II 

113TH CONGRESS 

2D SESSION S. 2162 

To amend the Internal Revenue Code of 1986 to establish a deduction 

for married couples who are both employed and have young children 

and to increase the earned income tax credit for childless workers, 

and to provide for budget offsets. 

IN THE SENATE OF THE UNITED STATES 

MARCH 26, 2014 

Mrs. MURRAY (for herself, Mr. REED, and Mr. BROWN) 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 establish 

a deduction for married couples who are both employed 

and have young children and to increase the earned 

income tax credit for childless workers, and to provide 

for budget offsets. 

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 ‘‘21st Century Worker 

5 Tax Cut Act’’. 


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1 SEC. 2. DEDUCTION FOR DUAL-EARNER FAMILIES. 

2 (a) IN GENERAL.—Part VII of subchapter B of chap3 ter 1 of the Internal Revenue Code of 1986 is amended 

4 by redesignating section 224 as section 225 and by insert5 ing after section 223 the following new section: 

6 ‘‘SEC. 224. DUAL-EARNER FAMILIES. 

7 ‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi8 ble taxpayer, there shall be allowed as a deduction for the 

9 taxable year an amount equal to 20 percent of the lesser 

10 of— 

11 ‘‘(1) $60,000, or 

12 ‘‘(2) the earned income of the spouse with the 

13 lower amount of earned income for such taxable 

14 year. 

15 ‘‘(b) LIMITATION.—The amount of the deduction al16 lowable under subsection (a) shall be reduced (but not 

17 below zero) by an amount which bears the same ratio to 

18 the amount determined under subsection (a) (as deter19 mined without regard to this subsection) as the amount 

20 of the taxpayer’s excess adjusted gross income bears to 

21 $20,000. 

22 ‘‘(c) DEFINITIONS.—In this section: 

23 ‘‘(1) EARNED INCOME.—The term ‘earned in24 come’ has the same meaning given such term in sec25 tion 32(c)(2). 

26 ‘‘(2) ELIGIBLE TAXPAYER.— 


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1 ‘‘(A) IN GENERAL.—The term ‘eligible tax2 payer’ means a taxpayer who— 

3 ‘‘(i) files a joint return for the taxable 

4 year under section 6013, and 

5 ‘‘(ii) has at least 1 qualifying child (as 

6 defined in section 152(c)) who has not at7 tained 12 years of age before the close of 

8 the taxable year. 

9 ‘‘(3) EXCESS ADJUSTED GROSS INCOME.—The 

10 term ‘excess adjusted gross income’ means the 

11 amount of the eligible taxpayer’s adjusted gross in12 come (as defined in section 62, determined without 

13 regard to this section) that exceeds $110,000 for the 

14 taxable year. 

15 ‘‘(d) INFLATION ADJUSTMENT.— 

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

17 year beginning after 2015, each of the dollar 

18 amounts in subsections (a)(1) and (c)(3) shall be in19 creased by an amount equal to— 

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

21 ‘‘(B) the cost-of-living adjustment deter22 mined under section 1(f)(3) for the calendar 

23 year in which the taxable year begins, deter24 mined by substituting ‘calendar year 2014’ for 


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1 ‘calendar year 1992’ in subparagraph (B) 

2 thereof. 

3 ‘‘(2) ROUNDING.—If any dollar amount in sub4 section (a)(1) or (c)(3), after being increased under 

5 paragraph (1), is not a multiple of $1,000, such dol6 lar amount shall be rounded to the nearest multiple 

7 of $1,000. 

8 ‘‘(e) ADDITIONAL ELIGIBILITY REQUIREMENTS.— 

9 ‘‘(1) INDIVIDUAL CLAIMING BENEFITS UNDER

10 SECTION 911.—No deduction shall be allowed under 

11 this section if an individual (or the individual’s 

12 spouse) claims the benefits of section 911 for the 

13 taxable year. 

14 ‘‘(2) NON-RESIDENT ALIENS.—No deduction 

15 shall be allowed under this section if an individual 

16 (or the individual’s spouse) is a nonresident alien in17 dividual for any portion of the taxable year unless 

18 such individual is treated for such taxable year as a 

19 resident of the United States for purposes of this 

20 chapter by reason of an election under subsection 

21 (g) or (h) of section 6013. 

22 ‘‘(3) IDENTIFICATION NUMBER REQUIRE23 MENT.— 

24 ‘‘(A) IN GENERAL.—No deduction shall be 

25 allowed under this section if the eligible taxVerDate Mar 15 2010 03:20 Mar 29, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2162.IS S2162

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1 payer does not include on the joint return of 

2 tax for the taxable year— 

3 ‘‘(i) the taxpayer identification num4 ber of the individual and the individual’s 

5 spouse, and 

6 ‘‘(ii) the name, age, and taxpayer 

7 identification number of any qualifying 

8 children. 

9 ‘‘(B) SOCIAL SECURITY NUMBERS.—For 

10 purposes of this paragraph, the term ‘taxpayer 

11 identification number’ means a social security 

12 number issued to an individual by the Social 

13 Security Administration (other than a social se14 curity number issued pursuant to clause (II) 

15 (or that portion of clause (III) that relates to 

16 clause (II)) of section 205(c)(2)(B)(i) of the So17 cial Security Act). 

18 ‘‘(f) TAXABLE YEAR MUST BE FULL TAXABLE

19 YEAR.—Except in the case of a taxable year closed by rea20 son of the death of an individual, no deduction shall be 

21 allowable under this section in the case of a taxable year 

22 covering a period of less than 12 months.’’. 

23 (b) DEDUCTION ALLOWED IN COMPUTING AD24 JUSTED GROSS INCOME.—Section 62(a) of such Code is 


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1 amended by inserting after paragraph (21) the following 

2 new paragraph: 

3 ‘‘(22) DUAL-EARNER FAMILIES.—The deduc4 tion allowed by section 224.’’. 

5 (c) ENHANCEMENT OF EARNED INCOME TAX CRED6 IT.—Section 32 of such Code is amended— 

7 (1) in subsection (a)(2)(B), by striking ‘‘earned 

8 income’’ and inserting ‘‘modified earned income (as 

9 defined in subsection (c)(5))’’, and 

10 (2) in subsection (c), by adding at the end the 

11 following new paragraph: 

12 ‘‘(5) MODIFIED EARNED INCOME.—The term 

13 ‘modified earned income’ means an amount equal to 

14 the earned income of the taxpayer minus the amount 

15 of any deduction allowed to the taxpayer under sec16 tion 224 for the taxable year.’’. 

17 (d) CONFORMING AMENDMENT.—The table of sec18 tions for part VII of subchapter B of chapter 1 of such 

19 Code is amended by redesignating the item relating to sec20 tion 224 as relating to section 225 and by inserting after 

21 the item relating to section 223 the following: 

‘‘Sec. 224. Dual-earner families.’’. 

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

23 this section shall apply to taxable years beginning after 

24 the date of the enactment of this Act. 


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1 SEC. 3. STRENGTHENING THE EARNED INCOME TAX CRED2 IT FOR INDIVIDUALS WITH NO QUALIFYING 

3 CHILDREN. 

4 (a) CREDIT FOR CERTAIN INDIVIDUALS OVER AGE

5 21.— 

6 (1) IN GENERAL.—Paragraph (1) of section 

7 32(c) of the Internal Revenue Code of 1986 is 

8 amended by adding at the end the following new 

9 subparagraph: 

10 ‘‘(G) SPECIAL RULE FOR WORKING INDI11 VIDUALS OVER AGE 20 AND WITHOUT QUALI12 FYING CHILD.— 

13 ‘‘(i) IN GENERAL.—In the case of an 

14 individual (or, if the individual is married, 

15 either the individual or the individual’s 

16 spouse) who— 

17 ‘‘(I) has attained the age of 21 

18 but not attained age 25 before the 

19 close of the taxable year, and 

20 ‘‘(II) is not a full-time student at 

21 any time during the taxable year, 

22 paragraph (1)(A)(ii)(II) shall not apply for 

23 purposes of determining whether such indi24 vidual is an eligible individual. 

25 ‘‘(ii) STUDENT.—For purposes of this 

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1 sidered a full-time student if such individual is carrying more than 1 2 ⁄2 the normal 

3 full-time work load for the course of study 

4 the individual is pursuing.’’. 

5 (2) INFORMATION RETURN MATCHING.—Not 

6 later than 1 year after the date of the enactment of 

7 this Act, the Secretary of the Treasury shall develop 

8 and implement procedures for checking an individ9 ual’s claim for a credit under section 32 of the In10 ternal Revenue Code of 1986, by reason of sub11 section (c)(1)(G) thereof, against any information 

12 return made with respect to such individual under 

13 section 6050S. 

14 (b) INCREASED CREDIT.— 

15 (1) CREDIT PERCENTAGE AND PHASEOUT PER16 CENTAGE.—The table contained in section 

17 32(b)(1)(A) of such Code is amended by striking 

18 ‘‘7.65’’ each place it appears and inserting ‘‘15.3’’. 

19 (2) EARNED INCOME AMOUNT AND PHASEOUT

20 AMOUNT.— 

21 (A) IN GENERAL.—The table contained in 

22 section 32(b)(2)(A) of such Code is amended— 

23 (i) by striking ‘‘$4,220’’ and inserting 

24 ‘‘$8,820’’, and 


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1 (ii) by striking ‘‘$5,280’’ and insert2 ing ‘‘$10,425’’. 

3 (B) INFLATION ADJUSTMENTS.—Subpara4 graph (B) of section 32(j)(1) of such Code is 

5 amended— 

6 (i) by inserting ‘‘except as provided in 

7 clause (iii)’’ in clause (i) before ‘‘in the 

8 case of amounts’’, 

9 (ii) by striking ‘‘and’’ at the end of 

10 clause (i), by striking the period at the end 

11 of clause (ii) and inserting ‘‘, and’’, and by 

12 adding at the end the following new clause: 

13 ‘‘(iii) in the case of the $8,820 and 

14 $10,425 amounts in subsection (b)(2)(A), 

15 by substituting ‘calendar year 2014’ for 

16 ‘calendar year 1992’ in subparagraph (B) 

17 of such section 1.’’. 

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

19 this section shall apply to taxable years beginning after 

20 the date of the enactment of this Act. 


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1 SEC. 4. INCREASED PENALTY FOR TAX RETURN PRE2 PARERS WHO FAIL TO COMPLY WITH DUE 

3 DILIGENCE REQUIREMENTS FOR THE 

4 EARNED INCOME TAX CREDIT. 

5 (a) IN GENERAL.—Section 6695(g) of the Internal 

6 Revenue Code of 1986 is amended by striking ‘‘$500’’ and 

7 inserting ‘‘$1,000’’. 

8 (b) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 5. EXPANSION OF DENIAL OF DEDUCTION FOR CER12 TAIN EXCESSIVE EMPLOYEE REMUNERA13 TION. 

14 (a) APPLICATION TO ALL CURRENT AND FORMER

15 EMPLOYEES.— 

16 (1) IN GENERAL.—Section 162(m) of the Inter17 nal Revenue Code of 1986 is amended— 

18 (A) by striking ‘‘covered employee’’ each 

19 place it appears in paragraphs (1) and (4) and 

20 inserting ‘‘covered individual’’, and 

21 (B) by striking ‘‘such employee’’ each 

22 place it appears in subparagraphs (A) and (G) 

23 of paragraph (4) and inserting ‘‘such indi24 vidual’’. 


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1 (2) COVERED INDIVIDUAL.—Paragraph (3) of 

2 section 162(m) of such Code is amended to read as 

3 follows: 

4 ‘‘(3) COVERED INDIVIDUAL.—For purposes of 

5 this subsection, the term ‘covered individual’ means 

6 any individual who is an officer, director, or em7 ployee of the taxpayer or a former officer, director, 

8 or employee of the taxpayer.’’. 

9 (3) CONFORMING AMENDMENTS.— 

10 (A) Section 48D(b)(3)(A) of such Code is 

11 amended by inserting ‘‘(as in effect for taxable 

12 years beginning before January 1, 2015)’’ after 

13 ‘‘section 162(m)(3)’’. 

14 (B) Section 409A(b)(3)(D)(ii) of such 

15 Code is amended by inserting ‘‘(as in effect for 

16 taxable years beginning before January 1, 

17 2015)’’ after ‘‘section 162(m)(3)’’. 

18 (b) EXPANSION OF APPLICABLE EMPLOYEE REMU19 NERATION.— 

20 (1) ELIMINATION OF EXCEPTION FOR COMMIS21 SION-BASED PAY.— 

22 (A) IN GENERAL.—Paragraph (4) of sec23 tion 162(m) of such Code, as amended by sub24 section (a), is amended by striking subpara25 graph (B) and by redesignating subparagraphs 


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1 (C) through (G) as subparagraphs (B) through 

2 (F), respectively. 

3 (B) CONFORMING AMENDMENTS.— 

4 (i) Section 162(m)(5) of such Code is 

5 amended— 

6 (I) by striking ‘‘subparagraphs 

7 (B), (C), and (D) thereof’’ in sub8 paragraph (E) and inserting ‘‘sub9 paragraphs (B) and (C) thereof’’, and 

10 (II) by striking ‘‘subparagraphs 

11 (F) and (G)’’ in subparagraph (G) 

12 and inserting ‘‘subparagraphs (E) and 

13 (F)’’. 

14 (ii) Section 162(m)(6) of such Code is 

15 amended— 

16 (I) by striking ‘‘subparagraphs 

17 (B), (C), and (D) thereof’’ in sub18 paragraph (D) and inserting ‘‘sub19 paragraphs (B) and (C) thereof’’, and 

20 (II) by striking ‘‘subparagraphs 

21 (F) and (G)’’ in subparagraph (G) 

22 and inserting ‘‘subparagraphs (E) and 

23 (F)’’. 

24 (2) INCLUSION OF PERFORMANCE-BASED COM25 PENSATION.— 


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1 (A) IN GENERAL.—Paragraph (4) of sec2 tion 162(m) of the Internal Revenue Code of 

3 1986, as amended by subsection (a) and para4 graph (1) of this subsection, is amended by 

5 striking subparagraph (B) and redesignating 

6 subparagraphs (C) through (F) as subpara7 graphs (B) through (E), respectively. 

8 (B) CONFORMING AMENDMENTS.— 

9 (i) Section 162(m)(5) of such Code, 

10 as amended by paragraph (1), is amend11 ed— 

12 (I) by striking ‘‘subparagraphs 

13 (B) and (C) thereof’’ in subparagraph 

14 (E) and inserting ‘‘subparagraph (B) 

15 thereof’’, and 

16 (II) by striking ‘‘subparagraphs 

17 (E) and (F)’’ in subparagraph (G) 

18 and inserting ‘‘subparagraphs (D) and 

19 (E)’’. 

20 (ii) Section 162(m)(6) of such Code, 

21 as amended by paragraph (1), is amend22 ed— 

23 (I) by striking ‘‘subparagraphs 

24 (B) and (C) thereof’’ in subparagraph 


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1 (D) and inserting ‘‘subparagraph (B) 

2 thereof’’, and 

3 (II) by striking ‘‘subparagraphs 

4 (E) and (F)’’ in subparagraph (G) 

5 and inserting ‘‘subparagraphs (D) and 

6 (E)’’. 

7 (c) EXPANSION OF APPLICABLE EMPLOYER.—Para8 graph (2) of section 162(m) of the Internal Revenue Code 

9 of 1986 is amended to read as follows: 

10 ‘‘(2) PUBLICLY HELD CORPORATION.—For pur11 poses of this subsection, the term ‘publicly held cor12 poration’ means any corporation which is an issuer 

13 (as defined in section 3 of the Securities Exchange 

14 Act of 1934 (15 U.S.C. 78c)) that— 

15 ‘‘(A) has a class of securities registered 

16 under section 12 of such Act (15 U.S.C. 78l), 

17 or 

18 ‘‘(B) is required to file reports under sec19 tion 15(d) of such Act (15 U.S.C. 780(d)).’’. 

20 (d) REGULATORY AUTHORITY.— 

21 (1) IN GENERAL.—Section 162(m) of the Inter22 nal Revenue Code of 1986 is amended by adding at 

23 the end the following new paragraph: 

24 ‘‘(7) REGULATIONS.—The Secretary may pre25 scribe such guidance, rules, or regulations, including 


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1 with respect to reporting, as are necessary to carry 

2 out the purposes of this subsection.’’. 

3 (2) CONFORMING AMENDMENT.—Paragraph (6) 

4 of section 162(m) of such Code is amended by strik5 ing subparagraph (H). 

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2014. 

9 SEC. 6. LOW-TAXED CROSS-BORDER FOREIGN INCOME 

10 TREATED AS SUBPART F INCOME. 

11 (a) IN GENERAL.—Subsection (a) of section 952 of 

12 the Internal Revenue Code of 1986 is amended by redesig13 nating paragraphs (3), (4), and (5) as paragraphs (4), (5), 

14 and (6), respectively, and by inserting after paragraph (2) 

15 the following new paragraph: 

16 ‘‘(3) low-taxed cross-border income (as defined 

17 under subsection (e)),’’. 

18 (b) LOW-TAXED CROSS-BORDER INCOME.—Section 

19 952 of such Code is amended by adding at the end the 

20 following new subsection: 

21 ‘‘(e) LOW-TAXED CROSS-BORDER INCOME.— 

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

23 (a), the term ‘low-taxed cross-border income’ means 

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1 tion unless the taxpayer establishes to the satisfac2 tion of the Secretary that— 

3 ‘‘(A) such income was derived in the home 

4 country of the controlled foreign corporation, or 

5 ‘‘(B) such income was subject to an effec6 tive rate of income tax imposed by a foreign 

7 country in excess of 15 percent. 

8 ‘‘(2) RULES RELATED TO INCOME DERIVED IN

9 HOME COUNTRY.—For purposes of paragraph 

10 (1)(A), income shall be treated as derived in the 

11 home country of a controlled foreign corporation 

12 only if— 

13 ‘‘(A) such income is derived in the conduct 

14 of a trade or business of such corporation in 

15 the country in which such corporation is created 

16 or organized, 

17 ‘‘(B) such corporation maintains an office 

18 or other fixed place of business in such country, 

19 and 

20 ‘‘(C) such income is derived in connection 

21 with— 

22 ‘‘(i) property which is sold for use, 

23 consumption, or disposition in such coun24 try, or 


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1 ‘‘(ii) services provided with respect to 

2 persons or property located in such coun3 try. 

4 ‘‘(3) RULES RELATED TO DETERMINATION OF

5 EFFECTIVE RATE OF FOREIGN INCOME TAX.— 

6 ‘‘(A) COUNTRY-BY-COUNTRY DETERMINA7 TION.—Paragraph (1)(B) shall be applied— 

8 ‘‘(i) separately with respect to each 

9 foreign country in which a controlled for10 eign corporation conducts any trade or 

11 business, and 

12 ‘‘(ii) with respect to the aggregate 

13 gross income derived with respect to such 

14 country. 

15 ‘‘(B) TREATMENT OF LOSSES.—For pur16 poses of determining the effective rate of in17 come tax imposed by any foreign country under 

18 paragraph (1)(B)— 

19 ‘‘(i) such effective rate shall be deter20 mined without regard to any losses carried 

21 to the relevant taxable year, and 

22 ‘‘(ii) to the extent the income of the 

23 controlled foreign corporation reduces 

24 losses in the relevant taxable year, such ef25 fective rate shall be treated as being the 


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1 effective rate which would have been im2 posed on such income without regard to 

3 such losses. 

4 ‘‘(4) DEDUCTIONS TO BE TAKEN INTO AC5 COUNT.—The gross income of a controlled foreign 

6 corporation taken into account under this subsection 

7 shall be reduced, under regulations prescribed by the 

8 Secretary, so as to take into account deductions (in9 cluding taxes) properly allocable to such income.’’. 

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

11 this section shall apply to taxable years of foreign corpora12 tions beginning after December 31, 2014, and to taxable 

13 years of United States shareholders in which or with which 

14 such taxable years of foreign corporations end. 

Æ 


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