II

106TH CONGRESS

2D SESSION S. 2403

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

APRIL 12, 2000

Mr. BAYH (for himself, Mr. DURBIN, Mr. JOHNSON, Mrs. FEINSTEIN, Ms.

LANDRIEU, Mr. EDWARDS, and Mrs. MURRAY) 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 ......................................................................................... $900

2003 ......................................................................................... $1,300

2004 and thereafter ................................................................. $1,700.

23 ‘‘(c) DETERMINATION OF AMOUNT.—
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1 ‘‘(1) IN GENERAL.—For purposes of subsection

2 (a), the amount determined under this subsection

3 for any taxable year with respect to a taxpayer is

4 equal to the excess (if any) of—

5 ‘‘(A) the joint tentative tax of such tax6 payer for such year, over

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

8 taxpayer for such year.

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

10 paragraph (1)(A)—

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

12 of a taxpayer for any taxable year is equal to

13 the tax determined in accordance with the table

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

15 taxable income of the taxpayer for such year.

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

18 joint tentative taxable income of a taxpayer for

19 any taxable year is equal to the excess of—

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

21 section 32(c)(2)), and any income received

22 as a pension or annuity which arises from

23 an employer-employee relationship (includ24 ing any social security benefit (as defined
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1 in section 86(d)(1)), of such taxpayer for

2 such year, over

3 ‘‘(ii) the sum of—

4 ‘‘(I) either—

5 ‘‘(aa) the standard deduc6 tion determined under section

7 63(c)(2)(A)(i) for such taxpayer

8 for such year, or

9 ‘‘(bb) in the case of an elec10 tion under section 63(e), the

11 total itemized deductions deter12 mined under section 63(d) for

13 such taxpayer for such year, and

14 ‘‘(II) the total exemption amount

15 for such taxpayer for such year deter16 mined under section 151.

17 ‘‘(3) COMBINED TENTATIVE TAX.—For pur18 poses of paragraph (1)(A)—

19 ‘‘(A) IN GENERAL.—The combined ten20 tative tax of a taxpayer for any taxable year is

21 equal to the sum of the taxes determined in ac22 cordance with the table contained in section

23 1(c) on the individual tentative taxable income

24 of each spouse for such year.
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1 ‘‘(B) INDIVIDUAL TENTATIVE TAXABLE IN2 COME.—For purposes of subparagraph (A), the

3 individual tentative taxable income of a spouse

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

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

6 section 32(c)(2)), and any income received

7 as a pension or annuity which arises from

8 an employer-employee relationship (includ9 ing any social security benefit (as defined

10 in section 86(d)(1)), of such spouse for

11 such year, over

12 ‘‘(ii) the sum of—

13 ‘‘(I) either—

14 ‘‘(aa) the standard deduc15 tion determined under section

16 63(c)(2)(C) for such spouse for

17 such year, or

18 ‘‘(bb) in the case of an elec19 tion under section 63(e), one-half

20 of the total itemized deductions

21 determined under paragraph

22 (2)(B)(ii)(I)(bb) for such spouse

23 for such year, and
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1 ‘‘(II) one-half of the total exemp2 tion amount determined under para3 graph (2)(B)(ii)(II) for such year.

4 ‘‘(d) PHASEOUT OF CREDIT.—

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

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

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

8 by the amount determined under paragraph (2).

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

10 determined under this paragraph is the amount

11 which bears the same ratio to the amount which

12 would be so taken into account as—

13 ‘‘(A) the excess of—

14 ‘‘(i) the taxpayer’s adjusted gross in15 come for such taxable year, over

16 ‘‘(ii) $120,000, bears to

17 ‘‘(B) $20,000.

18 ‘‘(e) INFLATION ADJUSTMENT.—

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

20 year beginning after 2004, the $1,700 amount re21 ferred to in subsection (b) and the $120,000 amount

22 referred to in subsection (d)(2)(A)(ii) shall be in23 creased by an amount equal to—

24 ‘‘(A) such dollar amount, multiplied by
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1 ‘‘(B) the cost-of-living adjustment deter2 mined under section (1)(f)(3) for the calendar

3 year in which the taxable year begins, by sub4 stituting ‘2003’ for ‘1992’.

5 ‘‘(2) ROUNDING.—If the $1,700 amount (as so

6 referred) and the $120,000 amount (as so referred)

7 as adjusted under paragraph (1) is not a multiple of

8 $25 and $50, respectively, such amount shall be

9 rounded to the nearest multiple of $25 and $50, re10 spectively.’’.

11 (b) CONFORMING AMENDMENT.—The table of sec12 tions for subpart A of part IV of subchapter A of chapter

13 1 is amended by inserting after the item relating to section

14 25A the following new item:

‘‘Sec. 25B. Marriage credit.’’

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

16 this section shall apply to taxable years beginning after

17 December 31, 2000.

18 SEC. 3. MARRIAGE PENALTY RELIEF FOR EARNED INCOME

19 CREDIT.

20 (a) IN GENERAL.—Section 32(b) (relating to percent21 ages and amounts) is amended—

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

23 in paragraph (1) and inserting ‘‘PERCENTAGES.—

24 ‘‘(A) IN GENERAL.—Subject to subpara25 graph (B), the credit’’,
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1 (2) by adding at the end of paragraph (1) the

2 following new subparagraph:

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

4 joint return, the phaseout percentage deter5 mined under subparagraph (A)—

6 ‘‘(i) in the case of an eligible indi7 vidual with 1 qualifying child shall be de8 creased by 1.87 percentage points, and

9 ‘‘(ii) in the case of an eligible indi10 vidual with 2 or more qualifying children

11 shall be decreased by 2.01 percentage

12 points.’’,

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

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

15 ‘‘(A) IN GENERAL.—Subject to subpara16 graph (B), the earned’’, and

17 (4) by adding at the end the following new sub18 paragraph:

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

20 joint return, the phaseout amount determined

21 under subparagraph (A) shall be increased by

22 $2,000.’’.

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

24 section 32(j) (relating to inflation adjustments) is amend25 ed to read as follows:
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1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 1(f)(3) for the calendar

3 year in which the taxable year begins,

4 determined—

5 ‘‘(i) in the case of amounts in sub6 sections (b)(2)(A) and (i)(1), by sub7 stituting ‘calendar year 1995’ for ‘calendar

8 year 1992’ in subparagraph (B) thereof,

9 and

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

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

12 ‘calendar year 2000’ for ‘calendar year

13 1992’ in subparagraph (B) of such section

14 1.’’.

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

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

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

18 under subparagraph (B) thereof)’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 2000.

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