107TH CONGRESS

1ST SESSION H. R. 1836

AN ACT

To provide for reconciliation pursuant to section 104 of

the concurrent resolution on the budget for fiscal year 2002.

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; ETC.

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

3 ‘‘Economic Growth and Tax Relief Reconciliation Act of

4 2001’’.

5 (b) AMENDMENT OF 1986 CODE.—Except as other6 wise expressly provided, whenever in this Act an amend7 ment or repeal is expressed in terms of an amendment

8 to, or repeal of, a section or other provision, the reference

9 shall be considered to be made to a section or other provi10 sion of the Internal Revenue Code of 1986.

11 (c) SECTION 15 NOT TO APPLY.—No amendment

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

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

14 Code of 1986.

15 SEC. 2. REDUCTION IN INCOME TAX RATES FOR INDIVID16 UALS.

17 (a) IN GENERAL.—Section 1 is amended by adding

18 at the end the following new subsection:

19 ‘‘(i) RATE REDUCTIONS AFTER 2000.—

20 ‘‘(1) NEW LOWEST RATE BRACKET.—

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

22 years beginning after December 31, 2000—

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

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

25 over the initial bracket amount shall be 12
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1 percent (as modified by paragraph (2)),

2 and

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

4 apply only to taxable income over the ini5 tial bracket amount.

6 ‘‘(B) INITIAL BRACKET AMOUNT.—For

7 purposes of this subsection, the initial bracket

8 amount is—

9 ‘‘(i) $12,000 in the case of subsection

10 (a),

11 ‘‘(ii) $10,000 in the case of subsection

12 (b), and

‘‘(iii) 1 13 ⁄2 the amount applicable under

14 clause (i) in the case of subsections (c) and

15 (d).

16 ‘‘(C) INFLATION ADJUSTMENT.—In pre17 scribing the tables under subsection (f) which

18 apply with respect to taxable years beginning in

19 calendar years after 2001—

20 ‘‘(i) the Secretary shall make no ad21 justment to the initial bracket amount for

22 any taxable year beginning before January

23 1, 2007,

24 ‘‘(ii) the cost-of-living adjustment

25 used in making adjustments to the initial
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1 bracket amount for any taxable year begin2 ning after December 31, 2006, shall be de3 termined under subsection (f)(3) by sub4 stituting ‘2005’ for ‘1992’ in subparagraph

5 (B) thereof, and

6 ‘‘(iii) such adjustment shall not apply

7 to the amount referred to in subparagraph

8 (B)(iii).

9 If any amount after adjustment under the pre10 ceding sentence is not a multiple of $50, such

11 amount shall be rounded to the next lowest

12 multiple of $50.

13 ‘‘(2) REDUCTIONS IN RATES AFTER 2001.—In

14 the case of taxable years beginning in a calendar

15 year after 2001, the corresponding percentage speci16 fied for such calendar year in the following table

17 shall be substituted for the otherwise applicable tax

18 rate in the tables under subsections (a), (b), (c), (d),

19 and, to the extent applicable, (e).

‘‘In the case of taxable years

beginning during calendar year:

The corresponding percentages shall

be substituted for

the following percentages:

12% 28% 31% 36% 39.6%

2002 ............................................................ 12% 27% 30% 35% 38%

2003 ............................................................ 11% 27% 29% 35% 37%

2004............................................................ 11% 26% 28% 34% 36%

2005 ............................................................ 11% 26% 27% 34% 35%

2006 and thereafter .................................... 10% 25% 25% 33% 33%
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1 ‘‘(3) ADJUSTMENT OF TABLES.—The Secretary

2 shall adjust the tables prescribed under subsection

3 (f) to carry out this subsection.’’.

4 (b) REPEAL OF REDUCTION OF REFUNDABLE TAX

5 CREDITS.—

6 (1) Subsection (d) of section 24 is amended by

7 striking paragraph (2) and redesignating paragraph

8 (3) as paragraph (2).

9 (2) Section 32 is amended by striking sub10 section (h).

11 (c) CONFORMING AMENDMENTS.—

12 (1) Subparagraph (B) of section 1(g)(7) is

13 amended—

14 (A) by striking ‘‘15 percent’’ in clause

15 (ii)(II) and inserting ‘‘the first bracket percent16 age’’; and

17 (B) by adding at the end the following

18 flush sentence:

19 ‘‘For purposes of clause (ii), the first bracket

20 percentage is the percentage applicable to the

21 lowest income bracket in the table under sub22 section (c).’’.

23 (2) Section 1(h) is amended—
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1 (A) by striking ‘‘28 percent’’ both places it

2 appears in paragraphs (1)(A)(ii)(I) and

3 (1)(B)(i) and inserting ‘‘25 percent’’; and

4 (B) by striking paragraph (13).

5 (3) Section 15 is amended by adding at the end

6 the following new subsection:

7 ‘‘(f) RATE REDUCTIONS ENACTED BY ECONOMIC

8 GROWTH AND TAX RELIEF RECONCILIATION ACT OF

9 2001.—This section shall not apply to any change in rates

10 under subsection (i) of section 1 (relating to rate reduc11 tions after 2000).’’.

12 (4) Section 531 is amended by striking ‘‘equal

13 to’’ and all that follows and inserting ‘‘equal to the

14 product of the highest rate of tax under section 1(c)

15 and the accumulated taxable income.’’.

16 (5) Section 541 is amended by striking ‘‘equal

17 to’’ and all that follows and inserting ‘‘equal to the

18 product of the highest rate of tax under section 1(c)

19 and the undistributed personal holding company in20 come.’’.

21 (6) Section 3402(p)(1)(B) is amended by strik22 ing ‘‘7, 15, 28, or 31 percent’’ and inserting ‘‘7 per23 cent, any percentage applicable to any of the 3 low24 est income brackets in the table under section

25 1(c),’’.
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1 (7) Section 3402(p)(2) is amended by striking

2 ‘‘equal to 15 percent of such payment’’ and inserting

3 ‘‘equal to the product of the lowest rate of tax under

4 section 1(c) and such payment’’.

5 (8) Section 3402(q)(1) is amended by striking

6 ‘‘equal to 28 percent of such payment’’ and inserting

7 ‘‘equal to the product of the third to the lowest rate

8 of tax under section 1(c) and such payment’’.

9 (9) Section 3402(r)(3) is amended by striking

10 ‘‘31 percent’’ and inserting ‘‘the third to the lowest

11 rate of tax under section 1(c)’’.

12 (10) Section 3406(a)(1) is amended by striking

13 ‘‘equal to 31 percent of such payment’’ and inserting

14 ‘‘equal to the product of the third to the lowest rate

15 of tax under section 1(c) and such payment’’.

16 (11) Section 13273 of the Revenue Reconcili17 ation Act of 1993 is amended by striking ‘‘28 per18 cent’’ and inserting ‘‘the third to the lowest rate of

19 tax under section 1(c) of the Internal Revenue Code

20 of 1986’’.

21 (d) EFFECTIVE DATES.—

22 (1) IN GENERAL.—Except as provided in para23 graph (2), the amendments made by this section

24 shall apply to taxable years beginning after Decem25 ber 31, 2000.
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1 (2) AMENDMENTS TO WITHHOLDING PROVI2 SIONS.—The amendments made by paragraphs (6),

3 (7), (8), (9), (10), and (11) of subsection (c) shall

4 apply to amounts paid after the 60th day after the

5 date of the enactment of this Act.

6 SEC. 3. PROTECTION OF SOCIAL SECURITY AND MEDICARE.

7 The amounts transferred to any trust fund under the

8 Social Security Act shall be determined as if this Act had

9 not been enacted.

Passed the House of Representatives May 16, 2001.

Attest:

Clerk.
107TH CONGRESS

1ST SESSION H. R. 1836

AN ACT

To provide for reconciliation pursuant to section

104 of the concurrent resolution on the budgetfor fiscal year 2002.