II

Calendar No. 484

106TH CONGRESS

2D SESSION S. 2346

[Report No. 106–253]

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

by providing for adjustments to the standard deduction, 15-percent and

28-percent rate brackets, and earned income credit, and for other

purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 4, 2000

Mr. ROTH, from the Committee on Finance, reported the following original

bill; which was read twice and placed on the calendar

A BILL

To amend the Internal Revenue Code of 1986 to reduce

the marriage penalty by providing for adjustments to

the standard deduction, 15-percent and 28-percent rate

brackets, and earned income credit, 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. SHORT TITLE, ETC.

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

5 ‘‘Marriage Tax Relief Act of 2000’’.
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1 (b) SECTION 15 NOT TO APPLY.—No amendment

2 made by this Act shall be treated as a change in a rate

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

4 Code of 1986.

5 SEC. 2. ELIMINATION OF MARRIAGE PENALTY IN STAND6 ARD DEDUCTION.

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

8 the Internal Revenue Code of 1986 (relating to standard

9 deduction) is amended—

10 (1) by striking ‘‘$5,000’’ in subparagraph (A)

11 and inserting ‘‘200 percent of the dollar amount in

12 effect under subparagraph (C) for the taxable year’’;

13 (2) by adding ‘‘or’’ at the end of subparagraph

14 (B);

15 (3) by striking ‘‘in the case of ’’ and all that fol16 lows in subparagraph (C) and inserting ‘‘in any

17 other case.’’; and

18 (4) by striking subparagraph (D).

19 (b) TECHNICAL AMENDMENTS.—

20 (1) Subparagraph (B) of section 1(f )(6) of such

21 Code is amended by striking ‘‘(other than with’’ and

22 all that follows through ‘‘shall be applied’’ and in23 serting ‘‘(other than with respect to sections

24 63(c)(4) and 151(d)(4)(A)) shall be applied’’.
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1 (2) Paragraph (4) of section 63(c) of such Code

2 is amended by adding at the end the following flush

3 sentence:

4 ‘‘The preceding sentence shall not apply to the

5 amount referred to in paragraph (2)(A).’’.

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

7 this section shall apply to taxable years beginning after

8 December 31, 2000.

9 SEC. 3. PHASEOUT OF MARRIAGE PENALTY IN 15-PERCENT

10 AND 28-PERCENT RATE BRACKETS.

11 (a) IN GENERAL.—Subsection (f ) of section 1 of the

12 Internal Revenue Code of 1986 (relating to adjustments

13 in tax tables so that inflation will not result in tax in14 creases) is amended by adding at the end the following

15 new paragraph:

16 ‘‘(8) PHASEOUT OF MARRIAGE PENALTY IN 15-

17 PERCENT AND 28-PERCENT RATE BRACKETS.—

18 ‘‘(A) IN GENERAL.—With respect to tax19 able years beginning after December 31, 2001,

20 in prescribing the tables under paragraph (1)—

21 ‘‘(i) the maximum taxable income

22 amount in the 15-percent rate bracket, the

23 minimum and maximum taxable income

24 amounts in the 28-percent rate bracket,

25 and the minimum taxable income amount
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1 in the 31-percent rate bracket in the table

2 contained in subsection (a) shall be the ap3 plicable percentage of the comparable tax4 able income amounts in the table contained

5 in subsection (c) (after any other adjust6 ment under this subsection), and

7 ‘‘(ii) the comparable taxable income

8 amounts in the table contained in subsection (d) shall be 1 9 ⁄2 of the amounts de10 termined under clause (i).

11 ‘‘(B) APPLICABLE PERCENTAGE.—For

12 purposes of subparagraph (A), the applicable

13 percentage shall be determined in accordance

14 with the following table:

‘‘For taxable years beginning The applicable

in calendar year— percentage is—

2002 ............................................................................. 170.3

2003 ............................................................................. 173.8

2004 ............................................................................. 180.0

2005 ............................................................................. 183.2

2006 ............................................................................. 185.0

2007 and thereafter ..................................................... 200.0.

15 ‘‘(C) ROUNDING.—If any amount deter16 mined under subparagraph (A)(i) is not a mul17 tiple of $50, such amount shall be rounded to

18 the next lowest multiple of $50.’’.

19 (b) TECHNICAL AMENDMENTS.—
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1 (1) Subparagraph (A) of section 1(f )(2) of such

2 Code is amended by inserting ‘‘except as provided in

3 paragraph (8),’’ before ‘‘by increasing’’.

4 (2) The heading for subsection (f ) of section 1

5 of such Code is amended by inserting ‘‘PHASEOUT

6 OF MARRIAGE PENALTY IN 15-PERCENT AND 28-

7 PERCENT RATE BRACKETS;’’ before ‘‘ADJUST8 MENTS’’.

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

10 this section shall apply to taxable years beginning after

11 December 31, 2001.

12 SEC. 4. MARRIAGE PENALTY RELIEF FOR EARNED INCOME

13 CREDIT.

14 (a) IN GENERAL.—Paragraph (2) of section 32(b) of

15 the Internal Revenue Code of 1986 (relating to percent16 ages and amounts) is amended—

17 (1) by striking ‘‘AMOUNTS.—The earned’’ and

18 inserting ‘‘AMOUNTS.—

19 ‘‘(A) IN GENERAL.—Subject to subpara20 graph (B), the earned’’; and

21 (2) by adding at the end the following new sub22 paragraph:

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

24 joint return, the phaseout amount determined
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1 under subparagraph (A) shall be increased by

2 $2,500.’’.

3 (b) INFLATION ADJUSTMENT.—Paragraph (1)(B) of

4 section 32( j) of such Code (relating to inflation adjust5 ments) is amended to read as follows:

6 ‘‘(B) the cost-of-living adjustment deter7 mined under section 1(f )(3) for the calendar

8 year in which the taxable year begins,

9 determined—

10 ‘‘(i) in the case of amounts in sub11 sections (b)(2)(A) and (i)(1), by sub12 stituting ‘calendar year 1995’ for ‘calendar

13 year 1992’ in subparagraph (B) thereof,

14 and

15 ‘‘(ii) in the case of the $2,500 amount

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

17 ‘calendar year 2000’ for ‘calendar year

18 1992’ in subparagraph (B) of such section

19 1.’’.

20 (c) ROUNDING.—Section 32( j)(2)(A) of such Code

21 (relating to rounding) is amended by striking ‘‘subsection

22 (b)(2)’’ and inserting ‘‘subsection (b)(2)(A) (after being

23 increased under subparagraph (B) thereof)’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 2000.

4 SEC. 5. PRESERVE FAMILY TAX CREDITS FROM THE ALTER5 NATIVE MINIMUM TAX.

6 (a) IN GENERAL.—Subsection (a) of section 26 of the

7 Internal Revenue Code of 1986 (relating to limitation

8 based on tax liability; definition of tax liability) is amend9 ed to read as follows:

10 ‘‘(a) LIMITATION BASED ON AMOUNT OF TAX.—The

11 aggregate amount of credits allowed by this subpart for

12 the taxable year shall not exceed the sum of—

13 ‘‘(1) the taxpayer’s regular tax liability for the

14 taxable year reduced by the foreign tax credit allow15 able under section 27(a), and

16 ‘‘(2) the tax imposed for the taxable year by

17 section 55(a).’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Subsection (d) of section 24 of such Code

20 is amended by striking paragraph (2) and by redes21 ignating paragraph (3) as paragraph (2).

22 (2) Section 32 of such Code is amended by

23 striking subsection (h).

24 (3) Section 904 of such Code is amended by

25 striking subsection (h) and by redesignating sub-
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1 sections (i), (j), and (k) as subsections (h), (i), and

2 (j), respectively.

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

4 this section shall apply to taxable years beginning after

5 December 31, 2001.
Calendar No. 484

106TH CONGRESS

2D SESSION S. 2346

[Report No. 106–253]

A BILL

To amend the Internal Revenue Code of 1986 to

reduce the marriage penalty by providing for adjustments to the standard deduction, 15-percentand 28-percent rate brackets, and earned incomecredit, and for other purposes.

APRIL 4, 2000

Read twice and placed on the calendar