II

106TH CONGRESS

1ST SESSION S. 806

To amend the Internal Revenue Code of 1986 to reduce the 15 percent

individual income tax rate to 10 percent over 5 years, to provide that

married couples may file a combined return under which each spouse

is taxed using the rates applicable to unmarried individuals, and for

other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 15, 1999

Mr. ASHCROFT (for himself, Mrs. HUTCHISON, Mr. INHOFE, and Mr. KYL)

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 reduce

the 15 percent individual income tax rate to 10 percent

over 5 years, to provide that married couples may file

a combined return under which each spouse is taxed

using the rates applicable to unmarried individuals, 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 ‘‘Taxpayer Freedom and

5 Fairness Act’’.
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1 SEC. 2. PHASED REDUCTION OF 15 PERCENT INDIVIDUAL

2 INCOME TAX RATE TO 10 PERCENT.

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

4 Code of 1986 (relating to tax imposed) is amended—

5 (1) by striking ‘‘15%’’ each place it appears in

6 the tables in subsections (a) through (e) and insert7 ing ‘‘The applicable rate’’, and

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

9 ‘‘(i) APPLICABLE RATE.—For purposes of this sec10 tion, the applicable rate for any taxable year shall be de11 termined in accordance with the following table:

‘‘In the case of any taxable

year beginning in—

The applicable rate is:

1999 ......................................................................................... 14 percent

2000 ......................................................................................... 13 percent

2001 ......................................................................................... 12 percent

2002 ......................................................................................... 11 percent

2003 and thereafter ................................................................. 10 percent.’’.

12 (b) CONFORMING AMENDMENTS.—

13 (1) Section 1(f)(2) of the Internal Revenue

14 Code of 1986 is amended—

15 (A) by inserting ‘‘except as provided in

16 subsection (i),’’ before ‘‘by not changing’’ in

17 subparagraph (B), and

18 (B) by inserting ‘‘and the adjustment in

19 rates under subsection (i)’’ after ‘‘rate brack20 ets’’ in subparagraph (C).
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1 (2) Section 1(g)(7)(B)(ii)(II) of such Code is

2 amended by striking ‘‘15 percent’’ and inserting

3 ‘‘the applicable rate’’.

4 (3) Section 3402(p)(2) of such Code is amend5 ed by striking ‘‘15 percent’’ and inserting ‘‘the ap6 plicable rate in effect under section 1(i) for the tax7 able year’’.

8 (c) NEW TABLES.—Not later than 15 days after the

9 date of enactment of this Act, the Secretary of the

10 Treasury—

11 (1) shall prescribe tables for taxable years be12 ginning in 1999 which shall reflect the amendments

13 made by this section and which shall apply in lieu

14 of the tables prescribed under sections 1(f)(1) and

15 3(a) of the Internal Revenue Code of 1986 for such

16 taxable years, and

17 (2) shall modify the withholding tables and pro18 cedures for such taxable years under section

19 3402(a)(1) of such Code to take effect as if the re20 duction in the rate of tax under section 1 of such

21 Code (as amended by this section) was attributable

22 to such a reduction effective on such date of enact23 ment.

24 (d) SECTION 15 NOT TO APPLY.—No amendment

25 made by this section shall be treated as a change in a
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1 rate of tax for purposes of section 15 of the Internal Rev2 enue Code of 1986.

3 (e) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 December 31, 1998.

6 SEC. 3. COMBINED RETURN TO WHICH UNMARRIED RATES

7 APPLY.

8 (a) IN GENERAL.—Subpart B of part II of sub9 chapter A of chapter 61 of the Internal Revenue Code of

10 1986 (relating to income tax returns) is amended by in11 serting after section 6013 the following:

12 ‘‘SEC. 6013A. COMBINED RETURN WITH SEPARATE RATES.

13 ‘‘(a) GENERAL RULE.—A husband and wife may

14 make a combined return of income taxes under subtitle

15 A under which—

16 ‘‘(1) a separate taxable income is determined

17 for each spouse by applying the rules provided in

18 this section, and

19 ‘‘(2) the tax imposed by section 1 is the aggre20 gate amount resulting from applying the separate

21 rates set forth in section 1(c) to each such taxable

22 income.

23 ‘‘(b) DETERMINATION OF TAXABLE INCOME.—

24 ‘‘(1) IN GENERAL.—For purposes of subsection

25 (a)(1), the taxable income for each spouse shall be
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1 one-half of the taxable income computed as if the

2 spouses were filing a joint return.

3 ‘‘(2) NONITEMIZERS.—For purposes of para4 graph (1), if an election is made not to itemize de5 ductions for any taxable year, the basic standard de6 duction shall be equal to the amount which is twice

7 the basic standard deduction under section

8 63(c)(2)(C) for the taxable year.

9 ‘‘(c) TREATMENT OF CREDITS.—Credits shall be de10 termined (and applied against the joint liability of the cou11 ple for tax) as if the spouses had filed a joint return.

12 ‘‘(d) TREATMENT AS JOINT RETURN.—Except as

13 otherwise provided in this section or in the regulations

14 prescribed hereunder, for purposes of this title (other than

15 sections 1 and 63(c)) a combined return under this section

16 shall be treated as a joint return.

17 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

18 such regulations as may be necessary or appropriate to

19 carry out this section.’’.

20 (b) UNMARRIED RATE MADE APPLICABLE.—So

21 much of subsection (c) of section 1 of the Internal Rev22 enue Code of 1986 (relating to tax imposed) as precedes

23 the table is amended to read as follows:

24 ‘‘(c) SEPARATE OR UNMARRIED RETURN RATE.—

25 There is hereby imposed on the taxable income of every
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1 individual (other than a married individual (as defined in

2 section 7703) filing a joint return or a separate return,

3 a surviving spouse as defined in section 2(a), or a head

4 of household as defined in section 2(b)) a tax determined

5 in accordance with the following table:’’.

6 (c) CLERICAL AMENDMENT.—The table of sections

7 for subpart B of part II of subchapter A of chapter 61

8 of the Internal Revenue Code of 1986 is amended by in9 serting after the item relating to section 6013 the fol10 lowing:

‘‘Sec. 6013A. Combined return with separate rates.’’

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

12 this section shall apply to taxable years beginning after

13 the date of enactment of this Act.

Æ