II

106TH CONGRESS

1ST SESSION S. 799

To amend the Internal Revenue Code of 1986 to modify the tax brackets,

eliminate the marriage penalty, allow individuals a deduction for amounts

paid for insurance for medical care, increase contribution limits for

individual retirement plans and pensions, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 14, 1999

Mr. CAMPBELL 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 modify

the tax brackets, eliminate the marriage penalty, allow

individuals a deduction for amounts paid for insurance

for medical care, increase contribution limits for individual retirement plans and pensions, 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. 5 PERCENTAGE POINT REDUCTION IN GEN4 ERAL TAX RATE.

5 (a) GENERAL RULE.—Section 1 of the Internal Rev6 enue Code of 1986 (relating to tax imposed) is amended
2

•S 799 IS

1 by striking subsections (a) through (e) and inserting the

2 following:

3 ‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS

4 AND SURVIVING SPOUSES.—There is hereby imposed on

5 the taxable income of—

6 ‘‘(1) every married individual (as defined in sec7 tion 7703) who makes a single return jointly with

8 his spouse under section 6013, and

9 ‘‘(2) every surviving spouse (as defined in sec10 tion 2(a)),

11 a tax determined in accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $43,050 .......................... 10.0% of taxable income.

Over $43,050 but not over

$104,050.

$4,305, plus 23.0% of the excess over

$43,050.

Over $104,050 but not over

$158,550.

$18,335, plus 26.0% of the excess

over $104,050.

Over $158,550 but not over

$283,150.

$32,505, plus 31.0% of the excess

over $158,550.

Over $283,150 ............................... $71,131, plus 34.6% of the excess

over $283,150.

12 ‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im13 posed on the taxable income of every head of a household

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

15 with the following table:

‘‘If taxable income is: The tax is:

Not over $34,550 .......................... 10.0% of taxable income.

Over $34,550 but not over

$89,150.

$3,455, plus 23.0% of the excess over

$34,550.

Over $89,150 but not over

$144,400.

$16,013, plus 26.0% of the excess

over $89,150.

Over $144,400 but not over

$283,150.

$30,378, plus 31.0% of the excess

over $144,400.

Over $283,150 ............................... $73,390.50, plus 34.6% of the excess

over $283,150.
3

•S 799 IS

1 ‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SUR2 VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—There

3 is hereby imposed on the taxable income of every indi4 vidual (other than a married individual (as defined in sec5 tion 7703) filing a joint return or a separate return, a

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

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

8 accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $25,750 .......................... 10.0% of taxable income.

Over $25,750 but not over

$62,450.

$2,575, plus 23.0% of the excess over

$25,750.

Over $62,450 but not over

$130,250.

$11,016, plus 26.0% of the excess

over $62,450.

Over $130,250 but not over

$283,150.

$28,644, plus 31.0% of the excess

over $130,250.

Over $283,150 ............................... $76,043, plus 34.6% of the excess

over $283,150.

9 ‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RE10 TURNS.—There is hereby imposed on the taxable income

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

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

13 under section 6013, a tax determined in accordance with

14 the following table:

‘‘If taxable income is: The tax is:

Not over $21,525 .......................... 10.0% of taxable income.

Over $21,525 but not over

$52,025.

$2,152.50, plus 23.0% of the excess

over $21,525.

Over $52,025 but not over

$79,275.

$9,167.50, plus 26.0% of the excess

over $52,025.

Over $79,275 but not over

$141,575.

$16,252.50, plus 31.0% of the excess

over $79,275.

Over $141,575 ............................... $35,565.50, plus 34.6% of the excess

over $141,575.
4

•S 799 IS

1 ‘‘(e) ESTATES AND TRUSTS.—There is hereby im2 posed on the taxable income of—

3 ‘‘(1) every estate, and

4 ‘‘(2) every trust,

5 taxable under this subsection a tax determined in accord6 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.’’

7 (b) REDUCTION IN ALTERNATIVE MINIMUM TAX

8 RATE.—Section 55(b)(1)(A)(i) of the Internal Revenue

9 Code of 1986 (relating to tentative minimum tax for non10 corporate taxpayers) is amended—

11 (1) by striking ‘‘26 percent’’ in subclause (I)

12 and inserting ‘‘21 percent’’, and

13 (2) by striking ‘‘28 percent’’ in subclause (II)

14 and inserting ‘‘23 percent’’.

15 (c) INFLATION ADJUSTMENT TO APPLY IN DETER16 MINING RATES FOR 2000.—Section 1(f) of the Internal

17 Revenue Code of 1986 is amended—

18 (1) by striking ‘‘1993’’ in paragraph (1) and in19 serting ‘‘1999’’,
5

•S 799 IS

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

2 inserting ‘‘1998’’, and

3 (3) by striking paragraph (7).

4 (d) CONFORMING AMENDMENTS.—

5 (1) The following provisions of the Internal

6 Revenue Code of 1986 are each amended by striking

7 ‘‘1992’’ and inserting ‘‘1998’’ each place it appears:

8 (A) Section 25A(h).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

23 (P) Section 2032A(a)(3)(B).

24 (Q) Section 2503(b)(2)(B).

25 (R) Section 2631(c)(1)(B).
6

•S 799 IS

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

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

3 (U) Section 6039F(d).

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

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

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

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

8 such Code is amended by striking ‘‘1987’’ and in9 serting ‘‘1998’’.

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

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

12 Transportation Equity Act for the 21st Century, is

13 amended by striking ‘‘, by substituting ‘calendar

14 year 1998’ for ‘calendar year 1992’.’’ and by insert15 ing a period.

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

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

18 Transportation Equity Act for the 21st Century, is

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

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

21 ‘‘(ii) the cost-of-living adjustment de22 termined under section 1(f)(3) for the cal23 endar year in which the taxable year be24 gins. In the case of any taxable year begin25 ning in a calendar year after 2002, section
7

•S 799 IS

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

2 ‘calendar year 2001’ for ‘calendar year

3 1998’ for purposes of adjusting the dollar

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

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

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

7 ‘calendar year 1998’ for ‘calendar year 1992’ in sub8 paragraph (B) thereof’’.

9 (e) ADDITIONAL CONFORMING AMENDMENTS.—

10 (1) Section 1(g)(7)(B)(ii)(II) of the Internal

11 Revenue Code of 1986 is amended by striking ‘‘15

12 percent’’ and inserting ‘‘10 percent’’.

13 (2) Section 1(h) of such Code is amended by

14 striking ‘‘28 percent’’ and inserting ‘‘23 percent’’

15 each place it appears.

16 (3) Section 1(h) of such Code is amended by

17 striking ‘‘28-percent’’ and inserting ‘‘23-percent’’

18 each place it appears.

19 (4) Sections 531 and 541 of such Code are each

20 amended by striking ‘‘39.6 percent’’ and inserting

21 ‘‘34.6 percent’’.

22 (5) Section 3402(p)(1)(B) of such Code is

23 amended by striking ‘‘15, 28, or 31’’ and inserting

24 ‘‘10, 23, or 26’’.
8

•S 799 IS

1 (6) Section 3402(p)(2) of such Code is amend2 ed by striking ‘‘15 percent’’ and inserting ‘‘10 per3 cent’’.

4 (7) Section 3402(q)(1) of such Code is amend5 ed by striking ‘‘28 percent’’ and inserting ‘‘23 per6 cent’’.

7 (8) Section 3402(r)(3) of such Code is amended

8 by striking ‘‘31 percent’’ and inserting ‘‘26 per9 cent’’.

10 (9) Section 3406(a)(1) of such Code is amended

11 by striking ‘‘31 percent’’ and inserting ‘‘26 per12 cent’’.

13 (f) EFFECTIVE DATES.—

14 (1) IN GENERAL.—Except as provided in para15 graphs (2) and (3), the amendments made by this

16 section shall apply to taxable years beginning after

17 December 31, 1999.

18 (2) WITHHOLDING.—The amendments made by

19 paragraphs (5) through (9) of subsection (e) shall

20 apply to amounts paid after December 31, 1999.

21 (3) CONFORMING AMENDMENT.—The amend22 ment made by subsection (d)(4) shall apply to tax23 able years beginning after December 31, 2001.
9

•S 799 IS

1 SEC. 2. INCREASE IN MAXIMUM TAXABLE INCOME FOR 10

2 PERCENT RATE BRACKET.

3 Section 1(f) of the Internal Revenue Code of 1986

4 (relating to adjustments in tax tables so that inflation will

5 not result in tax increases), as amended by section 1(c),

6 is amended—

7 (1) in paragraph (2)—

8 (A) by redesignating subparagraphs (B)

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

10 (B) by inserting after subparagraph (A)

11 the following:

12 ‘‘(B) in the case of the tables contained in

13 subsections (a), (b), (c), and (d), by increasing

14 the maximum taxable income level for the 10

15 percent rate bracket and the minimum taxable

16 income level for the 23 percent rate bracket

17 otherwise determined under subparagraph (A)

18 for taxable years beginning in any calendar year

19 after 1999, by the applicable dollar amount for

20 such calendar year,’’, and

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

22 subparagraph (C) (as so redesignated) and in23 serting ‘‘subparagraphs (A) and (B)’’, and

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

25 ‘‘(7) APPLICABLE DOLLAR AMOUNT.—For pur26 poses of paragraph (2)(B), the applicable dollar
10

•S 799 IS

1 amount for any calendar year shall be determined as

2 follows:

3 ‘‘(A) JOINT RETURNS AND SURVIVING

4 SPOUSES.—In the case of the table contained in

5 subsection (a)—

‘‘Calendar year: Applicable Dollar Amount:

2000 ......................................................................................... $10,000

2001 ......................................................................................... $10,000

2002 and thereafter ................................................................. $20,000.

6 ‘‘(B) OTHER TABLES.—In the case of the

7 table contained in subsection (b), (c), or (d)—

‘‘Calendar year: Applicable Dollar Amount:

2000 ......................................................................................... $5,000

2001 ......................................................................................... $5,000

2002 and thereafter ................................................................. $10,000.’’

8 SEC. 3. ELIMINATION OF MARRIAGE PENALTY IN STAND9 ARD DEDUCTION.

10 (a) IN GENERAL.—Paragraph (2) of section 63(c) of

11 the Internal Revenue Code of 1986 (relating to standard

12 deduction) is amended to read as follows:

13 ‘‘(2) BASIC STANDARD DEDUCTION.—For pur14 poses of paragraph (1), the basic standard deduction

15 is—

16 ‘‘(A) $8,500 in the case of—

17 ‘‘(i) a joint return, or

18 ‘‘(ii) a surviving spouse (as defined in

19 section 2(a)),

20 ‘‘(B) $6,250 in the case of a head of

21 household (as defined in section 2(b)), or
11

•S 799 IS

1 ‘‘(C) $4,250 in any other case.’’

2 (b) TECHNICAL AMENDMENTS.—

3 (1) Paragraph (4) of section 63(c) of the Inter4 nal Revenue Code of 1986, as amended by section

5 1(d)(1)(E), is amended to read as follows:

6 ‘‘(4) ADJUSTMENTS FOR INFLATION.—In the

7 case of any taxable year beginning in a calendar

8 year after 1999, each dollar amount contained in

9 paragraph (2) or (5) or subsection (f) shall be in10 creased by an amount equal to—

11 ‘‘(A) such dollar amount, multiplied by

12 ‘‘(B) the cost-of-living adjustment deter13 mined under section 1(f)(3) for the calendar

14 year in which the taxable year begins.’’

15 (2) Subparagraph (A) of section 63(c)(5) of

16 such Code is amended by striking ‘‘$500’’ and in17 serting ‘‘$700’’.

18 (3) Subsection (f) of section 63 of such Code is

19 amended by striking ‘‘$600’’ each place it appears

20 and inserting ‘‘$850’’ and by striking ‘‘$750’’ in

21 paragraph (3) and inserting ‘‘$1,050’’.

22 (4) Subparagraph (B) of section 1(f)(6) of such

23 Code is amended by striking ‘‘subsection (c)(4) of

24 section 63 (as it applies to subsections (c)(5)(A) and
12

•S 799 IS

1 (f) of such section)’’ and inserting ‘‘section

2 63(c)(4)’’.

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

4 this section shall apply to taxable years beginning after

5 December 31, 1999.

6 SEC. 4. DEDUCTION FOR AMOUNTS PAID FOR INSURANCE

7 FOR MEDICAL CARE.

8 (a) IN GENERAL.—Part VII of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 (relating to

10 additional itemized deductions for individuals) is amended

11 by redesignating section 222 as section 223 and by insert12 ing after section 221 the following new section:

13 ‘‘SEC. 222. INSURANCE FOR MEDICAL CARE.

14 ‘‘(a) DEDUCTION ALLOWED.—

15 ‘‘(1) IN GENERAL.—In the case of an indi16 vidual, there shall be allowed as a deduction for any

17 taxable year an amount equal to the amount paid

18 during the taxable year for insurance covering med19 ical care or for any qualified long-term care insur20 ance contract for the taxpayer, and the taxpayer’s

21 spouse and dependents.

22 ‘‘(2) DEFINITIONS.—For purposes of paragraph

23 (1)—

24 ‘‘(A) INSURANCE.—The term ‘insurance’

25 includes amounts paid as premiums under part
13

•S 799 IS

1 B of title XVIII of the Social Security Act (re2 lating to supplementary medical insurance for

3 the aged).

4 ‘‘(B) MEDICAL CARE.—The term ‘medical

5 care’ has the meaning given to such term by

6 paragraphs (A), (B), and (C) of section

7 213(d)(1).

8 ‘‘(C) QUALIFIED LONG-TERM CARE INSUR9 ANCE CONTRACT.—The term ‘qualified long10 term care insurance contract’ has the meaning

11 given to such term by section 7702B(b).

12 ‘‘(b) COORDINATION OF DEDUCTION.—No amount

13 taken into account under subsection (a) shall be taken into

14 account in computing the amount allowable to the tax15 payer as a deduction under section 162(l) or 213(a).

16 ‘‘(c) COORDINATION WITH EXCLUSION.—No amount

17 excluded from income under section 125 shall be taken

18 into account under subsection (a).’’

19 (b) DEDUCTION ALLOWED IF INDIVIDUAL DOES NOT

20 ITEMIZE.—Subsection (a) of section 62 of the Internal

21 Revenue Code of 1986 (relating to general rule for ad22 justed gross income defined) is amended by inserting after

23 paragraph (17) the following:

24 ‘‘(18) INSURANCE FOR MEDICAL CARE.—The

25 deduction allowed by section 222.’’
14

•S 799 IS

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

2 for part VII of subchapter B of chapter 1 of the Internal

3 Revenue Code of 1986 is amended by striking the item

4 relating to section 222 and inserting the following:

‘‘Sec. 222. Insurance for medical care.

‘‘Sec. 223. Cross reference.’’

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

6 this section shall apply to taxable years beginning after

7 December 31, 1999.

8 SEC. 5. MODIFICATION OF DEDUCTION LIMITS FOR IRA

9 CONTRIBUTIONS.

10 (a) INCREASE IN CONTRIBUTION LIMIT.—Paragraph

11 (1)(A) of section 219(b) of the Internal Revenue Code of

12 1986 (relating to maximum amount of deduction) is

13 amended by striking ‘‘$2,000’’ and inserting ‘‘$3,500’’.

14 (b) CONFORMING AMENDMENTS.—

15 (1) Section 408(a)(1) of Internal Revenue Code

16 of 1986 is amended by striking ‘‘$2,000’’ and insert17 ing ‘‘$3,500’’.

18 (2) Section 408(b)(2)(B) of such Code is

19 amended by striking ‘‘$2,000’’ and inserting

20 ‘‘$3,500’’.

21 (3) Section 408(b) of such Code is amended by

22 striking ‘‘$2,000’’ in the matter following paragraph

23 (4) and inserting ‘‘$3,500’’.
15

•S 799 IS

1 (4) Section 408(j) of such Code is amended by

2 striking ‘‘$2,000’’ and inserting ‘‘$3,500’’.

3 (5) Section 408(p)(8) of such Code is amended

4 by striking ‘‘$2,000’’ and inserting ‘‘$3,500’’

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years beginning after

7 December 31, 1999.

8 SEC. 6. INCREASE IN LIMIT ON EXCLUSION AMOUNT FOR

9 ELECTIVE DEFERRALS.

10 (a) INCREASE IN ELECTIVE DEFERRAL LIMIT.—

11 Paragraph (1) of section 402(g) of the Internal Revenue

12 Code of 1986 (relating to limitation on exclusion for elec13 tive deferrals) is amended by striking ‘‘$7,000’’ and in14 serting ‘‘$15,000’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1)(A) Section 402(g) of the Internal Revenue

17 Code of 1986 is amended by striking paragraph (4)

18 and by redesignating paragraphs (5), (6), (7), (8),

19 and (9) as paragraphs (4), (5), (6), (7), and (8), re20 spectively.

21 (B) Section 457(c)(2) of such Code is amended

22 by striking ‘‘section 402(g)(8)(A)(iii)’’ and inserting

23 ‘‘section 402(g)(7)(A)(iii)’’.
16

•S 799 IS

1 (C) Section 501(c)(18)(D)(iii) of such Code is

2 amended by striking ‘‘(other than paragraph (4)

3 thereof)’’.

4 (2) Section 402(g)(4) of such Code, as redesig5 nated by paragraph (1)(A), is amended by striking

6 ‘‘$7,000’’ and inserting ‘‘$15,000’’.

7 (3) Section 402(g)(4) of such Code, as so redes8 ignated, is amended by inserting ‘‘the base period

9 taken into account shall be the calendar quarter

10 ending September 30, 1999, and’’ after ‘‘except

11 that’’.

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1999.

Æ