II 

Calendar No. 467 

112TH CONGRESS 

2D SESSION S. 3412 

To amend the Internal Revenue Code of 1986 to provide tax relief to middleclass families. 

IN THE SENATE OF THE UNITED STATES 

JULY 19, 2012 

Mr. REID introduced the following bill; which was read twice and ordered 

placed on the calendar 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax relief to middle-class families. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; ETC. 

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

5 ‘‘Middle Class Tax Cut Act’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

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

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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

3 (c) TABLE OF CONTENTS.—The table of contents of 

4 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—TEMPORARY EXTENSION OF TAX RELIEF 

Sec. 101. Temporary extension of 2001 tax relief. 

Sec. 102. Temporary extension of 2003 tax relief. 

Sec. 103. Temporary extension of 2010 tax relief. 

Sec. 104. Temporary extension of election to expense certain depreciable business assets. 

TITLE II—ALTERNATIVE MINIMUM TAX RELIEF 

Sec. 201. Temporary extension of increased alternative minimum tax exemption 

amount. 

Sec. 202. Temporary extension of alternative minimum tax relief for nonrefundable personal credits. 

TITLE III—BUDGETARY EFFECTS 

Sec. 301. Budgetary effects. 

5 TITLE I—TEMPORARY 

6 EXTENSION OF TAX RELIEF 

7 SEC. 101. TEMPORARY EXTENSION OF 2001 TAX RELIEF. 

8 (a) TEMPORARY EXTENSION.— 

9 (1) IN GENERAL.—Section 901(a)(1) of the 

10 Economic Growth and Tax Relief Reconciliation Act 

11 of 2001 is amended by striking ‘‘December 31, 

12 2012’’ and inserting ‘‘December 31, 2013’’. 

13 (2) EFFECTIVE DATE.—The amendment made 

14 by this subsection shall take effect as if included in 

15 the enactment of the Economic Growth and Tax Re16 lief Reconciliation Act of 2001. 

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1 (b) APPLICATION TO CERTAIN HIGH-INCOME TAX2 PAYERS.— 

3 (1) INCOME TAX RATES.— 

4 (A) TREATMENT OF 25- AND 28-PERCENT

5 RATE BRACKETS.—Paragraph (2) of section 

6 1(i) is amended to read as follows: 

7 ‘‘(2) 25- AND 28-PERCENT RATE BRACKETS.— 

8 The tables under subsections (a), (b), (c), (d), and 

9 (e) shall be applied— 

10 ‘‘(A) by substituting ‘25%’ for ‘28%’ each 

11 place it appears (before the application of sub12 paragraph (B)), and 

13 ‘‘(B) by substituting ‘28%’ for ‘31%’ each 

14 place it appears.’’. 

15 (B) 33-PERCENT RATE BRACKET.—Sub16 section (i) of section 1 is amended by redesig17 nating paragraph (3) as paragraph (4) and by 

18 inserting after paragraph (2) the following new 

19 paragraph: 

20 ‘‘(3) 33-PERCENT RATE BRACKET.— 

21 ‘‘(A) IN GENERAL.—In the case of taxable 

22 years beginning after December 31, 2012— 

23 ‘‘(i) the rate of tax under subsections 

24 (a), (b), (c), and (d) on a taxpayer’s tax25 able income in the fourth rate bracket shall 

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1 be 33 percent to the extent such income 

2 does not exceed an amount equal to the ex3 cess of— 

4 ‘‘(I) the applicable amount, over 

5 ‘‘(II) the dollar amount at which 

6 such bracket begins, and 

7 ‘‘(ii) the 36 percent rate of tax under 

8 such subsections shall apply only to the 

9 taxpayer’s taxable income in such bracket 

10 in excess of the amount to which clause (i) 

11 applies. 

12 ‘‘(B) APPLICABLE AMOUNT.—For purposes 

13 of this paragraph, the term ‘applicable amount’ 

14 means the excess of— 

15 ‘‘(i) the applicable threshold, over 

16 ‘‘(ii) the sum of the following amounts 

17 in effect for the taxable year: 

18 ‘‘(I) the basic standard deduction 

19 (within the meaning of section 

20 63(c)(2)), and 

21 ‘‘(II) the exemption amount 

22 (within the meaning of section 

23 151(d)(1) (or, in the case of sub24 section (a), 2 such exemption 

25 amounts). 

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1 ‘‘(C) APPLICABLE THRESHOLD.—For pur2 poses of this paragraph, the term ‘applicable 

3 threshold’ means— 

4 ‘‘(i) $250,000 in the case of sub5 section (a), 

6 ‘‘(ii) $225,000 in the case of sub7 section (b), 

8 ‘‘(iii) $200,000 in the case of sub9 sections (c), and 

‘‘(iv) 1 10 ⁄2 the amount applicable under 

11 clause (i) (after adjustment, if any, under 

12 subparagraph (E)) in the case of sub13 section (d). 

14 ‘‘(D) FOURTH RATE BRACKET.—For pur15 poses of this paragraph, the term ‘fourth rate 

16 bracket’ means the bracket which would (deter17 mined without regard to this paragraph) be the 

18 36-percent rate bracket. 

19 ‘‘(E) INFLATION ADJUSTMENT.—For pur20 poses of this paragraph, with respect to taxable 

21 years beginning in calendar years after 2012, 

22 each of the dollar amounts under clauses (i), 

23 (ii), and (iii) of subparagraph (C) shall be ad24 justed in the same manner as under paragraph 

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1 (1)(C), except that subsection (f)(3)(B) shall be 

2 applied by substituting ‘2008’ for ‘1992’.’’. 

3 (2) PHASEOUT OF PERSONAL EXEMPTIONS AND

4 ITEMIZED DEDUCTIONS.— 

5 (A) OVERALL LIMITATION ON ITEMIZED

6 DEDUCTIONS.—Section 68 is amended— 

7 (i) by striking ‘‘the applicable 

8 amount’’ the first place it appears in sub9 section (a) and inserting ‘‘the applicable 

10 threshold in effect under section 1(i)(3)’’, 

11 (ii) by striking ‘‘the applicable 

12 amount’’ in subsection (a)(1) and inserting 

13 ‘‘such applicable threshold’’, 

14 (iii) by striking subsection (b) and re15 designating subsections (c), (d), and (e) as 

16 subsections (b), (c), and (d), respectively, 

17 and 

18 (iv) by striking subsections (f) and 

19 (g). 

20 (B) PHASEOUT OF DEDUCTIONS FOR PER21 SONAL EXEMPTIONS.— 

22 (i) IN GENERAL.—Paragraph (3) of 

23 section 151(d) is amended— 

24 (I) by striking ‘‘the threshold 

25 amount’’ in subparagraphs (A) and 

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1 (B) and inserting ‘‘the applicable 

2 threshold in effect under section 

3 1(i)(3)’’, 

4 (II) by striking subparagraph (C) 

5 and redesignating subparagraph (D) 

6 as subparagraph (C), and 

7 (III) by striking subparagraphs 

8 (E) and (F). 

9 (ii) CONFORMING AMENDMENTS.— 

10 Paragraph (4) of section 151(d) is amend11 ed— 

12 (I) by striking subparagraph (B), 

13 (II) by redesignating clauses (i) 

14 and (ii) of subparagraph (A) as sub15 paragraphs (A) and (B), respectively, 

16 and by indenting such subparagraphs 

17 (as so redesignated) accordingly, and 

18 (III) by striking all that precedes 

19 ‘‘in a calendar year after 1989,’’ and 

20 inserting the following: 

21 ‘‘(4) INFLATION ADJUSTMENT.—In the case of 

22 any taxable year beginning’’. 

23 (c) EFFECTIVE DATE.—Except as otherwise pro24 vided, the amendments made by this section shall apply 

25 to taxable years beginning after December 31, 2012. 

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1 (d) APPLICATION OF EGTRRA SUNSET.—Each 

2 amendment made by subsection (b) shall be subject to title 

3 IX of the Economic Growth and Tax Relief Reconciliation 

4 Act of 2001 to the same extent and in the same manner 

5 as if such amendment was included in title I of such Act. 

6 SEC. 102. TEMPORARY EXTENSION OF 2003 TAX RELIEF. 

7 (a) EXTENSION.— 

8 (1) IN GENERAL.—Section 303 of the Jobs and 

9 Growth Tax Relief Reconciliation Act of 2003 is 

10 amended by striking ‘‘December 31, 2012’’ and in11 serting ‘‘December 31, 2013’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by this subsection shall take effect as if included in 

14 the enactment of the Jobs and Growth Tax Relief 

15 Reconciliation Act of 2003. 

16 (b) 20-PERCENT CAPITAL GAINS RATE FOR CERTAIN

17 HIGH INCOME INDIVIDUALS.— 

18 (1) IN GENERAL.—Paragraph (1) of section 

19 1(h) is amended by striking subparagraph (C), by 

20 redesignating subparagraphs (D) and (E) as sub21 paragraphs (E) and (F) and by inserting after sub22 paragraph (B) the following new subparagraphs: 

23 ‘‘(C) 15 percent of the lesser of— 

24 ‘‘(i) so much of the adjusted net cap25 ital gain (or, if less, taxable income) as exmstockstill on DSK4VPTVN1PROD with BILLS

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1 ceeds the amount on which a tax is deter2 mined under subparagraph (B), or 

3 ‘‘(ii) the excess (if any) of— 

4 ‘‘(I) the amount of taxable in5 come which would (without regard to 

6 this paragraph) be taxed at a rate 

7 below 36 percent, over 

8 ‘‘(II) the sum of the amounts on 

9 which a tax is determined under sub10 paragraphs (A) and (B), 

11 ‘‘(D) 20 percent of the adjusted net capital 

12 gain (or, if less, taxable income) in excess of the 

13 sum of the amounts on which tax is determined 

14 under subparagraphs (B) and (C),’’. 

15 (2) MINIMUM TAX.—Paragraph (3) of section 

16 55(b) is amended by striking subparagraph (C), by 

17 redesignating subparagraph (D) as subparagraph 

18 (E), and by inserting after subparagraph (B) the 

19 following new subparagraphs: 

20 ‘‘(C) 15 percent of the lesser of— 

21 ‘‘(i) so much of the adjusted net cap22 ital gain (or, if less, taxable excess) as ex23 ceeds the amount on which tax is deter24 mined under subparagraph (B), or 

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1 ‘‘(ii) the excess described in section 

2 1(h)(1)(C)(ii), plus 

3 ‘‘(D) 20 percent of the adjusted net capital 

4 gain (or, if less, taxable excess) in excess of the 

5 sum of the amounts on which tax is determined 

6 under subparagraphs (B) and (C), plus’’. 

7 (c) CONFORMING AMENDMENTS.— 

8 (1) The following provisions are each amended 

9 by striking ‘‘15 percent’’ and inserting ‘‘20 per10 cent’’: 

11 (A) Section 531. 

12 (B) Section 541. 

13 (C) Section 1445(e)(1). 

14 (D) The second sentence of section 

15 7518(g)(6)(A). 

16 (E) Section 53511(f)(2) of title 46, United 

17 States Code. 

18 (2) Sections 1(h)(1)(B) and 55(b)(3)(B) are 

19 each amended by striking ‘‘5 percent (0 percent in 

20 the case of taxable years beginning after 2007)’’ and 

21 inserting ‘‘0 percent’’. 

22 (3) Section 1445(e)(6) is amended by striking 

23 ‘‘15 percent (20 percent in the case of taxable years 

24 beginning after December 31, 2010)’’ and inserting 

25 ‘‘20 percent’’. 

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1 (d) EFFECTIVE DATES.— 

2 (1) IN GENERAL.—Except as otherwise pro3 vided, the amendments made by subsections (b) and 

4 (c) shall apply to taxable years beginning after De5 cember 31, 2012. 

6 (2) WITHHOLDING.—The amendments made by 

7 paragraphs (1)(C) and (3) of subsection (c) shall 

8 apply to amounts paid on or after January 1, 2013. 

9 (e) APPLICATION OF JGTRRA SUNSET.—Each 

10 amendment made by subsections (b) and (c) shall be sub11 ject to section 303 of the Jobs and Growth Tax Relief 

12 Reconciliation Act of 2003 to the same extent and in the 

13 same manner as if such amendment was included in title 

14 III of such Act. 

15 SEC. 103. TEMPORARY EXTENSION OF 2010 TAX RELIEF. 

16 (a) AMERICAN OPPORTUNITY TAX CREDIT.— 

17 (1) IN GENERAL.—Section 25A(i) is amended 

18 by striking ‘‘or 2012’’ and inserting ‘‘2012, or 

19 2013’’. 

20 (2) TREATMENT OF POSSESSIONS.—Section 

21 1004(c)(1) of division B of the American Recovery 

22 and Reinvestment Tax Act of 2009 is amended by 

23 striking ‘‘and 2012’’ each place it appears and in24 serting ‘‘2012, and 2013’’. 

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1 (b) CHILD TAX CREDIT.—Section 24(d)(4) is amend2 ed— 

3 (1) by striking ‘‘AND 2012’’ in the heading and 

4 inserting ‘‘2012, AND 2013’’, and 

5 (2) by striking ‘‘or 2012’’ and inserting ‘‘2012, 

6 or 2013’’. 

7 (c) EARNED INCOME TAX CREDIT.—Section 32(b)(3) 

8 is amended— 

9 (1) by striking ‘‘AND 2012’’ in the heading and 

10 inserting ‘‘2012, AND 2013’’, and 

11 (2) by striking ‘‘or 2012’’ and inserting ‘‘2012, 

12 or 2013’’. 

13 (d) TEMPORARY EXTENSION OF RULE DIS14 REGARDING REFUNDS IN THE ADMINISTRATION OF FED15 ERAL PROGRAMS AND FEDERALLY ASSISTED PRO16 GRAMS.—Subsection (b) of section 6409 is amended by 

17 striking ‘‘December 31, 2012’’ and inserting ‘‘December 

18 31, 2013’’. 

19 (e) EFFECTIVE DATES.— 

20 (1) IN GENERAL.—Except as provided in para21 graph (2), the amendments made by this section 

22 shall apply to taxable years beginning after Decem23 ber 31, 2012. 

24 (2) RULE DISREGARDING REFUNDS IN THE AD25 MINISTRATION OF CERTAIN PROGRAMS.—The 

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1 amendment made by subsection (d) shall apply to 

2 amounts received after December 31, 2012. 

3 SEC. 104. TEMPORARY EXTENSION OF ELECTION TO EX4 PENSE CERTAIN DEPRECIABLE BUSINESS AS5 SETS. 

6 (a) IN GENERAL.— 

7 (1) DOLLAR LIMITATION.—Section 179(b)(1) is 

8 amended— 

9 (A) by striking ‘‘and’’ at the end of sub10 paragraph (C), 

11 (B) by redesignating subparagraph (D) as 

12 subparagraph (E), 

13 (C) by inserting after subparagraph (C) 

14 the following new subparagraph: 

15 ‘‘(D) $250,000 in the case of taxable years 

16 beginning in 2013, and’’, and 

17 (D) in subparagraph (E), as so redesig18 nated, by striking ‘‘2012’’ and inserting 

19 ‘‘2013’’. 

20 (2) REDUCTION IN LIMITATION.—Section 

21 179(b)(2) is amended— 

22 (A) by striking ‘‘and’’ at the end of sub23 paragraph (C), 

24 (B) by redesignating subparagraph (D) as 

25 subparagraph (E), 

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1 (C) by inserting after subparagraph (C) 

2 the following new subparagraph: 

3 ‘‘(D) $800,000 in the case of taxable years 

4 beginning in 2013, and’’, and 

5 (D) in subparagraph (E), as so redesig6 nated, by striking ‘‘2012’’ and inserting 

7 ‘‘2013’’. 

8 (b) COMPUTER SOFTWARE.—Section 

9 179(d)(1)(A)(ii) is amended by striking ‘‘2013’’ and in10 serting ‘‘2014’’. 

11 (c) ELECTION.—Section 179(c)(2) is amended by 

12 striking ‘‘2013’’ and inserting ‘‘2014’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2012. 

16 TITLE II—ALTERNATIVE 

17 MINIMUM TAX RELIEF 

18 SEC. 201. TEMPORARY EXTENSION OF INCREASED ALTER19 NATIVE MINIMUM TAX EXEMPTION AMOUNT. 

20 (a) IN GENERAL.—Paragraph (1) of section 55(d) is 

21 amended— 

22 (1) by striking ‘‘$72,450’’ and all that follows 

23 through ‘‘2011’’ in subparagraph (A) and inserting 

24 ‘‘$78,750 in the case of taxable years beginning in 

25 2012’’, and 

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1 (2) by striking ‘‘$47,450’’ and all that follows 

2 through ‘‘2011’’ in subparagraph (B) and inserting 

3 ‘‘$50,600 in the case of taxable years beginning in 

4 2012’’. 

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2011. 

8 SEC. 202. TEMPORARY EXTENSION OF ALTERNATIVE MIN9 IMUM TAX RELIEF FOR NONREFUNDABLE 

10 PERSONAL CREDITS. 

11 (a) IN GENERAL.—Paragraph (2) of section 26(a) is 

12 amended— 

13 (1) by striking ‘‘or 2011’’ and inserting ‘‘2011, 

14 or 2012’’, and 

15 (2) by striking ‘‘2011’’ in the heading thereof 

16 and inserting ‘‘2012’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2011. 

20 TITLE III—BUDGETARY EFFECTS 

21 SEC. 301. BUDGETARY EFFECTS. 

22 (a) PAYGO SCORECARD.—The budgetary effects of 

23 this Act shall not be entered on either PAYGO scorecard 

24 maintained pursuant to section 4(d) of the Statutory Pay25 As-You-Go Act of 2010. 

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1 (b) SENATE PAYGO SCORECARD.—The budgetary 

2 effects of this Act shall not be entered on any PAYGO 

3 scorecard maintained for purposes of section 201 of S. 

4 Con. Res. 21 (110th Congress). 

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Calendar No. 467 

112TH CONGRESS 

2D SESSION S. 3412 

A BILL 

To amend the Internal Revenue Code of 1986 to 

provide tax relief to middle-class families. 

JULY 19, 2012 

Read twice and ordered placed on the calendar 

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