II

106TH CONGRESS

2D SESSION S. 2305

To amend the Internal Revenue Code of 1986 to reduce the marriage penalty

by providing a nonrefundable marriage credit and adjustment to the

earned income credit.

IN THE SENATE OF THE UNITED STATES

MARCH 28, 2000

Mr. BAYH 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 marriage penalty by providing a nonrefundable marriage credit and adjustment to the earned income credit.

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; AMENDMENT OF 1986 CODE.

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

5 ‘‘Targeted Marriage Tax Penalty Relief Act of 2000’’.

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) SECTION 15 NOT TO APPLY.—No amendment

4 made by section 2 shall be treated as a change in a rate

5 of tax for purposes of section 15 of the Internal Revenue

6 Code of 1986 .

7 SEC. 2. MARRIAGE CREDIT.

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter A of chapter 1 (relating to nonrefundable personal

10 credits) is amended by inserting after section 25A the fol11 lowing new section:

12 ‘‘SEC. 25B. MARRIAGE CREDIT.

13 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a joint

14 return under section 6013, there shall be allowed as a

15 credit against the tax imposed by this chapter for the tax16 able year an amount equal to the lesser of the amount

17 determined under subsection (b) or (c) for the taxable

18 year.

19 ‘‘(b) AMOUNT UNDER SUBSECTION (b).—For pur20 poses of subsection (a), the amount under this subsection

21 for any taxable year with respect to a taxpayer is deter22 mined in accordance with the following table:

‘‘Taxable year: Amount:

2001 ......................................................................................... $500

2002 ......................................................................................... $750

2003 ......................................................................................... $1,000

2004 ......................................................................................... $1,250

2005 and thereafter ................................................................. $1,500.
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1 ‘‘(c) DETERMINATION OF AMOUNT.—

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

3 (a), the amount determined under this subsection

4 for any taxable year with respect to a taxpayer is

5 equal to the excess (if any) of—

6 ‘‘(A) the joint tentative tax of such tax7 payer for such year, over

8 ‘‘(B) the combined tentative tax of such

9 taxpayer for such year.

10 ‘‘(2) JOINT TENTATIVE TAX.—For purposes of

11 paragraph (1)(A)—

12 ‘‘(A) IN GENERAL.—The joint tentative tax

13 of a taxpayer for any taxable year is equal to

14 the tax determined in accordance with the table

15 contained in section 1(a) on the joint tentative

16 taxable income of the taxpayer for such year.

17 ‘‘(B) JOINT TENTATIVE TAXABLE IN18 COME.—For purposes of subparagraph (A), the

19 joint tentative taxable income of a taxpayer for

20 any taxable year is equal to the excess of—

21 ‘‘(i) the earned income (as defined in

22 section 32(c)(2)) of such taxpayer for such

23 year, over

24 ‘‘(ii) the sum of—
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1 ‘‘(I) the standard deduction for

2 such taxpayer for such year deter3 mined under section 63(c)(2)(A)(i),

4 and

5 ‘‘(II) the total exemption amount

6 for such taxpayer for such year deter7 mined under section 151.

8 ‘‘(3) COMBINED TENTATIVE TAX.—For pur9 poses of paragraph (1)(A)—

10 ‘‘(A) IN GENERAL.—The combined ten11 tative tax of a taxpayer for any taxable year is

12 equal to the sum of the taxes determined in ac13 cordance with the table contained in section

14 1(c) on the individual tentative taxable income

15 of each spouse for such year.

16 ‘‘(B) INDIVIDUAL TENTATIVE TAXABLE IN17 COME.—For purposes of subparagraph (A), the

18 individual tentative taxable income of a spouse

19 for any taxable year is equal to the excess of—

20 ‘‘(i) the earned income (as defined in

21 section 32(c)(2)) of such spouse for such

22 year, over

23 ‘‘(ii) the sum of—
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1 ‘‘(I) the standard deduction for

2 such spouse for such year determined

3 under section 63(c)(2)(C), and

4 ‘‘(II) one-half of the total exemp5 tion amount determined under para6 graph (2)(B)(ii)(II) for such year.

7 ‘‘(d) PHASEOUT OF CREDIT.—

8 ‘‘(1) IN GENERAL.—The amount which would

9 (but for this subsection) be taken into account under

10 subsection (a) shall be reduced (but not below zero)

11 by the amount determined under paragraph (2).

12 ‘‘(2) AMOUNT OF REDUCTION.—The amount

13 determined under this paragraph is the amount

14 which bears the same ratio to the amount which

15 would be so taken into account as—

16 ‘‘(A) the excess of—

17 ‘‘(i) the taxpayer’s adjusted gross in18 come for such taxable year, over

19 ‘‘(ii) $100,000, bears to

20 ‘‘(B) $20,000.

21 ‘‘(e) INFLATION ADJUSTMENT.—

22 ‘‘(1) IN GENERAL.—In the case of any taxable

23 year beginning after 2005, the $1,500 amount re24 ferred to in subsection (b) and the $100,000 amount
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1 referred to in subsection (d)((2)(A)(ii) shall be in2 creased by an amount equal to—

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

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section (1)(f)(3) for the calendar

6 year in which the taxable year begins, by sub7 stituting ‘2004’ for ‘1992’.

8 ‘‘(2) ROUNDING.—If any amount as adjusted

9 under paragraph (1) is not a multiple of $20, such

10 amount shall be rounded to the nearest multiple of

11 $20.’’.

12 (b) CONFORMING AMENDMENT.—The table of sec13 tions for subpart A of part IV of subchapter A of chapter

14 1 is amended by inserting after the item relating to section

15 25A the following new item:

‘‘Sec. 25B. Marriage credit.’’

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

17 this section shall apply to taxable years beginning after

18 December 31, 2000.

19 SEC. 3. MARRIAGE PENALTY RELIEF FOR EARNED INCOME

20 CREDIT.

21 (a) IN GENERAL.—Section 32(b) (relating to percent22 ages and amounts) is amended—

23 (1) by striking ‘‘PERCENTAGES.—The credit’’

24 in paragraph (1) and inserting ‘‘PERCENTAGES.—
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1 ‘‘(A) IN GENERAL.—Subject to subpara2 graph (B), the credit’’,

3 (2) by adding at the end of paragraph (1) the

4 following new subparagraph:

5 ‘‘(B) JOINT RETURNS.—In the case of a

6 joint return, the phaseout percentage deter7 mined under subparagraph (A)—

8 ‘‘(i) in the case of an eligible indi9 vidual with 1 qualifying child shall be in10 creased by 3.196 percentage points, and

11 ‘‘(ii) in the case of an eligible indi12 vidual with 2 or more qualifying child shall

13 be increased by 4.212 percentage points.’’,

14 (3) by striking ‘‘AMOUNTS.—The earned’’ in

15 paragraph (2) and inserting ‘‘AMOUNTS.—

16 ‘‘(A) IN GENERAL.—Subject to subpara17 graph (B), the earned’’, and

18 (4) by adding at the end the following new sub19 paragraph:

20 ‘‘(B) JOINT RETURNS.—In the case of a

21 joint return, the phaseout amount determined

22 under subparagraph (A) shall be increased by

23 $2,000.’’.
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1 (b) INFLATION ADJUSTMENT.—Paragraph (1)(B) of

2 section 32(j) (relating to inflation adjustments) is amend3 ed to read as follows:

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3) for the calendar

6 year in which the taxable year begins,

7 determined—

8 ‘‘(i) in the case of amounts in sub9 sections (b)(2)(A) and (i)(1), by sub10 stituting ‘calendar year 1995’ for ‘calendar

11 year 1992’ in subparagraph (B) thereof,

12 and

13 ‘‘(ii) in the case of the $2,000 amount

14 in subsection (b)(2)(B), by substituting

15 ‘calendar year 2000’ for ‘calendar year

16 1992’ in subparagraph (B) of such section

17 1.’’.

18 (c) ROUNDING.—Section 32(j)(2)(A) (relating to

19 rounding) is amended by striking ‘‘subsection (b)(2)’’ and

20 inserting ‘‘subsection (b)(2)(A) (after being increased

21 under subparagraph (B) thereof)’’.

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

23 this section shall apply to taxable years beginning after

24 December 31, 2000.

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