall

7 apply to payments by such other per8 son to the taxpayer for conducting

9 such activities).

10 ‘‘(II) DE MINIMIS EXCEPTION.—

11 ‘‘(aa) IN GENERAL.—Clause

12 (i) shall not apply to any in13 house expenditures for any tax14 able year if such expenditures do

15 not exceed $2,000. In deter16 mining whether a taxpayer ex17 ceeds the $2,000 limit, there

18 shall not be taken into account

19 overhead costs otherwise allocable

20 to activities described in sub21 clauses (I) and (IV) of clause (i).

22 ‘‘(bb) IN-HOUSE EXPENDI23 TURES.—For purposes of provi24 sion (aa), the term ‘in-house ex25 penditures’ means expenditures
42

•S 822 IS

1 described in subclauses (I) and

2 (IV) of clause (i) other than pay3 ments by the taxpayer to a per4 son engaged in the trade or busi5 ness of conducting activities de6 scribed in clause (i) for the con7 duct of such activities on behalf

8 of the taxpayer, or dues or other

9 similar amounts paid or incurred

10 by the taxpayer which are allo11 cable to activities described in

12 clause (i).

13 ‘‘(III) EXPENSES INCURRED IN

14 CONNECTION WITH LOBBYING AND

15 POLITICAL ACTIVITIES.—Any amount

16 paid or incurred for research for, or

17 preparation, planning, or coordination

18 of, any activity described in clause (i)

19 shall be treated as paid or incurred in

20 connection with such activity.

21 ‘‘(vi) COVERED EXECUTIVE BRANCH

22 OFFICIAL.—For purposes of this subpara23 graph, the term ‘covered executive branch

24 official’ means—

25 ‘‘(I) the President,
43

•S 822 IS

1 ‘‘(II) the Vice President,

2 ‘‘(III) any officer or employee of

3 the White House Office of the Execu4 tive Office of the President, and the 2

5 most senior level officers of each of

6 the other agencies in such Executive

7 Office, and

8 ‘‘(IV) any individual serving in a

9 position in level I of the Executive

10 Schedule under section 5312 of title

11 5, United States Code, any other indi12 vidual designated by the President as

13 having Cabinet level status, and any

14 immediate deputy of such an indi15 vidual.

16 ‘‘(vii) SPECIAL RULE FOR INDIAN

17 TRIBAL GOVERNMENTS.—For purposes of

18 this subparagraph, an Indian tribal gov19 ernment shall be treated in the same man20 ner as a local council or similar governing

21 body.

22 ‘‘(viii) CROSS REFERENCE.—

‘‘For reporting requirements and alternative taxes

related to this subsection, see section 6033(e).

23 ‘‘(e) CARRYOVER OF EXCESS DEDUCTIONS.—
44

•S 822 IS

1 ‘‘(1) IN GENERAL.—If the aggregate deductions

2 for any taxable year exceed the gross active income

3 for such taxable year, the amount of the deductions

4 specified in subsection (d) for the succeeding taxable

5 year (determined without regard to this subsection)

6 shall be increased by the sum of—

7 ‘‘(A) such excess, plus

8 ‘‘(B) the product of such excess and the 3-

9 month Treasury rate for the last month of such

10 taxable year.

11 ‘‘(2) 3-MONTH TREASURY RATE.—For purposes

12 of paragraph (1), the 3-month Treasury rate is the

13 rate determined by the Secretary based on the aver14 age market yield (during any 1-month period se15 lected by the Secretary and ending in the calendar

16 month in which the determination is made) on out17 standing marketable obligations of the United States

18 with remaining periods to maturity of 3 months or

19 less.’’

20 (b) CONFORMING REPEALS AND REDESIGNATIONS.—

21 (1) REPEALS.—The following subchapters of

22 chapter 1 of subtitle A and the items relating to

23 such subchapters in the table of subchapters for

24 such chapter 1 are repealed:
45

•S 822 IS

1 (A) Subchapter B (relating to computation

2 of taxable income).

3 (B) Subchapter C (relating to corporate

4 distributions and adjustments).

5 (C) Subchapter D (relating to deferred

6 compensation, etc.).

7 (D) Subchapter G (relating to corporations

8 used to avoid income tax on shareholders).

9 (E) Subchapter H (relating to banking in10 stitutions).

11 (F) Subchapter I (relating to natural re12 sources).

13 (G) Subchapter J (relating to estates,

14 trusts, beneficiaries, and decedents).

15 (H) Subchapter L (relating to insurance

16 companies).

17 (I) Subchapter M (relating to regulated in18 vestment companies and real estate investment

19 trusts).

20 (J) Subchapter N (relating to tax based on

21 income from sources within or without the

22 United States).

23 (K) Subchapter O (relating to gain or loss

24 on disposition of property).
46

•S 822 IS

1 (L) Subchapter P (relating to capital gains

2 and losses).

3 (M) Subchapter Q (relating to readjust4 ment of tax between years and special limita5 tions).

6 (N) Subchapter S (relating to tax treat7 ment of S corporations and their shareholders).

8 (O) Subchapter T (relating to cooperatives

9 and their patrons).

10 (P) Subchapter U (relating to designation

11 and treatment of empowerment zones, enter12 prise communities, and rural development in13 vestment areas).

14 (Q) Subchapter V (relating to title 11

15 cases).

16 (R) Subchapter W (relating to District of

17 Columbia Enterprise Zone).

18 (2) REDESIGNATIONS.—The following sub19 chapters of chapter 1 of subtitle A and the items re20 lating to such subchapters in the table of sub21 chapters for such chapter 1 are redesignated:

22 (A) Subchapter E (relating to accounting

23 periods and methods of accounting) as sub24 chapter B.
47

•S 822 IS

1 (B) Subchapter F (relating to exempt or2 ganizations) as subchapter C.

3 (C) Subchapter K (relating to partners

4 and partnerships) as subchapter D.

5 SEC. 3. REPEAL OF ESTATE AND GIFT TAXES.

6 Subtitle B (relating to estate, gift, and generation7 skipping taxes) and the item relating to such subtitle in

8 the table of subtitles is repealed.

9 SEC. 4. ADDITIONAL REPEALS.

10 Subtitles H (relating to financing of presidential elec11 tion campaigns) and J (relating to coal industry health

12 benefits) and the items relating to such subtitles in the

13 table of subtitles are repealed.

14 SEC. 5. EFFECTIVE DATES.

15 (a) IN GENERAL.—Except as provided in subsection

16 (b), the amendments made by this Act apply to taxable

17 years beginning after December 31, 1999.

18 (b) REPEAL OF ESTATE AND GIFT TAXES.—The re19 peal made by section 3 applies to estates of decedents

20 dying, and transfers made, after December 31, 1999.

21 (c) TECHNICAL AND CONFORMING CHANGES.—The

22 Secretary of the Treasury or the Secretary’s delegate

23 shall, as soon as practicable but in any event not later

24 than 90 days after the date of enactment of this Act, sub25 mit to the Committee on Ways and Means of the House
48

•S 822 IS

1 of Representatives and the Committee on Finance of the

2 Senate a draft of any technical and conforming changes

3 in the Internal Revenue Code of 1986 which are necessary

4 to reflect throughout such Code the changes in the sub5 stantive provisions of law made by this Act.

Æ