I

106TH CONGRESS

1ST SESSION H. R. 2085

To amend the Internal Revenue Code of 1986 to end the marriage penalty,

to provide estate tax relief for family-owned farms and other familyowned businesses, to provide a tax credit for long term care needs,

to expand the child and dependent care tax credit, to increase the

deduction for health insurance costs for self-employed individuals, and

to adjust for inflation the exemption amounts used to calculate the

individual alternative minimum tax.

IN THE HOUSE OF REPRESENTATIVES

JUNE 9, 1999

Ms. HOOLEY of Oregon (for herself and Mr. WALDEN of Oregon) introduced

the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to end the

marriage penalty, to provide estate tax relief for familyowned farms and other family-owned businesses, to provide a tax credit for long term care needs, to expand

the child and dependent care tax credit, to increase the

deduction for health insurance costs for self-employed

individuals, and to adjust for inflation the exemption

amounts used to calculate the individual alternative minimum tax.

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

2 This Act may be cited as the ‘‘Family Tax Reduction

3 Act of 1999’’.

4 SEC. 2. INCREASE OF STANDARD DEDUCTION FOR JOINT

5 RETURNS TO END MARRIAGE PENALTY.

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

7 the Internal Revenue Code of 1986 (relating to basic

8 standard deduction) is amended to read as follows:

9 ‘‘(2) BASIC STANDARD DEDUCTION.—For pur10 poses of paragraph (1), the basic standard deduction

11 is—

12 ‘‘(A) $8,600 in the case of—

13 ‘‘(i) a joint return, or

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

15 section 2(a)),

16 ‘‘(B) $6,350 in the case of a head of

17 household (as defined in section 2(b)), and

‘‘(C) 1 18 ⁄2 the dollar amount applicable under

19 subparagraph (A) in any other case.’’

20 (b) INFLATION ADJUSTMENT.—Paragraph (4) of sec21 tion 63(c) of such Code is amended to read as follows:

22 ‘‘(4) ADJUSTMENTS FOR INFLATION.—

23 ‘‘(A) ADJUSTMENT OF BASIC STANDARD

24 DEDUCTION.—In the case of any taxable year

25 beginning in a calendar year after 2000, each
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1 dollar amount contained in paragraph (2) shall

2 be increased by an amount equal to—

3 ‘‘(i) such dollar amount, multiplied by

4 ‘‘(ii) the cost-of-living adjustment de5 termined under section 1(f)(3) for the cal6 endar year in which the taxable year be7 gins by substituting ‘calendar year 1999’

8 for ‘calendar year 1992’ in subparagraph

9 (B) thereof.

10 ‘‘(B) ADJUSTMENT OF OTHER

11 AMOUNTS.—In the case of any taxable year be12 ginning in a calendar year after 1988, each dol13 lar amount contained in paragraph (5)(A) or

14 subsection (f) shall be increased by an amount

15 equal to—

16 ‘‘(i) such dollar amount, multiplied by

17 ‘‘(ii) the cost-of-living adjustment de18 termined under section 1(f)(3) for the cal19 endar year in which the taxable year be20 gins by substituting ‘calendar year 1987’

21 for ‘calendar year 1992’ in subparagraph

22 (B) thereof.’’

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

24 this section shall apply to taxable years beginning after

25 December 31, 1999.
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1 SEC. 3. INCREASE IN DEDUCTION FROM ESTATE TAX FOR

2 FAMILY-OWNED FARMS AND OTHER FAMILY3 OWNED BUSINESS INTERESTS.

4 (a) IN GENERAL.—Subsection (a) of section 2057 of

5 the Internal Revenue Code of 1986 (relating to family6 owned business interests) is amended—

7 (1) in paragraph (2), by striking ‘‘$675,000’’

8 and inserting ‘‘$5,000,000’’; and

9 (2) by striking paragraph (3).

10 (b) CHANGE IN PERIOD OF OWNERSHIP AND MATE11 RIAL PARTICIPATION.—Subparagraph (D) of section

12 2057(b)(1) of such Code (relating to estates to which sec13 tion applies) is amended—

14 (1) by striking ‘‘8-year period’’ and inserting

15 ‘‘7-year period’’; and

16 (2) by striking ‘‘5 years’’ and inserting ‘‘4

17 years’’.

18 (c) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to estates of decedents dying

20 after December 31, 2000.

21 SEC. 4. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE

22 NEEDS.

23 (a) ALLOWANCE OF CREDIT.—

24 (1) IN GENERAL.—Section 24(a) of the Internal

25 Revenue Code of 1986 (relating to allowance of child

26 tax credit) is amended to read as follows:
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1 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al2 lowed as a credit against the tax imposed by this chapter

3 for the taxable year an amount equal to the sum of—

4 ‘‘(1) $500 multiplied by the number of quali5 fying children of the taxpayer, plus

6 ‘‘(2) $1,000 multiplied by the number of appli7 cable individuals with respect to whom the taxpayer

8 is an eligible caregiver for the taxable year.

9 In any case in which the applicable individual and the eli10 gible caregiver are the same individual, the credit allowed

11 by paragraph (2) with respect to such individual shall not

12 exceed the aggregate amount paid by the taxpayer during

13 the taxable year (not compensated for by insurance or oth14 erwise) for qualified long-term care services (as defined

15 in section 7702B(c)) for such individual.’’

16 (2) ADDITIONAL CREDIT FOR TAXPAYER WITH

17 3 OR MORE SEPARATE CREDIT AMOUNTS.—So much

18 of section 24(d) of such Code as precedes paragraph

19 (1)(A) thereof is amended to read as follows:

20 ‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3

21 OR MORE SEPARATE CREDIT AMOUNTS.—

22 ‘‘(1) IN GENERAL.—If the sum of the number

23 of qualifying children of the taxpayer and the num24 ber of applicable individuals with respect to which

25 the taxpayer is an eligible caregiver is 3 or more for
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1 any taxable year, the aggregate credits allowed

2 under subpart C shall be increased by the lesser

3 of—’’.

4 (3) CONFORMING AMENDMENTS.—

5 (A) The heading for section 32(n) of such

6 Code is amended by striking ‘‘CHILD’’ and in7 serting ‘‘FAMILY CARE’’.

8 (B) The heading for section 24 is amended

9 to read as follows:

10 ‘‘SEC. 24. FAMILY CARE CREDIT.’’

11 (C) The table of sections for subpart A of

12 part IV of subchapter A of chapter 1 of such

13 Code is amended by striking the item relating

14 to section 24 and inserting the following new

15 item:

‘‘Sec. 24. Family care credit.’’.

16 (b) DEFINITIONS.—Section 24(c) of such Code (de17 fining qualifying child) is amended to read as follows:

18 ‘‘(c) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) QUALIFYING CHILD.—

20 ‘‘(A) IN GENERAL.—The term ‘qualifying

21 child’ means any individual if—

22 ‘‘(i) the taxpayer is allowed a deduc23 tion under section 151 with respect to such

24 individual for the taxable year,
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1 ‘‘(ii) such individual has not attained

2 the age of 17 as of the close of the cal3 endar year in which the taxable year of the

4 taxpayer begins, and

5 ‘‘(iii) such individual bears a relation6 ship to the taxpayer described in section

7 32(c)(3)(B).

8 ‘‘(B) EXCEPTION FOR CERTAIN NONCITI9 ZENS.—The term ‘qualifying child’ shall not in10 clude any individual who would not be a de11 pendent if the first sentence of section

12 152(b)(3) were applied without regard to all

13 that follows ‘resident of the United States’.

14 ‘‘(2) APPLICABLE INDIVIDUAL.—

15 ‘‘(A) IN GENERAL.—The term ‘applicable

16 individual’ means, with respect to any taxable

17 year, any individual who has been certified, be18 fore the due date for filing the return of tax for

19 the taxable year (without extensions), by a phy20 sician (as defined in section 1861(r)(1) of the

21 Social Security Act) as being an individual with

22 long-term care needs described in subparagraph

23 (B) for a period—

24 ‘‘(i) which is at least 180 consecutive

25 days, and
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1 ‘‘(ii) a portion of which occurs within

2 the taxable year.

3 Such term shall not include any individual oth4 erwise meeting the requirements of the pre5 ceding sentence unless within the 12 month pe6 riod ending on such due date (or such other pe7 riod as the Secretary prescribes) a physician (as

8 so defined) has certified that such individual

9 meets such requirements.

10 ‘‘(B) INDIVIDUALS WITH LONG-TERM CARE

11 NEEDS.—An individual is described in this sub12 paragraph if the individual meets any of the fol13 lowing requirements:

14 ‘‘(i) The individual is at least 6 years

15 of age and—

16 ‘‘(I) is unable to perform (with17 out substantial assistance from an18 other individual) at least 3 activities

19 of daily living (as defined in section

20 7702B(c)(2)(B)) due to a loss of

21 functional capacity, or

22 ‘‘(II) requires substantial super23 vision to protect such individual from

24 threats to health and safety due to se25 vere cognitive impairment and is un-
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1 able to perform at least 1 activity of

2 daily living (as so defined).

3 ‘‘(ii) The individual is at least 2 but

4 not 6 years of age and is unable due to a

5 loss of functional capacity to perform

6 (without substantial assistance from an7 other individual) at least 2 of the following

8 activities: eating, transferring, or mobility.

9 ‘‘(iii) The individual is under 2 years

10 of age and requires specific durable med11 ical equipment by reason of a severe health

12 condition or requires a skilled practitioner

13 trained to address the individual’s condi14 tion to be available if the individual’s par15 ents or guardians are absent.

16 ‘‘(3) ELIGIBLE CAREGIVER.—

17 ‘‘(A) IN GENERAL.—A taxpayer shall be

18 treated as an eligible caregiver for any taxable

19 year with respect to the following individuals:

20 ‘‘(i) The taxpayer.

21 ‘‘(ii) The taxpayer’s spouse.

22 ‘‘(iii) An individual with respect to

23 whom the taxpayer is allowed a deduction

24 under section 151 for the taxable year.
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1 ‘‘(iv) An individual who would be de2 scribed in clause (iii) for the taxable year

3 if section 151(c)(1)(A) were applied by

4 substituting for the exemption amount an

5 amount equal to the sum of the exemption

6 amount, the standard deduction under sec7 tion 63(c)(2)(C), and any additional stand8 ard deduction under section 63(c)(3) which

9 would be applicable to the individual if

10 clause (iii) applied.

11 ‘‘(v) An individual who would be de12 scribed in clause (iii) for the taxable year

13 if—

14 ‘‘(I) the requirements of clause

15 (iv) are met with respect to the indi16 vidual, and

17 ‘‘(II) the requirements of sub18 paragraph (B) are met with respect to

19 the individual in lieu of the support

20 test of section 152(a).

21 ‘‘(B) RESIDENCY TEST.—The require22 ments of this subparagraph are met if an indi23 vidual has as his principal place of abode the

24 home of the taxpayer and—
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1 ‘‘(i) in the case of an individual who

2 is an ancestor or descendant of the tax3 payer or the taxpayer’s spouse, is a mem4 ber of the taxpayer’s household for over

5 half the taxable year, or

6 ‘‘(ii) in the case of any other indi7 vidual, is a member of the taxpayer’s

8 household for the entire taxable year.

9 ‘‘(C) SPECIAL RULES WHERE MORE THAN

10 1 ELIGIBLE CAREGIVER.—

11 ‘‘(i) IN GENERAL.—If more than 1 in12 dividual is an eligible caregiver with re13 spect to the same applicable individual for

14 taxable years ending with or within the

15 same calendar year, a taxpayer shall be

16 treated as the eligible care giver if each

17 such individual (other than the taxpayer)

18 files a written declaration (in such form

19 and manner as the Secretary may pre20 scribe) that such individual will not claim

21 such applicable individual for the credit

22 under this section.

23 ‘‘(ii) NO AGREEMENT.—If each indi24 vidual required under clause (i) to file a

25 written declaration under clause (i) does
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1 not do so, the individual with the highest

2 modified adjusted gross income (as defined

3 in section 32(c)(5)) shall be treated as the

4 eligible caregiver.

5 ‘‘(iii) MARRIED INDIVIDUALS FILING

6 SEPARATELY.—In the case of married indi7 viduals filing separately, the determination

8 under this subparagraph as to whether the

9 husband or wife is the eligible caregiver

10 shall be made under the rules of clause (ii)

11 (whether or not one of them has filed a

12 written declaration under clause (i)).’’.

13 (c) IDENTIFICATION REQUIREMENTS.—

14 (1) IN GENERAL.—Section 24(e) of such Code

15 is amended by adding at the end the following new

16 sentence: ‘‘No credit shall be allowed under this sec17 tion to a taxpayer with respect to any applicable in18 dividual unless the taxpayer includes the name and

19 taxpayer identification number of such individual,

20 and the identification number of the physician certi21 fying such individual, on the return of tax for the

22 taxable year.’’.

23 (2) ASSESSMENT.—Section 6213(g)(2)(I) of

24 such Code is amended—
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1 (A) by inserting ‘‘or physician identifica2 tion’’ after ‘‘correct TIN’’, and

3 (B) by striking ‘‘child’’ and inserting

4 ‘‘family care’’.

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. EXPANSION OF CHILD AND DEPENDENT CARE TAX

9 CREDIT.

10 (a) INCREASE OF MAXIMUM CREDIT RATE.—Para11 graph (2) of section 21(a) of the Internal Revenue Code

12 of 1986 (relating to expenses for household and dependent

13 care services necessary for gainful employment) is amend14 ed to read as follows:

15 ‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For

16 purposes of paragraph (1), the term ‘applicable per17 centage’ means 50 percent reduced (but not below

18 20 percent) by 1 percentage point for each $1,000

19 (or fraction thereof) by which the taxpayer’s ad20 justed gross income for the taxable year exceeds

21 $30,000.’’.

22 (b) CREDIT ALLOWED BASED ON RESIDENCY IN

23 CERTAIN CASES.—Subsection (e) of section 21 of such

24 Code is amended by adding at the end the following new

25 paragraph:
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1 ‘‘(11) CREDIT ALLOWED BASED ON RESIDENCY

2 IN CERTAIN CASES.—In the case of a taxpayer—

3 ‘‘(A) who does not satisfy the household

4 maintenance test of subsection (a) for any pe5 riod, but

6 ‘‘(B) whose principal place of abode for

7 such period is also the principal place of abode

8 of any qualifying individual,

9 then such taxpayer shall be treated as satisfying

10 such test for such period but the amount of credit

11 allowable under this section with respect to such individual shall be determined by allowing only 1 12 ⁄12 of

13 the limitation under subsection (c)(1) for each full

14 month that the requirement of subparagraph (B) is

15 met.’’

16 (c) INFLATION ADJUSTMENT OF DOLLAR

17 AMOUNTS.—

18 (1) Section 21 of such Code is amended by re19 designating subsection (f) as subsection (g) and by

20 inserting after subsection (e) the following new sub21 section:

22 ‘‘(f) INFLATION ADJUSTMENT.—In the case of any

23 taxable year beginning in a calendar year after 2000, the

24 $30,000 amount contained in subsection (a), the $2,400
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1 amount in subsection (c), and the $500 amount in sub2 section (f) shall be increased by an amount equal to—

3 ‘‘(1) such dollar amount, multiplied by

4 ‘‘(2) the cost-of-living adjustment determined

5 under section 1(f)(3) for such calendar year by sub6 stituting ‘calendar year 1999’ for ‘calendar year

7 1992’ in subparagraph (B) thereof.

8 If the increase determined under the preceding sentence

9 is not a multiple of $50, such amount shall be rounded

10 to the next lowest multiple of $50.’’

11 (2) Paragraph (2) of section 21(c) of such Code

12 is amended by striking ‘‘$4,800’’ and inserting

13 ‘‘twice the dollar amount applicable under paragraph

14 (1)’’.

15 (3) Paragraph (2) of section 21(d) of such Code

16 is amended by striking ‘‘less than—’’ and all that

17 follows through the end of the first sentence and inserting ‘‘less than 1 18 ⁄12 of the amount which applies

19 under subsection (c) to the taxpayer for the taxable

20 year.’’

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

22 this section shall apply to taxable years beginning after

23 December 31, 1999.
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1 SEC. 6. DEDUCTION FOR HEALTH INSURANCE COSTS FOR

2 SELF-EMPLOYED INDIVIDUALS.

3 (a) IN GENERAL.—Paragraph (1) of section 162(l)

4 of the Internal Revenue Code of 1986 is amended to read

5 as follows:

6 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case

7 of an individual who is an employee within the

8 meaning of section 401(c)(1), there shall be allowed

9 as a deduction under this section 100 percent of the

10 amount paid during the taxable year for insurance

11 which constitutes medical care for the taxpayer, his

12 spouse, and dependents.’’

13 (b) EFFECTIVE DATE.—The amendment made by

14 subsection (a) shall apply to taxable years beginning after

15 December 31, 1999.

16 SEC. 7. INFLATION ADJUSTMENT FOR ALTERNATIVE MIN17 IMUM TAX EXEMPTION AMOUNT FOR INDI18 VIDUALS.

19 (a) IN GENERAL.—Section 55(d) of the Internal Rev20 enue Code of 1986 (relating to exemption amount) is

21 amended by adding at the end the following:

22 ‘‘(4) INFLATION ADJUSTMENT.—

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

24 taxable year beginning in a calendar year after

25 2002, each of the dollar amounts contained in
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1 paragraphs (1) and (3) shall be increased by an

2 amount equal to—

3 ‘‘(i) such dollar amount, multiplied by

4 ‘‘(ii) the cost-of-living adjustment de5 termined under section 1(f)(3) for the cal6 endar year in which the taxable year be7 gins by substituting ‘calendar year 2000’

8 for ‘calendar year 1992’ in subparagraph

9 (B) thereof.

10 ‘‘(B) ROUNDING.—If any increase deter11 mined under subparagraph (A) is not a multiple

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

13 nearest multiple of $50.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 this section shall apply to taxable years beginning after

16 December 31, 2002.

17 SEC. 8. EFFECTIVE DATE SUBJECT TO ENACTMENT OF LEG18 ISLATION EXTENDING THE SOLVENCY OF SO19 CIAL SECURITY AND MEDICARE.

20 Notwithstanding any other effective date provision in

21 this Act, this Act and the amendments made by this Act

22 shall not take effect until after the enactment of legislation

23 to extend the solvency of the Federal Old-Age and Sur24 vivors Insurance Trust Fund, the Federal Disability In25 surance Trust Fund, and the Federal Hospital Insurance
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1 Trust Fund, and to ensure that no funds from such trust

2 funds are used to pay for any tax expenditure resulting

3 from the provisions of this Act.

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