I 

110TH CONGRESS 

2D SESSION H. R. 5126 

To amend the Internal Revenue Code of 1986 to reduce individual income 

taxes by creating a new 5 percent rate of tax and to increase section 

179 expensing for small businesses. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 23, 2008 

Mr. KNOLLENBERG 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 reduce 

individual income taxes by creating a new 5 percent 

rate of tax and to increase section 179 expensing for 

small businesses. 

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 ‘‘Family Security and 

5 Small Business Stimulus Act of 2008’’. 

6 SEC. 2. INDIVIDUAL INCOME TAX RATE REDUCTION AFTER 

7 2007. 

8 (a) RATE REDUCTION.— 


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1 (1) IN GENERAL.—Subparagraph (A) of section 

2 1(i)(1) of the Internal Revenue Code of 1986 (relat3 ing to tax imposed on individuals) is amended to 

4 read as follows: 

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

6 years beginning after December 31, 2007— 

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

8 (a), (b), (c), and (d) on taxable income not 

9 over the initial bracket amount shall be 5 

10 percent, and 

11 ‘‘(ii) the 15 percent rate of tax shall 

12 apply only to taxable income over the ini13 tial bracket amount but not over the max14 imum dollar amount for the 15-percent 

15 rate bracket.’’. 

16 (2) CONFORMING AMENDMENTS.— 

17 (A) The heading for paragraph (1) of sec18 tion 1(i) of such Code is amended by striking 

19 ‘‘10-PERCENT’’ and inserting ‘‘5-PERCENT’’. 

20 (B) Subparagraph (D) of section 1(i)(1) of 

21 such Code is amended to read as follows: 

22 ‘‘(D) COORDINATION WITH ACCELERATION OF 5

23 PERCENT RATE BRACKET BENEFIT FOR 2008.—This 

24 paragraph shall not apply to any taxable year to 

25 which section 6428 applies.’’. 


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1 (3) 5-PERCENT BRACKET MADE

2 PERMANMENT.—Title IX of the Economic Growth 

3 and Tax Relief Reconciliation Act of 2001 shall not 

4 apply to paragraph (1) of section 1(i) of the Internal 

5 Revenue Code of 1986, as amended by this sub6 section. 

7 (b) ADVANCE PAYMENT OF 5 PERCENT RATE

8 BRACKET.—Section 6428 of such Code is amended to 

9 read as follows: 

10 ‘‘SEC. 6428. ACCELERATION OF 5 PERCENT INCOME TAX 

11 RATE BRACKET BENEFIT FOR 2008. 

12 ‘‘(a) IN GENERAL.—In the case of an eligible indi13 vidual, there shall be allowed as a credit against the tax 

14 imposed by chapter 1 for the taxpayer’s first taxable year 

15 beginning in 2008 an amount equal to 5 percent of so 

16 much of the taxpayer’s taxable income as does not exceed 

17 the initial bracket amount (as defined in section 

18 1(i)(1)(B)). 

19 ‘‘(b) CREDIT TREATED AS NONREFUNDABLE PER20 SONAL CREDIT.—For purposes of this title, the credit al21 lowed under this section shall be treated as a credit allow22 able under subpart A of part IV of subchapter A of chap23 ter 1. 


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1 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 

2 section, the term ‘eligible individual’ means any individual 

3 other than— 

4 ‘‘(1) any estate or trust, 

5 ‘‘(2) any nonresident alien individual, and 

6 ‘‘(3) any individual with respect to whom a de7 duction under section 151 is allowable to another 

8 taxpayer for a taxable year beginning in the cal9 endar year in which the individual’s taxable year be10 gins. 

11 ‘‘(d) COORDINATION WITH ADVANCE REFUNDS OF

12 CREDIT.— 

13 ‘‘(1) IN GENERAL.—The amount of credit 

14 which would (but for this paragraph) be allowable 

15 under this section shall be reduced (but not below 

16 zero) by the aggregate refunds and credits made or 

17 allowed to the taxpayer under subsection (e). Any 

18 failure to so reduce the credit shall be treated as 

19 arising out of a mathematical or clerical error and 

20 assessed according to section 6213(b)(1). 

21 ‘‘(2) JOINT RETURNS.—In the case of a refund 

22 or credit made or allowed under subsection (e) with 

23 respect to a joint return, half of such refund or cred24 it shall be treated as having been made or allowed 

25 to each individual filing such return. 


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1 ‘‘(e) ADVANCE REFUNDS OF CREDIT BASED ON

2 PRIOR YEAR DATA.— 

3 ‘‘(1) IN GENERAL.—Each individual who was 

4 an eligible individual for such individual’s first tax5 able year beginning in 2006 shall be treated as hav6 ing made a payment against the tax imposed by 

7 chapter 1 for such first taxable year in an amount 

8 equal to the advance refund amount for such taxable 

9 year. 

10 ‘‘(2) ADVANCE REFUND AMOUNT.—For pur11 poses of paragraph (1), the advance refund amount 

12 is the amount that would have been allowed as a 

13 credit under this section for such first taxable year 

14 if— 

15 ‘‘(A) this section (other than subsections 

16 (b) and (d) and this subsection) had applied to 

17 such taxable year, and 

18 ‘‘(B) the credit for such taxable year were 

19 not allowed to exceed the excess (if any) of— 

20 ‘‘(i) the sum of the regular tax liabil21 ity (as defined in section 26(b)) plus the 

22 tax imposed by section 55, over 

23 ‘‘(ii) the sum of the credits allowable 

24 under part IV of subchapter A of chapter 

25 1 (other than the credits allowable under 


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1 subpart C thereof, relating to refundable 

2 credits). 

3 ‘‘(3) TIMING OF PAYMENTS.—In the case of 

4 any overpayment attributable to this subsection, the 

5 Secretary shall, subject to the provisions of this title, 

6 refund or credit such overpayment as rapidly as pos7 sible and, to the extent practicable, before the date 

8 which is 30 days after the date of the enactment of 

9 this section. No refund or credit shall be made or al10 lowed under this subsection after December 31, 

11 2008. 

12 ‘‘(4) NO INTEREST.—No interest shall be al13 lowed on any overpayment attributable to this sub14 section.’’. 

15 (c) TECHNICAL AMENDMENT.—The item relating to 

16 section 6428 in the table of sections for subchapter B of 

17 chapter 65 of such Code is amended to read as follows: 

‘‘Sec. 6428. Acceleration of 5 percent income tax rate bracket benefit for 

2008.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2007. 

21 SEC. 3. INCREASE IN EXPENSING FOR SMALL BUSINESSES. 

22 (a) $125,000 LIMIT MADE PERMANENT; TEM23 PORARY INCREASE TO $375,000.—Paragraph (1) of sec24 tion 179(b) of the Internal Revenue Code of 1986 (relatVerDate Aug 31 2005 02:13 Jan 24, 2008 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5126.IH H5126

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1 ing to election to expense certain depreciable business as2 sets) is amended by striking ‘‘$25,000 ($125,000 in the 

3 case of taxable years beginning after 2006 and before 

4 2011)’’ and inserting ‘‘$125,000 ($375,000 in the case of 

5 taxable years beginning after 2007 and before 2010)’’. 

6 (b) CONFORMING AMENDMENT.—Subparagraph (A) 

7 of section 179(b)(5) of such Code is amended— 

8 (1) by striking ‘‘and before 2011’’, and 

9 (2) by adding at the end the following flush 

10 sentence: 

11 ‘‘The preceding sentence shall not apply to the 

12 $500,000 amount for taxable years beginning 

13 after December 31, 2010.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2007. 

Æ 


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