II 

113TH CONGRESS 

2D SESSION S. 3005 

To amend the Internal Revenue Code of 1986 to provide for a progressive 

consumption tax and to reform the income tax, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 11, 2014 

Mr. CARDIN 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 provide 

for a progressive consumption tax and to reform the 

income tax, 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) IN GENERAL.—This Act may be cited as the 

5 ‘‘Progressive Consumption Tax Act of 2014’’. 

6 (b) REFERENCE.—Except as otherwise expressly pro7 vided, whenever in this Act an amendment or repeal is 

8 expressed in terms of an amendment to, or repeal of, a 

9 section or other provision, the reference shall be considVerDate Sep 11 2014 17:41 Dec 17, 2014 Jkt 049200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3005.IS S3005

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1 ered to be made to a section or other provision of the In2 ternal Revenue Code of 1986. 

3 (c) TABLE OF CONTENTS.—The table of contents of 

4 this Act is as follows: 

Sec. 1. Short title, etc. 

TITLE I—PROGRESSIVE CONSUMPTION TAX 

Sec. 101. Imposition of progressive consumption tax. 

TITLE II—INDIVIDUAL AND CORPORATE TAX REFORM 

Subtitle A—Individual Income Tax Reforms 

Sec. 201. Individual income tax rate reductions. 

Sec. 202. Family allowance amounts. 

Sec. 203. Repeal of limitations relating to itemized deductions. 

Sec. 204. Termination of separate treatment of capital gains. 

Sec. 205. Repeals. 

Sec. 206. Establishment of progressive tax rebate. 

Sec. 207. Technical and conforming amendments. 

Subtitle B—Corporate Tax Reforms 

Sec. 211. Corporate income tax rate reduction. 

TITLE III—REFUND OF EXCESS CONSUMPTION TAX REVENUE 

Sec. 301. Refunds of excess consumption tax revenue. 

5 TITLE I—PROGRESSIVE 

6 CONSUMPTION TAX 

7 SEC. 101. IMPOSITION OF PROGRESSIVE CONSUMPTION 

8 TAX. 

9 (a) IN GENERAL.—Subtitle D is amended by insert10 ing before chapter 31 the following new chapter: 

11 ‘‘CHAPTER 30—PROGRESSIVE 

12 CONSUMPTION TAX 

‘‘SUBCHAPTER A. IMPOSITION OF TAX

‘‘SUBCHAPTER B. TAXABLE SUPPLY

‘‘SUBCHAPTER C. CREDIT AGAINST TAX


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‘‘SUBCHAPTER D. ADMINISTRATION

‘‘SUBCHAPTER E. DEFINITIONS AND SPECIAL RULES

1 ‘‘Subchapter A—Imposition of Tax 

‘‘Sec. 3901. Imposition of tax. 

‘‘Sec. 3902. Taxable amount. 

2 ‘‘SEC. 3901. IMPOSITION OF TAX. 

3 ‘‘(a) GENERAL RULE.—A tax is hereby imposed on 

4 every taxable supply. 

5 ‘‘(b) AMOUNT OF TAX.— 

6 ‘‘(1) IN GENERAL.—Except as provided in para7 graph (2), the amount of the tax shall be 10 percent 

8 of the taxable amount. 

9 ‘‘(2) SPECIAL RATE FOR EXPORTS.—The 

10 amount of the tax shall be zero with respect to the 

11 provision of any supply which is— 

12 ‘‘(A) a supply of tangible personal property 

13 that is exported from the United States within 

14 90 days after the provider gives an invoice for 

15 the supply, or 

16 ‘‘(B) a supply, other than a supply of tan17 gible personal property— 

18 ‘‘(i) which is provided to a recipient 

19 that is not in the United States when the 

20 supply is performed or otherwise done, and 

21 ‘‘(ii) the use of which takes place out22 side of the United States. 


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1 ‘‘SEC. 3902. TAXABLE AMOUNT. 

2 ‘‘(a) AMOUNT CHARGED CUSTOMER.—For purposes 

3 of this chapter, the taxable amount for any taxable supply 

4 for which money is the only consideration shall be the 

5 price charged by the provider— 

6 ‘‘(1) including all invoiced charges for transpor7 tation, and other items payable to the provider with 

8 respect to the supply, but 

9 ‘‘(2) excluding the tax imposed by section 3901 

10 with respect to the supply and excluding any State 

11 and local sales and use taxes with respect to the 

12 supply. 

13 ‘‘(b) BARTER TRANSACTIONS.—For purposes of this 

14 chapter, the taxable amount for any taxable supply which 

15 includes consideration other than money shall be the fair 

16 market value of the consideration (including all invoiced 

17 charges for transportation and other items payable to the 

18 provider) plus the amount of any money paid in consider19 ation. 

20 ‘‘(c) IMPORTS.—For purposes of this chapter, the 

21 taxable amount in the case of any import shall be— 

22 ‘‘(1) the customs value plus customs duties and 

23 any other duties which may be imposed, or 

24 ‘‘(2) if there is no such customs value, the fair 

25 market value (determined as if the importer had sold 

26 the supply). 


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1 For purposes of this subsection, the customs value of any 

2 import shall include all invoiced charges for transportation 

3 and other items payable to the importer with respect to 

4 the supply. 

5 ‘‘(d) SPECIAL RULE IN THE CASE OF SALES OF CER6 TAIN USED CONSUMER GOODS.—For purposes of this 

7 chapter, if— 

8 ‘‘(1) a person acquires any tangible personal 

9 property in a transaction which was not taxable 

10 under this chapter, and 

11 ‘‘(2) such property had been used by an ulti12 mate consumer before such acquisition, 

13 the taxable amount in the case of any sale of such property 

14 by such person (determined without regard to this sub15 section) shall be reduced by the amount paid for such 

16 property by such person. 

17 ‘‘Subchapter B—Taxable Supply 

‘‘Sec. 3911. Taxable supply. 

‘‘Sec. 3912. Supplies made in connection with the United States. 

‘‘Sec. 3913. Exempt supply. 

18 ‘‘SEC. 3911. TAXABLE SUPPLY. 

19 ‘‘(a) IN GENERAL.—For purposes of this chapter, the 

20 term ‘taxable supply’ means— 

21 ‘‘(1) the importation of property into the 

22 United States, and 

23 ‘‘(2) any supply (other than an exempt sup24 ply)— 


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1 ‘‘(A) which is provided— 

2 ‘‘(i) in the course of carrying on a 

3 trade or business, 

4 ‘‘(ii) in the case of an organization ex5 empt from tax under section 501(a), in 

6 furtherance of the activities related to the 

7 purpose or function constituting the basis 

8 of its exemption under section 501, or 

9 ‘‘(iii) in the case of a State, an Indian 

10 tribal government, a possession of the 

11 United States, or any political subdivision 

12 of any of the foregoing, or the United 

13 States or the District of Columbia, in car14 rying out any activity that is not an essen15 tial governmental function, 

16 ‘‘(B) for which consideration is provided in 

17 return, and 

18 ‘‘(C) which is made in connection with the 

19 United States. 

20 ‘‘(b) SUPPLY.—For purposes of this chapter— 

21 ‘‘(1) IN GENERAL.—The term ‘supply’ means 

22 any supply whatsoever, including— 

23 ‘‘(A) the sale or provision (including 

24 through renting, leasing, or licensing) of prop25 erty, 


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1 ‘‘(B) the performance of services, 

2 ‘‘(C) the grant, assignment, or surrender 

3 of real property, 

4 ‘‘(D) the creation, grant, transfer, assign5 ment, or surrender of any right, 

6 ‘‘(E) financial supplies, and 

7 ‘‘(F) an entry into, or release from, an ob8 ligation or agreement to perform or refrain 

9 from performing an act. 

10 ‘‘(2) SPECIAL RULE FOR SERVICES FOR EM11 PLOYER.—An employee’s services for the employee’s 

12 employer shall not be treated as a supply. 

13 ‘‘SEC. 3912. SUPPLIES MADE IN CONNECTION WITH THE 

14 UNITED STATES. 

15 ‘‘(a) TANGIBLE PROPERTY.—For purposes of this 

16 chapter— 

17 ‘‘(1) IN GENERAL.—The supply of tangible 

18 property is made in connection with the United 

19 States if— 

20 ‘‘(A) the property is delivered or made 

21 available to the recipient in the United States, 

22 or 

23 ‘‘(B) the property is assembled in or re24 moved from any location in the United States. 


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1 ‘‘(2) REAL PROPERTY.—The supply of real 

2 property is made in connection with the United 

3 States if the real property is located in the United 

4 States. 

5 ‘‘(b) SERVICES, INTANGIBLE PROPERTY, AND OTHER

6 SUPPLIES.—For purposes of this chapter, the supply of 

7 anything other than tangible property or real property is 

8 made in connection with the United States if— 

9 ‘‘(1) the supply is used, performed, or otherwise 

10 done in the United States, or 

11 ‘‘(2) the supply is provided through a trade or 

12 business in the United States. 

13 ‘‘SEC. 3913. EXEMPT SUPPLY. 

14 ‘‘(a) IN GENERAL.—An exempt supply shall not be 

15 subject to tax under this chapter. 

16 ‘‘(b) EXEMPT SUPPLY.—For purposes of this chap17 ter— 

18 ‘‘(1) IN GENERAL.—The term ‘exempt supply’ 

19 means— 

20 ‘‘(A) the rental or leasing of residential 

21 real property, 

22 ‘‘(B) any sale of qualified residential real 

23 property, 

24 ‘‘(C) any financial supply, and 


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1 ‘‘(D) any taxable supply (or category of 

2 such supplies) treated as an exempt supply 

3 under section 3932(b). 

4 ‘‘(2) QUALIFIED RESIDENTIAL REAL PROP5 ERTY.—For purposes of paragraph (1), the term 

6 ‘qualified residential real property’ means residential 

7 real property— 

8 ‘‘(A) which— 

9 ‘‘(i) has previously been sold as resi10 dential real property, or 

11 ‘‘(ii) has been continuously rented for 

12 5 years or more, and 

13 ‘‘(B) to which substantial renovations have 

14 not been made after the date of the enactment 

15 of this chapter. 

16 ‘‘Subchapter C—Credit Against Tax 

‘‘Sec. 3916. Credit against tax. 

17 ‘‘SEC. 3916. CREDIT AGAINST TAX. 

18 ‘‘(a) GENERAL RULE.—There shall be allowed as a 

19 credit against the aggregate amount of tax imposed by 

20 section 3901 with respect to all taxable supplies made by 

21 the taxpayer during the taxable period an amount equal 

22 to the aggregate amount of tax imposed by section 3901 

23 on creditable acquisitions of the taxpayer during such tax24 able period. 


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1 ‘‘(b) CREDITABLE ACQUISITIONS.—For purposes of 

2 this chapter, the term ‘creditable acquisition’ means the 

3 acquisition or receipt of any supply— 

4 ‘‘(1) which was subject to tax under section 

5 3901 at the time it was provided to the taxpayer, 

6 ‘‘(2) which was used by the taxpayer— 

7 ‘‘(A) in the course of carrying on a trade 

8 or business, 

9 ‘‘(B) in the case of a taxpayer exempt 

10 from tax under section 501(a), in furtherance 

11 of the activities related to the purpose or func12 tion constituting the basis of the exemption 

13 under section 501, or 

14 ‘‘(C) in the case of a State, an Indian trib15 al government, a possession of the United 

16 States, or any political subdivision of any of the 

17 foregoing, or the United States or the District 

18 of Columbia, in carrying out any activity that 

19 is not an essential governmental function, and 

20 ‘‘(3) which was not used by the taxpayer to 

21 make an exempt supply. 

22 ‘‘(c) EXEMPT SUPPLIES, ETC.—If supplies are used 

23 partly for a use described in subsection (b)(2) and partly 

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1 spect to the supplies used as described in subsection 

2 (b)(2). 

3 ‘‘(d) EXCESS CREDIT TREATED AS OVERPAY4 MENT.— 

5 ‘‘(1) IN GENERAL.—If for any taxable period 

6 the amount of the credit allowable by subsection (a) 

7 exceeds the aggregate amount of the tax imposed by 

8 section 3901 for such period, such excess shall be 

9 treated as an overpayment of the tax imposed by 

10 section 3901. 

11 ‘‘(2) TIME WHEN OVERPAYMENT ARISES.—Any 

12 overpayment under paragraph (1) for any taxable 

13 period shall be treated as arising on the later of— 

14 ‘‘(A) the due date for the return for such 

15 period, or 

16 ‘‘(B) the date on which the return is filed. 

17 ‘‘Subchapter D—Administration 

‘‘Sec. 3921. Provider liable for tax. 

‘‘Sec. 3922. Tax invoices. 

‘‘Sec. 3923. Time for filing return and claiming credit; deposits of tax. 

‘‘Sec. 3924. Treatment of related businesses, etc. 

‘‘Sec. 3925. Reports. 

‘‘Sec. 3926. Regulations. 

18 ‘‘SEC. 3921. PROVIDER LIABLE FOR TAX. 

19 ‘‘(a) IN GENERAL.—Except as provided in subsection 

20 (b), the person providing the supply shall be liable for the 

21 tax imposed by section 3901. 


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1 ‘‘(b) SPECIAL RULE FOR IMPORTS.—The person re2 ceiving the supply shall be liable for the tax imposed under 

3 section 3901— 

4 ‘‘(1) in the case of any taxable supply described 

5 in section 3911(a)(1), and 

6 ‘‘(2) in the case of any taxable supply which is 

7 not a supply of tangible property and which is— 

8 ‘‘(A) performed or otherwise done outside 

9 the United States, 

10 ‘‘(B) used in the United States, and 

11 ‘‘(C) acquired for use— 

12 ‘‘(i) in carrying on a trade or business 

13 in the United States, 

14 ‘‘(ii) by an organization exempt from 

15 tax under section 501(a), in furtherance of 

16 activities related to the purpose or function 

17 constituting the basis of its exemption 

18 under section 501, or 

19 ‘‘(iii) by a State, an Indian tribal gov20 ernment, a possession of the United 

21 States, or any political subdivision of any 

22 of the foregoing, or the United States or 

23 the District of Columbia, in carrying out 

24 any activity that is not an essential govern25 mental function. 


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1 ‘‘SEC. 3922. TAX INVOICES. 

2 ‘‘(a) IN GENERAL.— 

3 ‘‘(1) SUPPLIES MADE IN CONNECTION WITH

4 THE UNITED STATES.—Except as otherwise provided 

5 in this subsection, any person providing a taxable 

6 supply shall give the recipient a tax invoice with re7 spect to such supply. 

8 ‘‘(2) CERTAIN SERVICES PERFORMED OUTSIDE

9 THE UNITED STATES.—In the case of any taxable 

10 supply described in section 3921(b)(2), paragraph 

11 (1) shall not apply and the person receiving the tax12 able supply shall generate a tax invoice with respect 

13 to such supply. 

14 ‘‘(3) IMPORTS.—In the case of any taxable sup15 ply described in section 3911(a), the Secretary, in 

16 consultation with the Commissioner of Customs and 

17 Border Protection, shall promulgate regulations gov18 erning the provision of tax invoices. 

19 ‘‘(b) CONTENT OF INVOICE.—The tax invoice re20 quired by subsection (a) with respect to any supply shall 

21 set forth— 

22 ‘‘(1) the name and, in the case of an invoice 

23 under subsection (a)(1), identification number of the 

24 provider, 

25 ‘‘(2) the name of the recipient, 

26 ‘‘(3) the date of the taxable supply, 


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1 ‘‘(4) the taxable amount with respect to the 

2 taxable supply, 

3 ‘‘(5) the amount of the tax imposed by section 

4 3901, and 

5 ‘‘(6) such other information as may be pre6 scribed by regulations. 

7 ‘‘(c) NO CREDIT WITHOUT INVOICE.— 

8 ‘‘(1) IN GENERAL.—Except as provided in para9 graph (2) or (3), a taxpayer may claim a credit with 

10 respect to a creditable acquisition only if the tax11 payer— 

12 ‘‘(A) has in the taxpayer’s possession a tax 

13 invoice which meets the requirements of this 

14 section, and 

15 ‘‘(B) is named as the recipient of the sup16 ply in such invoice. 

17 ‘‘(2) EMPLOYEES OR OTHER AGENTS NAMED IN

18 INVOICES.—To the extent provided in regulations, 

19 the naming of an employee or other agent of the re20 cipient of the supply shall be treated as the naming 

21 of the recipient. 

22 ‘‘(3) WAIVER OF INVOICE REQUIREMENT IN

23 CERTAIN CASES.—To the extent provided in regula24 tions, paragraph (1) shall not apply— 


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1 ‘‘(A) where the taxpayer can demonstrate 

2 that the failure to receive or to have in the tax3 payer’s possession a tax invoice was without 

4 fault on the taxpayer’s part, or 

5 ‘‘(B) to a taxable supply (or category of 

6 supplies) where— 

7 ‘‘(i) the amount involved is de mini8 mis, or 

9 ‘‘(ii) the information required by sub10 section (b) can be reliably established by 

11 sampling or by another method and can be 

12 adequately documented. 

13 ‘‘(d) TIME FOR FURNISHING INVOICE.—Any invoice 

14 required to be furnished by subsection (a) with respect to 

15 any supply shall be furnished not later than 15 business 

16 days after the tax point for such supply. 

17 ‘‘SEC. 3923. TIME FOR FILING RETURN AND CLAIMING 

18 CREDIT; DEPOSITS OF TAX. 

19 ‘‘(a) FILING RETURN.—Before the last day of the 

20 fourth week (third week, in the case of any taxpayer to 

21 which subsection (c)(2) applies) after the close of each tax22 able period, each person liable for tax under this chapter 

23 shall file a return of the tax imposed by section 3901 on 

24 taxable supplies having a tax point within such taxable 

25 period. 


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1 ‘‘(b) CREDIT ALLOWED FOR TAXABLE PERIOD IN

2 WHICH RECIPIENT RECEIVES INVOICE.— 

3 ‘‘(1) IN GENERAL.—Except as provided in para4 graph (2), a credit allowable by section 3916 with 

5 respect to a supply may be allowed only for the first 

6 taxable period by the close of which the taxpayer— 

7 ‘‘(A) has paid or accrued amounts properly 

8 allocable to the tax imposed by section 3901 

9 with respect to such supply, and 

10 ‘‘(B) has a tax invoice (or equivalent) with 

11 respect to such supply. 

12 ‘‘(2) USE FOR LATER PERIOD.—Under regula13 tions, a credit allowable by section 3916 may be al14 lowed for a period after the period set forth in para15 graph (1). 

16 ‘‘(c) TAXABLE PERIOD.—For purposes of this chap17 ter— 

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), the term ‘taxable period’ means a cal20 endar quarter. 

21 ‘‘(2) MONTHLY PERIOD FOR CERTAIN TAX22 PAYERS.— 

23 ‘‘(A) IN GENERAL.—In the case of a tax24 payer who makes taxable supplies for any 


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1 month in excess of $20,000,000, the term ‘tax2 able period’ means a calendar month. 

3 ‘‘(B) ELECTION OF 1-MONTH PERIOD.—If 

4 the taxpayer so elects, the term ‘taxable period’ 

5 means a calendar month. 

6 ‘‘(d) TAX POINT.—For purposes of this chapter— 

7 ‘‘(1) CHAPTER 1 RULES WITH RESPECT TO

8 PROVIDER GOVERN.—Except as provided in para9 graph (2), the tax point for any supply is the earlier 

10 of— 

11 ‘‘(A) the time (or times) when any income 

12 from the provision of the supply should be 

13 treated by the provider as received or accrued 

14 (or any loss should be taken into account by the 

15 seller) for purposes of chapter 1, or 

16 ‘‘(B) the time (or times) when the provider 

17 receives payment for the sale. 

18 ‘‘(2) IMPORTS.—In the case of the importing of 

19 property, the tax point is when the property is en20 tered, or withdrawn from warehouse, for consump21 tion in the United States. 

22 ‘‘(e) MONTHLY DEPOSITS REQUIRED.—To the extent 

23 provided in regulations, monthly deposits may be required 

24 of the estimated liability for any taxable period for the 

25 tax imposed by section 3901. 


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1 ‘‘SEC. 3924. TREATMENT OF RELATED BUSINESSES, ETC. 

2 ‘‘For purposes of this chapter, to the extent provided 

3 in regulations, the taxpayer may elect— 

4 ‘‘(1) to treat as 1 person 2 or more businesses 

5 which may be treated under section 52(b) as 1 em6 ployer, and 

7 ‘‘(2) to treat as separate persons separate divi8 sions of the same business. 

9 ‘‘SEC. 3925. REPORTS. 

10 ‘‘The Secretary shall submit to Congress semi-annual 

11 reports on the implementation and administration of this 

12 chapter, including the amount of revenue collected from 

13 the tax imposed under this chapter and estimates of the 

14 revenue to be collected from such tax for future period. 

15 ‘‘SEC. 3926. REGULATIONS. 

16 ‘‘The Secretary shall prescribe such regulations as 

17 may be necessary to carry out the purposes of this chap18 ter. 

19 ‘‘Subchapter E—Definitions and Special 

20 Rules 

‘‘Sec. 3931. Definitions. 

‘‘Sec. 3932. Special rules. 

21 ‘‘SEC. 3931. DEFINITIONS. 

22 ‘‘For purposes of this chapter— 

23 ‘‘(1) BUSINESS.—The term ‘business’ in24 cludes— 


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1 ‘‘(A) a trade, and 

2 ‘‘(B) an activity regularly carried on for 

3 profit. 

4 ‘‘(2) BUSINESS DAY.—The term ‘business day’ 

5 means any day other than Saturday and Sunday and 

6 other than a legal holiday (within the meaning of 

7 section 7503). 

8 ‘‘(3) EMPLOYEE.—The term ‘employee’ has the 

9 meaning such term has for purposes of chapter 24. 

10 ‘‘(4) FINANCIAL SUPPLIES.—The term ‘finan11 cial supplies’ means the provision, acquisition, or 

12 disposal of any of the following: a bank account, a 

13 debit or credit arrangement, a mortgage, a super14 annuation fund, an annuity, insurance, a financial 

15 guarantee, an indemnity, currency, securities, or de16 rivatives. 

17 ‘‘(5) PERSON.—The term ‘person’ includes any 

18 governmental entity. 

19 ‘‘(6) PROVIDE; PROVIDER.—The term ‘provide’, 

20 when used in reference to taxable supplies (other 

21 than in section 3911(a)(2)), includes the importation 

22 of property and the term ‘provider’ includes the im23 porter of property. 

24 ‘‘(7) UNITED STATES.—The term ‘United 

25 States’, when used in a geographical sense, includes 


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1 a Commonwealth and any possession of the United 

2 States. 

3 ‘‘SEC. 3932. SPECIAL RULES. 

4 ‘‘(a) COORDINATION WITH SUBTITLE A.—For pur5 poses of subtitle A— 

6 ‘‘(1) TREATMENT OF CREDIT.—Any credit al7 lowable to a taxpayer under section 3916 which is 

8 attributable to any supply shall be treated as a re9 duction in the amount paid or incurred by the tax10 payer for such supply. 

11 ‘‘(2) AMOUNT OF DEDUCTION FOR TAX.—The 

12 amount allowable as a deduction for the tax imposed 

13 by section 3901 shall be determined without regard 

14 to any credit allowable under section 3916. 

15 ‘‘(3) COMPUTATION OF PERCENTAGE DEPLE16 TION.—For purposes of sections 613 and 613A— 

17 ‘‘(A) gross income shall be reduced by the 

18 amount of the tax imposed by section 3901, 

19 and 

20 ‘‘(B) taxable income shall be determined 

21 without regard to any deduction allowed for 

22 such tax. 

23 ‘‘(b) AUTHORITY TO ZERO RATE DE MINIMIS SUP24 PLIES, ETC.—The Secretary may prescribe regulations 


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1 treating as an exempt supply any taxable supply (or cat2 egory of such supplies) where— 

3 ‘‘(1) the amount involved is de minimis, or 

4 ‘‘(2) the revenue raised by taxing the supply is 

5 not sufficient to justify the administrative and other 

6 costs involved in the payment and collection of the 

7 tax.’’. 

8 (b) CLERICAL AMENDMENT.—The table of chapters 

9 for subtitle D is amended by inserting before the item re10 lating to chapter 31 the following: 

‘‘CHAPTER 30. PROGRESSIVE CONSUMPTION TAX’’. 

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

12 this section shall apply to supplies provided after Decem13 ber 31, 2015. 

14 TITLE II—INDIVIDUAL AND 

15 CORPORATE TAX REFORM 

16 Subtitle A—Individual Income Tax 

17 Reforms 

18 SEC. 201. INDIVIDUAL INCOME TAX RATE REDUCTIONS. 

19 (a) IN GENERAL.— 

20 (1) MARRIED INDIVIDUALS FILING JOINT RE21 TURNS AND SURVIVING SPOUSES.—Subsection (a) of 

22 section 1 is amended by striking the table and in23 serting the following: 

‘‘If taxable income is: The tax is: 

Not over $100,000 ........................ 15 percent of taxable income. 


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‘‘If taxable income is: The tax is: 

Over $100,000 but not over 

$500,000.

$15,000, plus 25 percent of the excess over $100,000. 

Over $500,000 ............................... $115,000, plus 28 percent of the excess over $500,000.’’. 

1 (2) HEADS OF HOUSEHOLDS.—Subsection (b) 

2 of section 1 is amended by striking the table and in3 serting the following: 

‘‘If taxable income is: The tax is: 

Not over $50,000 .......................... 15 percent of taxable income. 

Over $50,000 but not over 

$250,000.

$7,500, plus 25 percent of the excess 

over $50,000. 

Over $250,000 ............................... $57,500, plus 28 percent of the excess over $250,000.’’. 

4 (3) UNMARRIED INDIVIDUALS (OTHER THAN

5 SURVIVING SPOUSES AND HEADS OF HOUSE6 HOLDS).—Subsection (c) of section 1 is amended by 

7 striking the table and inserting the following: 

‘‘If taxable income is: The tax is: 

Not over $50,000 .......................... 15 percent of taxable income. 

Over $50,000 but not over 

$250,000.

$7,500, plus 25 percent of the excess 

over $250,000. 

Over $250,000 ............................... $57,500, plus 28 percent of the excess over $250,000.’’. 

8 (4) MARRIED INDIVIDUALS FILING SEPARATE

9 RETURNS.—Subsection (d) of section 1 is amended 

10 by striking the table and inserting the following: 

‘‘If taxable income is: The tax is: 

Not over $50,000 .......................... 15 percent of taxable income. 

Over $50,000 but not over 

$250,000.

$7,500, plus 25 percent of the excess 

over $250,000. 

Over $250,000 ............................... $57,500, plus 28 percent of the excess over $250,000.’’. 

11 (b) CONFORMING AMENDMENTS RELATING TO COST12 OF-LIVING ADJUSTMENT.— 


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1 (1) IN GENERAL.—Paragraph (3) of section 

2 1(f) is amended by inserting ‘‘, except as provided 

3 in paragraph (7),’’ after ‘‘for any calendar year’’. 

4 (2) UPDATED COST-OF-LIVING ADJUSTMENT

5 FOR NEW RATES.—Section 1(f) is amended by strik6 ing paragraphs (7) and (8) and inserting the fol7 lowing: 

8 ‘‘(7) COST-OF-LIVING ADJUSTMENT FOR YEARS

9 AFTER 2015.— 

10 ‘‘(A) CALENDAR YEAR 2016.—In pre11 scribing the tables under paragraph (1) which 

12 apply in lieu of the tables contained in sub13 sections (a), (b), (c), and (d) with respect to 

14 taxable years beginning in calendar year 2016, 

15 the Secretary shall make no adjustment to the 

16 dollar amounts in any such table. 

17 ‘‘(B) LATER CALENDAR YEARS.—In pre18 scribing tables under paragraph (1) which apply 

19 in lieu of the tables contained in subsections 

20 (a), (b), (c), and (d) with respect to taxable 

21 years beginning after December 31, 2016, the 

22 cost-of-living adjustment used in making ad23 justments to the dollar amounts in such tables 

24 shall be determined under paragraph (3) by 

25 substituting ‘2015’ for ‘1992’.’’. 


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1 (3) CONFORMING AMENDMENTS.— 

2 (A) Paragraph (2) of section 1(f) is 

3 amended— 

4 (i) by striking ‘‘paragraph (8)’’ in 

5 subparagraph (A) and inserting ‘‘para6 graph (7)(A)’’, and 

7 (ii) by striking ‘‘by adjusting’’ in sub8 paragraph (C) and inserting ‘‘except as 

9 provided in paragraph (7)(A), by adjust10 ing’’. 

11 (B) The heading of subsection (f) of sec12 tion 1 is amended by striking ‘‘PHASEOUT OF

13 MARRIAGE PENALTY IN 15-PERCENT BRACKET; 

14 ADJUSTMENTS’’ and inserting ‘‘ADJUST15 MENTS’’. 

16 (c) CONFORMING AMENDMENT RELATING TO

17 RATES.—Section 1 is amended by striking subsection (i). 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2015. 

21 SEC. 202. FAMILY ALLOWANCE AMOUNTS. 

22 (a) IN GENERAL.—Section 63 is amended to read as 

23 follows: 


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1 ‘‘SEC. 63. TAXABLE INCOME DEFINED. 

2 ‘‘(a) IN GENERAL.—For purposes of this subtitle, the 

3 term ‘taxable income’ means adjusted gross income 

4 minus— 

5 ‘‘(1) the deductions allowed by this chapter 

6 (other than those taken into account in determining 

7 adjusted gross income), and 

8 ‘‘(2) the family allowance amount. 

9 ‘‘(b) FAMILY ALLOWANCE.—For purposes of this 

10 subtitle— 

11 ‘‘(1) IN GENERAL.—The family allowance 

12 amount with respect to a taxpayer shall be deter13 mined in accordance with the following table: 

‘‘If the taxpayer is: 

The family 

allowance 

amount is: 

Single or married filing separately ................................. $50,000

Married filing jointly or a surviving spouse ................... $100,000

A head of a household .................................................... $75,000. 

14 ‘‘(2) DEFINITIONS.—For purposes of this sub15 section— 

16 ‘‘(A) the term ‘single or married filing sep17 arately’ means a taxpayer to whom subsection 

18 (c) or (d) of section 1 applies, 

19 ‘‘(B) the term ‘married filing jointly or a 

20 surviving spouse’ means a taxpayer to whom 

21 subsection (a) of section 1 applies, and 


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1 ‘‘(C) the term ‘head of a household’ means 

2 a taxpayer to whom subsection (b) of section 1 

3 applies. 

4 ‘‘(3) ADJUSTMENT FOR INFLATION.—In the 

5 case of any taxable year beginning after 2016, each 

6 of the dollar amounts in the table under paragraph 

7 (1) shall be increased by an amount equal to— 

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

9 ‘‘(B) the cost-of-living adjustment deter10 mined under section 1(f)(3) for the calendar 

11 year in which the taxable year begins, by sub12 stituting ‘calendar year 2015’ for ‘calendar year 

13 1992’ in subparagraph (B) thereof. 

14 ‘‘(c) CROSS REFERENCES.— 

15 ‘‘(1) For deductions of estates and trusts in 

16 lieu of the family allowance amount, see section 

17 642(b). 

18 ‘‘(2) For calculation of family allowance relat19 ing to nonresident aliens, see section 873(b)(3). 

20 ‘‘(3) For determination of marital status, see 

21 section 7703.’’. 

22 (b) TERMINATION OF PERSONAL EXEMPTIONS.— 

23 (1) IN GENERAL.—Subsection (a) of section 

24 151 is amended by inserting ‘‘, for a taxable year 


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1 beginning before January 1, 2016’’ after ‘‘In the 

2 case of an individual’’. 

3 (2) IDENTIFYING INFORMATION REQUIRED TO

4 TREAT INDIVIDUAL AS DEPENDENT.—Section 152 is 

5 amended by adding at the end the following new 

6 subsection: 

7 ‘‘(g) IDENTIFYING INFORMATION REQUIRED.—No 

8 individual shall be treated as a dependent of the taxpayer 

9 under this section for a taxable year unless the taxpayer 

10 includes the TIN of such individual on the return of tax 

11 for the taxable year.’’. 

12 (3) CONFORMING AMENDMENTS.— 

13 (A) Section 2(a)(1)(B)(ii) is amended by 

14 striking ‘‘of a dependent’’ and all that follows 

15 and inserting ‘‘of a dependent (as defined in 

16 section 152) who (within the meaning of section 

17 152, determined without regard to subsections 

18 (b)(1), (b)(2), and (d)(1)(B) thereof) is a son, 

19 stepson, daughter, or stepdaughter of the tax20 payer.’’. 

21 (B) Section 2(b)(1)(A)(ii) is amended by 

22 striking ‘‘if the taxpayer is entitled to a deduc23 tion for the taxable year for such person under 

24 section 151’’ and inserting ‘‘within the meaning 

25 of section 152’’. 


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1 (C) Section 2(b)(1)(B) is amended by 

2 striking ‘‘if the taxpayer is entitled to a deduc3 tion for the taxable year for such father or 

4 mother under section 151’’ and inserting ‘‘if 

5 such father or mother is a dependent of the 

6 taxpayer for the taxable year, within the mean7 ing of section 152’’. 

8 (D) Section 36B(b)(3)(B) is amended— 

9 (i) by striking ‘‘who is not allowed a 

10 deduction under section 151 for the tax11 able year with respect to a dependent’’ in 

12 clause (ii)(I)(aa) and inserting ‘‘with re13 spect to whom no dependents are taken 

14 into account under section 152 for pur15 poses of any provision of this title for the 

16 taxable year’’, and 

17 (ii) by striking ‘‘unless a deduction is 

18 allowed under section 151 for the taxable 

19 year with respect to a dependent other 

20 than either spouse’’ and inserting ‘‘unless 

21 a dependent other than either spouse is 

22 taken into account under section 152 for 

23 purposes of any provision of this title for 

24 the taxable year’’. 


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1 (E) Section 36B(c)(1)(D) is amended by 

2 striking ‘‘with respect to whom a deduction 

3 under section 151 is allowable to another tax4 payer’’ and inserting ‘‘who is taken into ac5 count as a dependent by another taxpayer 

6 under section 152 for purposes of any provision 

7 of this title’’. 

8 (F) Section 36B(d)(1) is amended by 

9 striking ‘‘for whom the taxpayer is allowed a 

10 deduction under section 151 (relating to allow11 ance of deduction for personal exemptions)’’ 

12 and inserting ‘‘who is a dependent of the tax13 payer under section 152’’. 

14 (G) Section 36B(e)(1) is amended by strik15 ing ‘‘for whom a taxpayer is allowed a deduc16 tion under section 151 (relating to allowance of 

17 deduction for personal exemptions)’’ and insert18 ing ‘‘who is a dependent of the taxpayer under 

19 section 152’’. 

20 (H) Section 152(d)(1)(B) is amended by 

21 striking ‘‘the exemption amount (as defined in 

22 section 151(d))’’ and inserting ‘‘the family al23 lowance amount applicable to taxpayers who are 

24 single or married filing separately under section 

25 63(b)’’. 


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1 (I) Section 152(f)(6)(B)(i) is amended by 

2 striking ‘‘the deduction under section 151(c)’’ 

3 and inserting ‘‘the family allowance amount 

4 under section 63(b)’’. 

5 (J) Part V of subchapter B of chapter 1 

6 is amended by striking section 153. 

7 (K) The table of sections for part V of 

8 subchapter B of chapter 1 is amended by strik9 ing the item relating to section 153. 

10 (L) Section 172(d)(3) is amended to read 

11 as follows: 

12 ‘‘(3) FAMILY ALLOWANCE AMOUNT.—Taxable 

13 income under section 63 shall be determined without 

14 regard to paragraph (2) of section 63(a), relating to 

15 the family allowance amount. No deduction in lieu of 

16 the exclusion of such family allowance amount shall 

17 be allowed.’’. 

18 (M) Section 220(b)(6) is amended by strik19 ing ‘‘with respect to whom a deduction under 

20 section 151 is allowable to another taxpayer’’ 

21 and inserting ‘‘who is taken into account as a 

22 dependent by another taxpayer under section 

23 152 for purposes of any provision of this title’’. 

24 (N) Section 223(b)(6) is amended by strik25 ing ‘‘with respect to whom a deduction under 


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1 section 151 is allowable to another taxpayer’’ 

2 and inserting ‘‘who is taken into account as a 

3 dependent by another taxpayer under section 

4 152 for purposes of any provision of this title’’. 

5 (O) Section 443(c) is amended by striking 

6 ‘‘the exemptions allowed as a deduction under 

7 section 151 (and any deduction in lieu thereof) 

8 shall be reduced to amounts which bear the 

9 same ratio to the full exemptions’’ and inserting 

10 ‘‘the family allowance amount under section 63 

11 (and any deduction in lieu thereof) shall be re12 duced to an amount which bears the same ratio 

13 to the full family allowance amount’’. 

14 (P) Section 642(b)(2)(C)(i) is amended— 

15 (i) by striking ‘‘151(d)’’ and inserting 

16 ‘‘151(d) (as in effect for taxable years be17 ginning before January 1, 2016)’’, and 

18 (ii) by striking ‘‘151(d)(3)(C)(iii)’’ in 

19 subclause (I) and inserting 

20 ‘‘151(d)(3)(C)(iii) (as so in effect)’’. 

21 (Q) Section 642(b)(3) is amended by strik22 ing ‘‘the deductions allowed under section 151 

23 (relating to deduction for personal exemption)’’ 

24 and inserting ‘‘the family allowance amount 

25 under section 63’’. 


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1 (R) Section 703(a) is amended— 

2 (i) by striking ‘‘and’’ at the end of 

3 paragraph (1), 

4 (ii) by striking subparagraph (A) of 

5 paragraph (2) and by redesignating sub6 paragraphs (B), (C), (D), (E), and (F) of 

7 such paragraph as subparagraphs (A), (B), 

8 (C), (D), and (E), 

9 (iii) by striking the period at the end 

10 of paragraph (2)(F) and inserting ‘‘, and’’, 

11 and 

12 (iv) by adding at the end the following 

13 new paragraph: 

14 ‘‘(3) taxable income under section 63 shall be 

15 determined without regard to paragraph (2) of sec16 tion 63(a), relating to the family allowance 

17 amount.’’. 

18 (S) Section 773(b) is amended— 

19 (i) by striking subparagraph (A) of 

20 paragraph (1) and by redesignating sub21 paragraphs (B) and (C) of such paragraph 

22 as subparagraphs (A) and (B), and 

23 (ii) by adding at the end the following 

24 new paragraph: 


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1 ‘‘(4) FAMILY ALLOWANCE AMOUNT.—Taxable 

2 income under section 63 shall be determined without 

3 regard to paragraph (2) of section 63(a), relating to 

4 the family allowance amount.’’. 

5 (T) Section 873(b) is amended— 

6 (i) by striking ‘‘deductions’’ in the 

7 matter preceding paragraph (1), and 

8 (ii) by striking paragraph (3) and in9 serting the following: 

10 ‘‘(3) FAMILY ALLOWANCE AMOUNT.—The ex11 clusion of the family allowance amount under section 

12 63(a)(2), except that the taxpayer shall be treated 

13 for purposes of section 63(b) as single or married 

14 filing separately unless the taxpayer is a resident of 

15 a contiguous country or is a national of the United 

16 States.’’. 

17 (U) The heading of section 873 is amend18 ed by striking ‘‘DEDUCTIONS’’ and inserting 

19 ‘‘DEDUCTIONS AND ALLOWANCES’’. 

20 (V) The item relating to section 873 in the 

21 table of sections for subpart A of part II of 

22 subchapter N of chapter 1 is amended to read 

23 as follows: 

‘‘Sec. 873. Deductions and allowances.’’. 

24 (W) Section 874(b) is amended by striking 

25 ‘‘deduction for exemptions under section 151’’ 


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1 and inserting ‘‘exclusion of the family allowance 

2 amount under section 63(a)(2)’’. 

3 (X) Section 891 is amended by striking 

4 ‘‘deductions allowable under section 151 and 

5 under’’ and inserting ‘‘exclusion of the family 

6 allowance amount under section 63(a)(2) and 

7 the deductions allowable under’’. 

8 (Y) Section 904(b)(1) is amended to read 

9 as follows: 

10 ‘‘(1) FAMILY ALLOWANCE AND DEDUCTIONS.— 

11 For purposes of subsection (a), the taxable income 

12 in the case of an individual, estate, or trust shall be 

13 computed without regard to the exclusion of the 

14 family allowance amount under section 63(a)(2) or 

15 any deduction in lieu of such exclusion.’’. 

16 (Z) Section 931(b)(1) is amended by strik17 ing ‘‘deductions (other than the deduction 

18 under section 151, relating to personal exemp19 tions)’’ and inserting ‘‘deductions’’. 

20 (AA) Section 933 is amended— 

21 (i) by striking ‘‘deductions (other than 

22 the deduction under section 151, relating 

23 to personal exemptions)’’ in paragraph (1) 

24 and inserting ‘‘deductions’’, and 


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1 (ii) by striking ‘‘deductions (other 

2 than the deduction for personal exemptions 

3 under section 151)’’ in paragraph (2) and 

4 inserting ‘‘deductions’’. 

5 (BB) Section 1212(b)(2)(B)(ii) is amended 

6 to read as follows: 

7 ‘‘(ii) the family allowance amount for 

8 the taxable year under section 63(b) or any 

9 deduction allowed in lieu thereof.’’. 

10 (CC) Section 1402(a)(7) is amended to 

11 read as follows: 

12 ‘‘(7) taxable income under section 63 shall be 

13 determined without regard to paragraph (2) of sec14 tion 63(a), relating to the family allowance 

15 amount;’’. 

16 (DD) Section 5000A(c)(4)(A) is amended 

17 by striking ‘‘for whom the taxpayer is allowed 

18 a deduction under section 151 (relating to al19 lowance of deduction for personal exemptions)’’ 

20 and inserting ‘‘who are taken into account as a 

21 dependent by the taxpayer under section 152 

22 for purposes of any provision of this title’’. 

23 (EE) Section 6012(a)(1) is amended to 

24 read as follows: 

25 ‘‘(1)(A) Every individual— 


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1 ‘‘(i) having for the taxable year gross in2 come which equals or exceeds the family allow3 ance amount applicable to the individual under 

4 section 63, or 

5 ‘‘(ii) in the case of individuals entitled to 

6 make a joint return (but only if the individual 

7 and the individual’s spouse had the same house8 hold as their home at the close of the taxable 

9 year), every individual whose gross income, 

10 when combined with the gross income of the in11 dividual’s spouse, equals or exceeds the family 

12 allowance amount applicable to taxpayers who 

13 are married filing jointly under section 63. 

14 ‘‘(B) Every individual not described in subpara15 graph (A) who is taken into account as a dependent 

16 by another taxpayer under section 152 for purposes 

17 of any provision of this title, but only if such individ18 ual’s gross income, when combined with the gross in19 come of all individuals taken into account in deter20 mining the family allowance amount under section 

21 63(b) of the taxpayer, equals or exceeds the family 

22 allowance amount applicable to the taxpayer under 

23 such section.’’. 

24 (FF) Section 6012(a)(8) is amended by 

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1 tion amount plus the basic standard deduction 

2 under section 63(c)(2)(D)’’ and inserting 

3 ‘‘equals or exceeds the family allowance amount 

4 applicable to the estate under section 

5 1398(c)(3)’’. 

6 (GG) Section 6013(b)(3)(A) is amended by 

7 striking ‘‘has the meaning given to such term’’ 

8 and all that follows and inserting ‘‘means the 

9 family allowance amount applicable to a tax10 payer who is single or married filing separately 

11 under section 63(b).’’. 

12 (HH) Section 6014(a) is amended by 

13 striking ‘‘who does not itemize his deductions 

14 and who is not described in section 

15 6012(a)(1)(C)(i)’’ and inserting ‘‘who is not de16 scribed in section 6012(a)(1)(B)’’. 

17 (II) Section 6103(l)(21)(A)(iii) is amended 

18 by striking ‘‘for whom a deduction is allowed 

19 under section 151’’ and inserting ‘‘who is taken 

20 into account as a dependent under section 152 

21 for purposes of any provision of this title’’. 

22 (JJ) Section 6334(d)(2)(A) is amended to 

23 read as follows: 

24 ‘‘(A) the family allowance amount deter25 mined under section 63(b) with respect to the 


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•S 3005 IS

1 taxpayer for the taxable year in which such levy 

2 occurs, divided by’’. 

3 (KK) Section 7703(b)(1) is amended by 

4 striking ‘‘with respect to whom such individual 

5 is entitled to a deduction for the taxable year 

6 under section 151 (or would be so entitled but 

7 for section 152(e))’’ and inserting ‘‘who is a de8 pendent (within the meaning of section 152) of 

9 the individual for the taxable year’’. 

10 (4) AMENDMENTS RELATING TO PAYROLL

11 WITHHOLDING.— 

12 (A) IN GENERAL.—Paragraph (1) of sec13 tion 3402(f) is amended by striking subpara14 graph (A) and all that follows and inserting the 

15 following: 

16 ‘‘(A) an exemption equal to the family al17 lowance exemption amount; and 

18 ‘‘(B) any allowance to which the employee 

19 is entitled under subsection (m), but only if the 

20 employee’s spouse does not have in effect a 

21 withholding exemption certificate claiming such 

22 allowance.’’. 

23 (B) FAMILY ALLOWANCE EXEMPTION

24 AMOUNT.—Subsection (f) of section 3402 is 

25 amended— 


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1 (i) by redesignating paragraphs (2), 

2 (3), (4), (5), (6), and (7) as paragraphs 

3 (3), (4), (5), (6), (7), and (8), respectively, 

4 (ii) by striking ‘‘paragraph (2)(C)’’ in 

5 paragraph (3)(B)(iii) and inserting ‘‘para6 graph (3)(C)’’, and 

7 (iii) by inserting after paragraph (1) 

8 the following new paragraph: 

9 ‘‘(2) FAMILY ALLOWANCE EXEMPTION

10 AMOUNT.—For purposes of this section— 

11 ‘‘(A) IN GENERAL.—Except as provided in 

12 subparagraphs (B) and (C), the term ‘family al13 lowance exemption amount’ means the family 

14 allowance amount with respect to the taxpayer 

15 under section 63(b) for the taxable year in 

16 which the payroll period begins, prorated to the 

17 payroll period. 

18 ‘‘(B) MARRIED EMPLOYEES.—If the em19 ployee is married filing jointly and the employ20 ee’s spouse is an employee receiving wages, the 

21 employee and the employee’s spouse may divide 

22 the family allowance amount determined under 

23 section 63(b) in the proportion of their choice 

24 for purposes of this paragraph, but the sum of 

25 the family allowance exemption amounts 


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1 claimed by the employee and the employee’s 

2 spouse shall not exceed such family allowance 

3 amount. 

4 ‘‘(C) EMPLOYEES WITH MORE THAN 1 EM5 PLOYER.—In the case of an employee that has 

6 withholding exemption certificates in effect with 

7 respect to more than 1 employer, the employee 

8 may divide the family allowance amount (or the 

9 employee’s share of such amount after the ap10 plication of subparagraph (B), if applicable) de11 termined under section 63(b) among employers 

12 in the proportion of the employee’s choice for 

13 purposes of this paragraph, but the sum of the 

14 family allowance exemption amounts claimed by 

15 the employee with respect to all employers shall 

16 not exceed such family allowance amount (or 

17 the employee’s share of such amount after the 

18 application of subparagraph (B), if applica19 ble).’’. 

20 (C) CONFORMING AMENDMENTS.— 

21 (i) Paragraph (2) of section 3402(a) 

22 is amended by striking ‘‘the number of 

23 withholding exemptions claimed’’ and all 

24 that follows and inserting ‘‘the total 


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1 amount of the withholding exemptions 

2 claimed.’’. 

3 (ii) Paragraph (3) of section 3402(f), 

4 as redesignated by subparagraph (B)(i) of 

5 this paragraph, is amended— 

6 (I) by striking ‘‘the number of 

7 withholding exemptions’’ and all that 

8 follows in subparagraph (A) and in9 serting ‘‘the total amount of the with10 holding exemptions which the em11 ployee claims, which shall in no event 

12 exceed the amount to which the em13 ployee is entitled.’’, 

14 (II) by striking ‘‘the number of 

15 withholding exemptions’’ each place it 

16 appears in subparagraphs (B) and (C) 

17 and inserting ‘‘the total amount of the 

18 withholding exemptions’’, 

19 (III) by striking ‘‘the number to 

20 which he is entitled’’ each place it ap21 pears in subparagraph (B) and insert22 ing ‘‘the amount to which the em23 ployee is entitled’’, 

24 (IV) by striking ‘‘the number to 

25 which the employee is entitled’’ in 


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1 subparagraph (C) and inserting ‘‘the 

2 amount to which the employee is enti3 tled’’, and 

4 (V) by striking ‘‘the number to 

5 which he will be, or reasonably may be 

6 expected to be, so entitled’’ in sub7 paragraph (C) and inserting ‘‘the 

8 amount to which the employee will be, 

9 or reasonably may be expected to be, 

10 so entitled’’. 

11 (iii) Paragraph (7) of section 3402(f), 

12 as redesignated by subparagraph (B)(i) of 

13 this paragraph, is amended by striking 

14 ‘‘shall be entitled to only one withholding 

15 exemption’’ and inserting ‘‘shall be treated 

16 as single or married filing separately for 

17 purposes of determining the family allow18 ance exemption amount’’. 

19 (iv) Paragraph (8) of section 3402(f), 

20 as redesignated by subparagraph (B)(i) of 

21 this paragraph, is amended by inserting ‘‘, 

22 except as provided in paragraph (2)(C)’’ 

23 after ‘‘with respect to one employer’’. 

24 (v) Paragraph (3) of section 3402(m) 

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1 cluding the additional standard deduction 

2 under section 63(c)(3) for the aged and 

3 blind)’’ and inserting ‘‘deductions’’. 

4 (vi) Paragraph (2) of section 3402(r) 

5 is amended striking ‘‘the sum of’’ and all 

6 that follows and inserting ‘‘the family al7 lowance amount determined under section 

8 63(b) for a taxpayer who is single or mar9 ried filing separately.’’. 

10 (vii) Section 6040(4) is amended by 

11 striking ‘‘section 3402(f)(2), (3), (4), and 

12 (5)’’ and inserting ‘‘paragraphs (3), (4), 

13 (5), and (6) of section 3402(f)’’. 

14 (c) CONFORMING AMENDMENTS.— 

15 (1) Section 1(f)(6) is amended— 

16 (A) by striking ‘‘63(c)(4)’’ each place it 

17 appears and inserting ‘‘63(b)(3)’’, and 

18 (B) by inserting ‘‘, subsection (g)(4)(B)’’ 

19 after ‘‘paragraph (2)(A)’’ in subparagraph (A). 

20 (2) Section 1(g)(4) is amended— 

21 (A) by striking clause (ii) of subparagraph 

22 (A) and inserting the following: 

23 ‘‘(ii) the sum of— 

24 ‘‘(I) $500, plus 


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1 ‘‘(II) the greater of the amount 

2 described in subclause (I) or the 

3 amount of the itemized deductions al4 lowed by this chapter which are di5 rectly connected with the production 

6 of the portion of adjusted gross in7 come referred to in clause (i).’’, and 

8 (B) by redesignating subparagraphs (B) 

9 and (C) as subparagraphs (C) and (D), respec10 tively, and inserting after subparagraph (A) the 

11 following new subparagraph: 

12 ‘‘(B) ADJUSTMENT FOR INFLATION.—In 

13 the case of any taxable year beginning in a cal14 endar year after 1988, the $500 amount in sub15 paragraph (A)(ii)(I) shall be increased by an 

16 amount equal to— 

17 ‘‘(i) such dollar amount, multiplied by 

18 ‘‘(ii) the cost-of-living adjustment de19 termined under subsection (f)(3) for the 

20 calendar year in which the taxable year be21 gins, by substituting ‘calendar year 1987’ 

22 for ‘calendar year 1992’ in subparagraph 

23 (B) thereof.’’. 

24 (3) Section 3(a) is amended to read as follows: 


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1 ‘‘(a)(1) IN GENERAL.—In lieu of the tax imposed by 

2 section 1, there is hereby imposed for each taxable year 

3 on the taxable income of every individual whose taxable 

4 income does not exceed the ceiling amount a tax deter5 mined under tables, applicable to such taxable year, which 

6 shall be prescribed by the Secretary and which shall be 

7 in such form as the Secretary determines appropriate. In 

8 the table so prescribed, the amounts of the tax shall be 

9 computed on the basis of the rates prescribed by section 

10 1. 

11 ‘‘(2) CEILING AMOUNT DEFINED.—For purposes of 

12 paragraph (1), the term ‘ceiling amount’ means, with re13 spect to any taxpayer, the amount (not less than $20,000) 

14 determined by the Secretary for the tax rate category in 

15 which such taxpayer falls.’’. 

16 (4) Section 861(b) is amended by striking the 

17 last sentence. 

18 (5) Section 862(b) is amended by striking the 

19 last sentence. 

20 (6) Section 1398(c) is amended— 

21 (A) by striking paragraph (3) and insert22 ing the following: 

23 ‘‘(3) FAMILY ALLOWANCE AMOUNT.—The fam24 ily allowance amount under section 63(b) taken into 

25 account for the estate for the taxable year shall be 


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1 the same as for a taxpayer who is single or married 

2 filing separately.’’, and 

3 (B) by striking ‘‘BASIC STANDARD DE4 DUCTION’’ in the heading and inserting ‘‘FAM5 ILY ALLOWANCE AMOUNT’’. 

6 (7) Section 6212(c)(2) is amended by striking 

7 subparagraph (A) and by redesignating subpara8 graphs (B) and (C) as subparagraphs (A) and (B), 

9 respectively. 

10 (8) Section 6014(b)(4) is amended by striking 

11 ‘‘deductions’’ and all that follows and inserting ‘‘de12 ductions.’’. 

13 (9) Section 6504 is amended by striking para14 graph (2) and by redesignating paragraphs (3), (4), 

15 (5), (6), (7), (8), (9), (10), and (11) as paragraphs 

16 (2), (3), (4), (5), (6), (7), (8), (9), and (10), respec17 tively. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2015. 

21 SEC. 203. REPEAL OF LIMITATIONS RELATING TO ITEMIZED 

22 DEDUCTIONS. 

23 (a) IN GENERAL.—Sections 67 and 68 are repealed. 

24 (b) CONFORMING AMENDMENTS.— 


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•S 3005 IS

1 (1) Section 162(o) is amended by striking para2 graph (2) and redesignating paragraph (3) as para3 graph (2). 

4 (2) Section 164(b)(5)(H)(ii) is amended— 

5 (A) by striking the comma at the end of 

6 subclause (I) and inserting ‘‘, and’’, 

7 (B) by striking ‘‘, and’’ at the end of sub8 clause (II) and inserting a period, and 

9 (C) by striking subclause (III). 

10 (3) Section 302(b)(5) is amended by inserting 

11 ‘‘, as in effect on December 31, 2015’’ after 

12 ‘‘67(c)(2)(B)’’. 

13 (4) Section 562(c) is amended by inserting ‘‘, 

14 as in effect on December 31, 2015’’ after 

15 ‘‘67(c)(2)(B)’’. 

16 (5) Section 642(b)(2)(C)(i)(II) is amended by 

17 inserting ‘‘, and as in effect on December 31, 2015’’ 

18 after ‘‘642(b)’’. 

19 (6) Section 772(c)(3) is amended— 

20 (A) by striking subparagraph (B), and 

21 (B) by striking ‘‘INCOME OR LOSS FROM

22 OTHER ACTIVITIES.—’’ and all that follows 

23 through ‘‘For purposes of this chapter’’ and in24 serting ‘‘INCOME OR LOSS FROM OTHER ACTIVI25 TIES.—For purposes of this chapter’’. 


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•S 3005 IS

1 (7) Section 773(a)(3)(B) is amended by strik2 ing clause (i) and by redesignating clauses (ii), (iii), 

3 and (iv) as clauses (i), (ii), and (iii), respectively. 

4 (8) Section 773(b) is amended by striking para5 graph (3). 

6 (9) Section 1411(a)(2)(B)(i) is amended by in7 serting ‘‘, as in effect on December 31, 2015’’ after 

8 ‘‘67(e)’’. 

9 (10) Subparagraphs (C)(iii) and (D)(v) of sec10 tion 6654(d)(1) are each amended by inserting ‘‘, as 

11 in effect on December 31, 2015’’ before the period. 

12 (c) EFFECTIVE DATE.—The repeal and the amend13 ments made by this section shall apply to taxable years 

14 beginning after December 31, 2015. 

15 SEC. 204. TERMINATION OF SEPARATE TREATMENT OF 

16 CAPITAL GAINS. 

17 Subsection (h) of section 1 is amended by adding at 

18 the end the following new paragraph: 

19 ‘‘(12) TERMINATION.—This subsection shall not 

20 apply to any taxable year beginning after December 

21 31, 2015.’’. 

22 SEC. 205. REPEALS. 

23 (a) IN GENERAL.—The following provisions of the In24 ternal Revenue Code of 1986 are repealed: 


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•S 3005 IS

1 (1) Subpart A of part IV of subchapter A of 

2 chapter 1 (relating to nonrefundable personal cred3 its). 

4 (2) Subpart B of part IV of subchapter A of 

5 chapter 1 (relating to other credits), other than sec6 tion 27 (relating to taxes of foreign countries and 

7 possessions of the United States; possession tax 

8 credit). 

9 (3) Subpart C of part IV of subchapter A of 

10 chapter 1 (relating to refundable credits), other than 

11 sections 32 (relating to earned income) and 36B (re12 lating to refundable credit for coverage under a 

13 qualified health plan). 

14 (4) Part VI of subchapter A of chapter 1 (relat15 ing to alternative minimum tax). 

16 (5) Section 217 (relating to moving expenses). 

17 (6) Section 221 (relating to interest on edu18 cation loans). 

19 (7) Section 222 (relating to qualified tuition 

20 and related expenses). 

21 (8) Chapter 2A (relating to unearned income 

22 medicare contribution). 

23 (b) EFFECTIVE DATE.—The repeals made by sub24 section (a) shall take effect for taxable years beginning 

25 after December 31, 2015. 


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•S 3005 IS

1 SEC. 206. ESTABLISHMENT OF PROGRESSIVE TAX REBATE. 

2 (a) IN GENERAL.—Section 32 is amended to read as 

3 follows: 

4 ‘‘SEC. 32. PROGRESSIVE TAX REBATE. 

5 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli6 gible taxpayer, there shall be allowed as a credit against 

7 the tax imposed by this subtitle for the taxable year an 

8 amount equal to the sum of— 

9 ‘‘(1) the earned income amount (as determined 

10 under subsection (b)), 

11 ‘‘(2) the child benefit amount (as determined 

12 under subsection (c)), plus 

13 ‘‘(3) the additional child benefit amount (as de14 termined under subsection (d)). 

15 ‘‘(b) EARNED INCOME AMOUNT.— 

16 ‘‘(1) SINGLE WORKERS.—In the case of an eli17 gible taxpayer (other than a head of a household as 

18 defined in section 2(b)) who is not filing a joint re19 turn for the taxable year under section 6013, the 

20 earned income amount shall be equal to— 

21 ‘‘(A) in the case of a taxpayer whose 

22 earned income for the taxable year does not ex23 ceed $6,100, 25.1 percent of such earned in24 come, 

25 ‘‘(B) in the case of a taxpayer whose 

26 earned income for the taxable year exceeds 


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•S 3005 IS

1 $6,100 but does not exceed $9,000, $1,530 plus 

2 17.1 percent of such earned income in excess of 

3 $6,100, 

4 ‘‘(C) in the case of a taxpayer whose 

5 earned income (or, if greater, adjusted gross in6 come) for the taxable year exceeds $9,000, but 

7 does not exceed $49,494, $2,025 minus 5 per8 cent of such earned income or adjusted gross 

9 income in excess of $9,000, or 

10 ‘‘(D) in the case of a taxpayer whose 

11 earned income (or, if greater, adjusted gross in12 come) for the taxable year exceeds $49,494, $0. 

13 ‘‘(2) HEAD OF HOUSEHOLD.—In the case of an 

14 eligible taxpayer who is a head of a household (as 

15 defined in section 2(b)), the earned income amount 

16 shall be equal to— 

17 ‘‘(A) in the case of a taxpayer whose 

18 earned income for the taxable year does not ex19 ceed $9,150, 25.1 percent of such earned in20 come, 

21 ‘‘(B) in the case of a taxpayer whose 

22 earned income for the taxable year exceeds 

23 $9,150 but does not exceed $13,500, $2,294 

24 plus 17.1 percent of such earned income in ex25 cess of $9,150, 


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•S 3005 IS

1 ‘‘(C) in the case of a taxpayer whose 

2 earned income (or, if greater, adjusted gross in3 come) for the taxable year exceeds $13,500, but 

4 does not exceed $74,241, $3,037 minus 5 per5 cent of such earned income or adjusted gross 

6 income in excess of $13,500, or 

7 ‘‘(D) in the case of a taxpayer whose 

8 earned income (or, if greater, adjusted gross in9 come) for the taxable year exceeds $74,241, $0. 

10 ‘‘(3) MARRIED FILING JOINTLY.—In the case of 

11 an eligible taxpayer filing a joint return under sec12 tion 6013, the earned income amount shall be deter13 mined pursuant to paragraph (1), except that the 

14 dollar amounts in effect under such paragraph shall 

15 be multiplied by 2. 

16 ‘‘(c) CHILD BENEFIT AMOUNT.— 

17 ‘‘(1) IN GENERAL.—In the case of an eligible 

18 taxpayer with a qualifying child, the child benefit 

19 amount shall be equal to 15 percent of the earned 

20 income of such taxpayer for the taxable year. 

21 ‘‘(2) LIMITATIONS.— 

22 ‘‘(A) LIMITATION BASED ON NUMBER OF

23 CHILDREN.—The child benefit amount deter24 mined under paragraph (1) shall not exceed an 

25 amount equal to the product of— 


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•S 3005 IS

1 ‘‘(i) the number of qualifying children 

2 of the taxpayer, multiplied by 

3 ‘‘(ii) $1,590. 

4 ‘‘(B) REDUCTION BASED ON EARNINGS OR

5 ADJUSTED GROSS INCOME.—The child benefit 

6 amount determined under this subsection (as 

7 determined after application of subparagraph 

8 (A)) shall be reduced (but not below zero) by an 

9 amount equal to 5 percent of the earned income 

10 (or, if greater, the adjusted gross income) of 

11 the taxpayer for the taxable year in excess of 

12 $75,000 ($110,000 in the case of a joint re13 turn). 

14 ‘‘(d) ADDITIONAL CHILD BENEFIT AMOUNT.— 

15 ‘‘(1) IN GENERAL.—In the case of an eligible 

16 taxpayer with a qualifying child, the additional child 

17 benefit amount shall be equal to— 

18 ‘‘(A) in the case of a taxpayer whose 

19 earned income for the taxable year does not ex20 ceed $20,000, the applicable percentage of such 

21 earned income, 

22 ‘‘(B) in the case of a taxpayer whose 

23 earned income exceeds $20,000 but does not ex24 ceed $25,000, the applicable percentage of 

25 $20,000, 


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•S 3005 IS

1 ‘‘(C) in the case of a taxpayer whose 

2 earned income (or, if greater, adjusted gross in3 come) exceeds $25,000 but does not exceed the 

4 applicable amount, an amount equal to— 

5 ‘‘(i) the applicable percentage of 

6 $20,000, minus 

7 ‘‘(ii) 15 percent of such earned in8 come or adjusted gross income in excess of 

9 $25,000, or 

10 ‘‘(D) in the case of a taxpayer whose 

11 earned income (or, if greater, adjusted gross in12 come) exceeds the applicable amount, $0. 

13 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

14 of paragraph (1), the applicable percentage is— 

15 ‘‘(A) in the case of a taxpayer with 1 

16 qualifying child, 11 percent, 

17 ‘‘(B) in the case of a taxpayer with 2 

18 qualifying children, 17 percent, and 

19 ‘‘(C) in the case of a taxpayer with 3 or 

20 more qualifying children, 19 percent. 

21 ‘‘(3) APPLICABLE AMOUNT.—For purposes of 

22 paragraph (1), the applicable amount is— 

23 ‘‘(A) in the case of a taxpayer with 1 

24 qualifying child, $39,667, 


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•S 3005 IS

1 ‘‘(B) in the case of a taxpayer with 2 

2 qualifying children, $47,667, and 

3 ‘‘(C) in the case of a taxpayer with 3 or 

4 more qualifying children, $50,333. 

5 ‘‘(e) ELIGIBLE TAXPAYER.— 

6 ‘‘(1) IN GENERAL.—The term ‘eligible taxpayer’ 

7 means an individual— 

8 ‘‘(A) whose principal place of abode is in 

9 the United States for more than one-half of 

10 such taxable year, and 

11 ‘‘(B) is not a dependent (as defined under 

12 section 152) to another taxpayer for any tax13 able year beginning in the same calendar year 

14 as such taxable year. 

15 ‘‘(2) QUALIFYING CHILD INELIGIBLE.—If an 

16 individual is the qualifying child of a taxpayer for 

17 any taxable year of such taxpayer beginning in a cal18 endar year, such individual shall not be treated as 

19 an eligible taxpayer for any taxable year of such in20 dividual beginning in such calendar year. 

21 ‘‘(3) EXCEPTION FOR TAXPAYER CLAIMING

22 BENEFITS UNDER SECTION 911.—The term ‘eligible 

23 taxpayer’ does not include any taxpayer who claims 

24 the benefits of section 911 for the taxable year. 


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•S 3005 IS

1 ‘‘(4) LIMITATION ON ELIGIBILITY OF NON2 RESIDENT ALIENS.—The term ‘eligible taxpayer’ 

3 shall not include any individual who is a nonresident 

4 alien individual for any portion of the taxable year 

5 unless such individual is treated for such taxable 

6 year as a resident of the United States for purposes 

7 of this chapter by reason of an election under sub8 section (g) or (h) of section 6013. 

9 ‘‘(5) IDENTIFICATION NUMBER REQUIRE10 MENT.—No credit shall be allowed under this section 

11 to an eligible taxpayer who does not include on the 

12 return of tax for the taxable year— 

13 ‘‘(A) such individual’s taxpayer identifica14 tion number, and 

15 ‘‘(B) if the individual is married (within 

16 the meaning of section 7703), the taxpayer 

17 identification number of such individual’s 

18 spouse. 

19 ‘‘(6) TAXPAYERS WHO DO NOT INCLUDE TIN, 

20 ETC., OF ANY QUALIFYING CHILD.—No credit shall 

21 be allowed under this section to any eligible taxpayer 

22 who has one or more qualifying children if no quali23 fying child of such taxpayer is taken into account 

24 under subsection (c) or (d) by reason of subsection 

25 (f)(4). 


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•S 3005 IS

1 ‘‘(7) TREATMENT OF MILITARY PERSONNEL

2 STATIONED OUTSIDE OF THE UNITED STATES.—For 

3 purposes of paragraph (1)(A) and subsection (f)(3), 

4 the principal place of abode of a member of the 

5 Armed Forces of the United States shall be treated 

6 as in the United States during any period during 

7 which such member is stationed outside the United 

8 States while serving on extended active duty with 

9 the Armed Forces of the United States. For pur10 poses of the preceding sentence, the term ‘extended 

11 active duty’ means any period of active duty pursu12 ant to a call or order to such duty for a period in 

13 excess of 90 days or for an indefinite period. 

14 ‘‘(8) JOINT RETURN.— 

15 ‘‘(A) MARRIED INDIVIDUALS.—In the case 

16 of an individual who is married (within the 

17 meaning of section 7703), this section shall 

18 apply only if a joint return is filed for the tax19 able year under section 6013. 

20 ‘‘(B) OTHER.—In the case of taxpayer fil21 ing a joint return under section 6013, such tax22 payer shall not be treated as an eligible tax23 payer for purposes of this section unless either 

24 the taxpayer or the taxpayer’s spouse satisfies 

25 each of the requirements under this subsection. 


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•S 3005 IS

1 ‘‘(f) QUALIFYING CHILD.— 

2 ‘‘(1) IN GENERAL.—The term ‘qualifying child’ 

3 means a qualifying child of the taxpayer (as defined 

4 in section 152(c), determined without regard to 

5 paragraph (1)(D) thereof and section 152(e)). 

6 ‘‘(2) MARRIED INDIVIDUAL.—The term ‘quali7 fying child’ shall not include an individual who is 

8 married as of the close of the eligible taxpayer’s tax9 able year unless the individual qualifies as a depend10 ent (as defined under section 152) of the taxpayer 

11 for such taxable year. 

12 ‘‘(3) PLACE OF ABODE.—For purposes of para13 graph (1), the requirements of section 152(c)(1)(B) 

14 shall be met only if the principal place of abode is 

15 in the United States. 

16 ‘‘(4) IDENTIFICATION REQUIREMENTS.— 

17 ‘‘(A) IN GENERAL.—A qualifying child 

18 shall not be taken into account under sub19 section (c) or (d) unless the taxpayer includes 

20 the name, age, and TIN of the qualifying child 

21 on the return of tax for the taxable year. 

22 ‘‘(B) OTHER METHODS.—The Secretary 

23 may prescribe other methods for providing the 

24 information described in subparagraph (A). 

25 ‘‘(g) EARNED INCOME.— 


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•S 3005 IS

1 ‘‘(1) IN GENERAL.—The term ‘earned income’ 

2 means— 

3 ‘‘(A) wages, salaries, tips, and other em4 ployee compensation, but only if such amounts 

5 are includible in gross income for the taxable 

6 year, plus 

7 ‘‘(B) the amount of the taxpayer’s net 

8 earnings from self-employment for the taxable 

9 year (within the meaning of section 1402(a)), 

10 but such net earnings shall be determined with 

11 regard to the deduction allowed to the taxpayer 

12 by section 164(f). 

13 ‘‘(2) SPECIAL RULES.—For purposes of para14 graph (1)— 

15 ‘‘(A) no amount received as a pension or 

16 annuity shall be taken into account, 

17 ‘‘(B) no amount to which section 871(a) 

18 applies (relating to income of nonresident alien 

19 individuals not connected with United States 

20 business) shall be taken into account, 

21 ‘‘(C) no amount received for services pro22 vided by an individual while the individual is an 

23 inmate at a penal institution shall be taken into 

24 account, 


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•S 3005 IS

1 ‘‘(D) no amount described in paragraph 

2 (1) received for service performed in work ac3 tivities as defined in paragraph (4) or (7) of 

4 section 407(d) of the Social Security Act to 

5 which the taxpayer is assigned under any State 

6 program under part A of title IV of such Act 

7 shall be taken into account, but only to the ex8 tent such amount is subsidized under such 

9 State program, and 

10 ‘‘(E) a taxpayer may elect to treat 

11 amounts excluded from gross income by reason 

12 of section 112 as earned income. 

13 ‘‘(h) TAXABLE YEAR MUST BE FULL TAXABLE

14 YEAR.—Except in the case of a taxable year closed by rea15 son of the death of the eligible taxpayer, no credit shall 

16 be allowable under this section in the case of a taxable 

17 year covering a period of less than 12 months. 

18 ‘‘(i) COORDINATION WITH CERTAIN MEANS-TESTED

19 PROGRAMS.—For purposes of— 

20 ‘‘(1) the United States Housing Act of 1937, 

21 ‘‘(2) title V of the Housing Act of 1949, 

22 ‘‘(3) section 101 of the Housing and Urban De23 velopment Act of 1965, 

24 ‘‘(4) sections 221(d)(3), 235, and 236 of the 

25 National Housing Act, and 


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•S 3005 IS

1 ‘‘(5) the Food and Nutrition Act of 2008, 

2 any refund made to a taxpayer by reason of this section 

3 shall not be treated as income (and shall not be taken into 

4 account in determining resources for the month of its re5 ceipt and the following month). 

6 ‘‘(j) AMOUNT OF CREDIT TO BE DETERMINED

7 UNDER TABLES.—The amount of the credit allowed by 

8 this section shall be determined under tables prescribed 

9 by the Secretary. 

10 ‘‘(k) DENIAL OF CREDIT FOR INDIVIDUALS HAVING

11 EXCESSIVE INVESTMENT INCOME.— 

12 ‘‘(1) IN GENERAL.—No credit shall be allowed 

13 under subsection (a) for the taxable year if the ag14 gregate amount of disqualified income of the tax15 payer for the taxable year exceeds $5,000. 

16 ‘‘(2) DISQUALIFIED INCOME.—For purposes of 

17 paragraph (1), the term ‘disqualified income’ 

18 means— 

19 ‘‘(A) interest or dividends to the extent in20 cludible in income for the taxable year, 

21 ‘‘(B) interest received or accrued during 

22 the taxable year which is exempt from tax im23 posed by this chapter, 

24 ‘‘(C) the excess (if any) of— 


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•S 3005 IS

1 ‘‘(i) gross income from rents or royal2 ties not derived in the ordinary course of 

3 a trade or business, over 

4 ‘‘(ii) the sum of— 

5 ‘‘(I) the deductions (other than 

6 interest) which are clearly and directly 

7 allocable to such gross income, plus 

8 ‘‘(II) interest deductions properly 

9 allocable to such gross income, 

10 ‘‘(D) the capital gain net income (as de11 fined in section 1222) of the taxpayer for such 

12 taxable year, and 

13 ‘‘(E) the excess (if any) of— 

14 ‘‘(i) the aggregate income from all 

15 passive activities for the taxable year (de16 termined without regard to any amount in17 cluded in earned income under subsection 

18 (f) or described in a preceding subpara19 graph), over 

20 ‘‘(ii) the aggregate losses from all pas21 sive activities for the taxable year (as so 

22 determined). 

23 ‘‘(3) PASSIVE ACTIVITY.—For purposes of para24 graph (2)(E), the term ‘passive activity’ has the 

25 meaning given such term by section 469. 


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•S 3005 IS

1 ‘‘(l) INFLATION ADJUSTMENTS.— 

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

3 year beginning after 2015, each of the dollar 

4 amounts in subsections (b), (c), (d), and (j)(1) shall 

5 each be increased by an amount equal to— 

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

7 ‘‘(B) the cost-of-living adjustment deter8 mined under section 1(f)(3) for the calendar 

9 year in which the taxable year begins, deter10 mined by substituting ‘calendar year 2014’ for 

11 ‘calendar year 1992’ in subparagraph (B) 

12 thereof. 

13 ‘‘(2) ROUNDING.—If any dollar amount in sub14 sections (b), (c), (d), and (j)(1), after being in15 creased under paragraph (1), is not a multiple of 

16 $100, such dollar amount shall be rounded to the 

17 nearest multiple of $100. 

18 ‘‘(m) RESTRICTIONS ON TAXPAYERS WHO IMPROP19 ERLY CLAIMED CREDIT IN PRIOR YEAR.— 

20 ‘‘(1) TAXPAYERS MAKING PRIOR FRAUDULENT

21 OR RECKLESS CLAIMS.— 

22 ‘‘(A) IN GENERAL.—No credit shall be al23 lowed under this section for any taxable year in 

24 the disallowance period. 


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1 ‘‘(B) DISALLOWANCE PERIOD.—For pur2 poses of subparagraph (A), the disallowance pe3 riod is— 

4 ‘‘(i) the period of 10 taxable years 

5 after the most recent taxable year for 

6 which there was a final determination that 

7 the taxpayer’s claim of credit under this 

8 section was due to fraud, and 

9 ‘‘(ii) the period of 2 taxable years 

10 after the most recent taxable year for 

11 which there was a final determination that 

12 the taxpayer’s claim of credit under this 

13 section was due to reckless or intentional 

14 disregard of rules and regulations (but not 

15 due to fraud). 

16 ‘‘(2) TAXPAYERS MAKING IMPROPER PRIOR

17 CLAIMS.—In the case of a taxpayer who is denied 

18 credit under this section for any taxable year as a 

19 result of the deficiency procedures under subchapter 

20 B of chapter 63, no credit shall be allowed under 

21 this section for any subsequent taxable year unless 

22 the taxpayer provides such information as the Sec23 retary may require to demonstrate eligibility for 

24 such credit.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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•S 3005 IS

1 (1) Section 86(f)(2) is amended by striking 

2 ‘‘section 32(c)(2)’’ and inserting ‘‘section 32(g)’’. 

3 (2) Section 129(e)(2) is amended by striking 

4 ‘‘section 32(c)(2)’’ and inserting ‘‘section 32(g)’’. 

5 (3) Section 6213(g)(2) is amended— 

6 (A) in subparagraph (G), by striking ‘‘sec7 tion 32(c)(2)(A)’’ and inserting ‘‘section 

8 32(g)(1)’’, and 

9 (B) in subparagraph (K), by striking ‘‘sec10 tion 32(k)(2)’’ and inserting ‘‘section 

11 32(m)(2)’’. 

12 (4) Paragraph (2) of section 1324(b) of title 

13 31, United States Code, is amended by inserting 

14 ‘‘32,’’ after ‘‘25A,’’. 

15 (5) The table of sections for subpart C of part 

16 IV of subchapter A of chapter 1 of subtitle A is 

17 amended by striking the item relating to section 32 

18 and inserting the following: 

‘‘Sec. 32. Progressive tax rebate.’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2015. 

22 SEC. 207. TECHNICAL AND CONFORMING AMENDMENTS. 

23 The Secretary of the Treasury or the Secretary’s del24 egate shall, not later than 90 days after the date of the 

25 enactment of this Act, submit to the Committee on Ways 


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•S 3005 IS

1 and Means of the House of Representatives and the Com2 mittee on Finance of the Senate a draft of any technical 

3 and conforming changes in the Internal Revenue Code of 

4 1986 which are necessary to reflect throughout such Code 

5 the purposes of the provisions of, and amendments made 

6 by, this title. 

7 Subtitle B—Corporate Tax Reforms 

8 SEC. 211. CORPORATE INCOME TAX RATE REDUCTION. 

9 (a) IN GENERAL.—Subsection (b) of section 11 is 

10 amended to read as follows: 

11 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im12 posed by subsection (a) shall be an amount equal to 17 

13 percent of the taxable income.’’. 

14 (b) CONFORMING AMENDMENT.—Section 1551 is 

15 amended— 

16 (1) by striking ‘‘BENEFITS OF THE GRAD17 UATED CORPORATE RATES AND’’ in the heading, 

18 (2) by striking ‘‘the benefits of the rates con19 tained in section 11(b) which are lower than the 

20 highest rate specified in such section, or’’ in sub21 section (a), and 

22 (3) by striking ‘‘such benefits or credit’’ in sub23 section (a) and inserting ‘‘such credit’’. 


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•S 3005 IS

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2015. 

4 TITLE III—REFUND OF EXCESS 

5 CONSUMPTION TAX REVENUE 

6 SEC. 301. REFUNDS OF EXCESS CONSUMPTION TAX REV7 ENUE. 

8 (a) IN GENERAL.—Subchapter B of chapter 65 is 

9 amended by adding at the end the following new section: 

10 ‘‘SEC. 6433. REFUNDS OF EXCESS CONSUMPTION TAX REV11 ENUE. 

12 ‘‘(a) IN GENERAL.—In the case of any qualifying ex13 cess consumption tax revenue year, the Secretary shall pay 

14 to each eligible filer an amount equal to the consumption 

15 tax refund amount. 

16 ‘‘(b) QUALIFYING EXCESS CONSUMPTION TAX REV17 ENUE YEAR.—For purposes of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘qualifying excess 

19 consumption tax revenue year’ means any calendar 

20 year for which the net consumption tax revenues ex21 ceed 10 percent of gross domestic product for such 

22 year. 

23 ‘‘(2) NET CONSUMPTION TAX REVENUES.—The 

24 net consumption tax revenues for any calendar year 

25 shall be the excess of— 


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•S 3005 IS

1 ‘‘(A) the tax imposed under section 3901 

2 with respect to taxable supplies the tax point 

3 for which is during such calendar year, over 

4 ‘‘(B) the credits allowed under section 

5 3916 for such calendar year. 

6 ‘‘(3) GROSS DOMESTIC PRODUCT.—The gross 

7 domestic product for any calendar year shall be the 

8 last estimate of the gross domestic product for such 

9 calendar year by the Department of Commerce 

10 which is published before the date that is 3 months 

11 after the close of such calendar year. 

12 ‘‘(c) ELIGIBLE FILER.—For purposes of this sec13 tion— 

14 ‘‘(1) DEFINITION.— 

15 ‘‘(A) IN GENERAL.—The term ‘eligible 

16 filer’ means, with respect to any qualifying ex17 cess consumption tax revenue year, any indi18 vidual (other than an individual described in 

19 paragraph (2)) who filed a return of income tax 

20 for the individual’s qualifying rebate taxable 

21 year. 

22 ‘‘(B) EXCLUSION.—The term ‘eligible filer’ 

23 shall not include— 

24 ‘‘(i) any nonresident alien individual, 


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1 ‘‘(ii) any individual who is a depend2 ent (as defined in section 152) of another 

3 taxpayer for the individual’s qualifying re4 bate taxable year, or 

5 ‘‘(iii) an estate or trust. 

6 ‘‘(2) QUALIFYING REBATE TAXABLE YEAR.— 

7 The term ‘qualifying rebate taxable year’ means, 

8 with respect to any individual in connection with a 

9 qualifying excess consumption tax revenue year, the 

10 taxable year of such individual which contains 6 or 

11 more months of such qualifying excess consumption 

12 tax revenue year. 

13 ‘‘(3) IDENTIFICATION REQUIREMENT.— 

14 ‘‘(A) IN GENERAL.—An individual shall 

15 not be treated as an eligible filer for any year 

16 unless such individual includes on the return of 

17 tax for such year— 

18 ‘‘(i) such individual’s valid identifica19 tion number, 

20 ‘‘(ii) in the case of a joint return, the 

21 valid identification number of such individ22 ual’s spouse, and 

23 ‘‘(iii) the valid identification number 

24 of any qualifying child (as defined in sec25 tion 32(f)) claimed on such return. 


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1 ‘‘(B) VALID IDENTIFICATION NUMBER.— 

2 For purposes of subparagraph (A), the term 

3 ‘valid identification number’ means a social se4 curity number issued to an individual by the 

5 Social Security Administration. Such term shall 

6 not include a TIN issued by the Internal Rev7 enue Service. 

8 ‘‘(C) SPECIAL RULE FOR MEMBERS OF

9 THE ARMED FORCES.—Subparagraph (A) shall 

10 not apply to a joint return where at least 1 

11 spouse was a member of the Armed Forces of 

12 the United States at any time during the tax13 able year. 

14 ‘‘(d) CONSUMPTION TAX REFUND AMOUNT.— 

15 ‘‘(1) IN GENERAL.—The consumption tax re16 fund amount for any eligible filer for any qualifying 

17 excess consumption tax year shall be the product 

18 of— 

19 ‘‘(A) the applicable amount, times 

20 ‘‘(B) the applicable shares of the eligible 

21 filer. 

22 ‘‘(2) APPLICABLE AMOUNT.—The applicable 

23 amount for any qualifying excess revenue consump24 tion tax year is an amount equal to— 


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1 ‘‘(A) the excess described in subsection 

2 (b)(1), divided by 

3 ‘‘(B) the total number of applicable shares 

4 of all eligible filers for such year. 

5 ‘‘(3) APPLICABLE SHARE.—The number of ap6 plicable shares for any eligible filer shall be the sum 

7 of— 

8 ‘‘(A) 1 (2 in the case of a joint return), 

9 plus 

‘‘(B) 1 10 ⁄2 of the number of qualifying chil11 dren (as defined in section 32(f)) claimed on 

12 the eligible filer’s return for the filer’s quali13 fying rebate taxable year. 

14 ‘‘(e) TIME FOR PAYMENT.—Payments under sub15 section (a) shall be made as soon as practical after the 

16 Secretary has determined the consumption tax refund 

17 amount.’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) Section 1324(b)(2) of title 31, United 

20 States Code, is amended by striking ‘‘or 6431’’ and 

21 inserting ‘‘6431, or 6433’’. 

22 (2) The table of sections for subchapter B of 

23 chapter 65 is amended by adding at the end the fol24 lowing new item: 

‘‘Sec. 6433. Refunds of excess consumption tax revenue.’’. 


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

2 this section shall apply to calendar years beginning after 

3 the date of the enactment of this Act. 

Æ 


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