II 

114TH CONGRESS 

2D SESSION S. 3529 

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 8, 2016 

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 2016’’. 

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 03:29 Dec 13, 2016 Jkt 069200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3529.IS S3529

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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, 


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1 ‘‘(D) any nonparticipating small supplier 

2 supply, and 

3 ‘‘(E) any taxable supply (or category of 

4 such supplies) treated as an exempt supply 

5 under section 3932(b). 

6 ‘‘(2) QUALIFIED RESIDENTIAL REAL PROP7 ERTY.—For purposes of paragraph (1), the term 

8 ‘qualified residential real property’ means residential 

9 real property— 

10 ‘‘(A) which— 

11 ‘‘(i) has previously been sold as resi12 dential real property, or 

13 ‘‘(ii) has been continuously rented for 

14 5 years or more, and 

15 ‘‘(B) to which substantial renovations have 

16 not been made after the date of the enactment 

17 of this chapter. 

18 ‘‘(3) NONPARTICIPATING SMALL SUPPLIER SUP19 PLY.— 

20 ‘‘(A) IN GENERAL.—For purposes of para21 graph (1), the term ‘nonparticipating small sup22 plier supply’ means any supply provided by a 

23 supplier during— 


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1 ‘‘(i) any taxable period during which 

2 such supplier was a nonparticipating small 

3 supplier, or 

4 ‘‘(ii) the four-week period beginning 

5 on the first day after the close of the last 

6 calendar quarter in which such supplier 

7 was a nonparticipating small supplier. 

8 ‘‘(B) NONPARTICIPATING SMALL SUP9 PLIER.— 

10 ‘‘(i) IN GENERAL.—For purposes of 

11 subparagraph (A), the term ‘nonpartici12 pating small supplier’ means any person 

13 for any taxable period if— 

14 ‘‘(I) such person has aggregate 

15 taxable revenues of not more than 

16 $100,000 for the four-calendar quar17 ter period ending immediately before 

18 the taxable period, and 

19 ‘‘(II) has not made an election 

20 under clause (iii) for such taxable pe21 riod. 

22 ‘‘(ii) TAXABLE REVENUE.—For pur23 poses of this paragraph, the term ‘taxable 

24 revenue’ means revenue from supplies 


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1 which are taxable supplies, determined 

2 without regard to paragraph (1)(D). 

3 ‘‘(iii) ELECTION.—Under regulations 

4 prescribed by the Secretary, any person 

5 who meets the requirements of clause (i)(I) 

6 may make an election not to be treated as 

7 a nonparticipating small supplier for any 

8 taxable period. 

9 ‘‘(C) AGGREGATION RULES.—For purposes 

10 of determining aggregate taxable revenues 

11 under subparagraph (B)(i)(I), all members of 

12 the same controlled group of corporations (with13 in the meaning of section 267(f)) and all per14 sons under common control (within the mean15 ing of section 52(b) but determined by treating 

16 an interest of more than 50 percent as a con17 trolling interest) shall be treated as 1 person. 

18 ‘‘Subchapter C—Credit Against Tax 

‘‘Sec. 3916. Credit against tax. 

19 ‘‘SEC. 3916. CREDIT AGAINST TAX. 

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

21 credit against the aggregate amount of tax imposed by 

22 section 3901 with respect to all taxable supplies made by 

23 the taxpayer during the taxable period an amount equal 

24 to the aggregate amount of tax imposed by section 3901 


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1 on creditable acquisitions of the taxpayer during such tax2 able period. 

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

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

5 acquisition or receipt of any supply which— 

6 ‘‘(1) was subject to tax under section 3901 at 

7 the time it was provided to the taxpayer, 

8 ‘‘(2) was used by the taxpayer— 

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

10 or business, 

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

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

13 of the activities related to the purpose or func14 tion constituting the basis of the exemption 

15 under section 501, or 

16 ‘‘(C) in the case of a State, an Indian trib17 al government, a possession of the United 

18 States, or any political subdivision of any of the 

19 foregoing, or the United States or the District 

20 of Columbia, in carrying out any activity that 

21 is not an essential governmental function, and 

22 ‘‘(3) except as provided in subsection (c), was 

23 not used by the taxpayer to make an exempt supply. 

24 ‘‘(c) CERTAIN ACQUISITIONS RELATED TO FINAN25 CIAL SUPPLIES.— 


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1 ‘‘(1) ACQUISITIONS BY QUALIFIED SMALL FI2 NANCIAL SUPPLIERS.— 

3 ‘‘(A) IN GENERAL.—Solely for purposes of 

4 subsections (b)(3) and (d)(1), a financial supply 

5 which is provided by a qualified small financial 

6 supplier shall not be treated as an exempt sup7 ply. 

8 ‘‘(B) QUALIFIED SMALL FINANCIAL SUP9 PLIER.— 

10 ‘‘(i) IN GENERAL.—For purposes of 

11 this paragraph, the term ‘qualified small 

12 financial supplier’ means any person for 

13 any month if, for the 12-month period end14 ing with the month preceding such month, 

15 the amount of credits which, but for this 

16 paragraph, would be allowable to such per17 son under subsection (a) for taxable sup18 plies which are used for the purpose of 

19 making financial supplies does not exceed 

20 the lesser of— 

21 ‘‘(I) $150,000, or 

22 ‘‘(II) 10 percent of the amount of 

23 credits allowable to such person under 

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1 gard to this paragraph) for all taxable 

2 supplies during such 12-month period. 

3 ‘‘(ii) AGGREGATION RULES.—For pur4 poses of determining the amount of credits 

5 for any period under clause (i), all mem6 bers of the same controlled group of cor7 porations (within the meaning of section 

8 267(f)) and all persons under common con9 trol (within the meaning of section 52(b) 

10 but determined by treating an interest of 

11 more than 50 percent as a controlling in12 terest) shall be treated as 1 person. 

13 ‘‘(2) PARTIALLY CREDITABLE ACQUISITIONS.— 

14 ‘‘(A) IN GENERAL.—In the case of any 

15 partially creditable acquisition by a person 

16 other than a qualified small financial supplier— 

17 ‘‘(i) subsection (b) shall be applied 

18 without regard to paragraph (3) thereof, 

19 and 

20 ‘‘(ii) only 60 percent of the amount of 

21 tax imposed by section 3901 shall be taken 

22 account under subsection (a) in deter23 mining the amount of the credit under this 

24 section. 


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1 ‘‘(B) PARTIALLY CREDITABLE ACQUISI2 TION.—For purposes of this section— 

3 ‘‘(i) IN GENERAL.—The term ‘par4 tially creditable acquisition’ means the ac5 quisition of any supply described in clause 

6 (ii) if such acquisition is used to provide a 

7 financial supply. 

8 ‘‘(ii) SUPPLIES DESCRIBED.—A sup9 ply is described in this clause if such sup10 ply is a supply of— 

11 ‘‘(I) banking or cash manage12 ment services, including services re13 lated to issuing, closing, operating, 

14 and maintaining accounts, and the 

15 processing of account information and 

16 applications, 

17 ‘‘(II) payment and fund transfer 

18 services, including for the operation of 

19 a payment system and processing ac20 count transactions, 

21 ‘‘(III) securities transaction serv22 ices for the provision, acquisition, or 

23 disposal of an interest in a security, 

24 ‘‘(IV) loan and debt collection 

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1 age services, services related to mort2 gage insurance and loan protection in3 surance, and loan application, man4 agement, and processing services, 

5 ‘‘(V) capital markets, financial 

6 instruments, or fund management 

7 services, 

8 ‘‘(VI) insurance services, includ9 ing brokerage services, or 

10 ‘‘(VII) such other services as the 

11 Secretary may specify in regulations. 

12 ‘‘(d) EXEMPT SUPPLIES, ETC.— 

13 ‘‘(1) IN GENERAL.—If acquisitions (other than 

14 partially creditable acquisitions) are used partly for 

15 a use which is not for an exempt supply and partly 

16 for an exempt supply, the credit shall be allowable 

17 only with respect to the acquisitions which are not 

18 used for an exempt supply. 

19 ‘‘(2) PARTIALLY CREDITABLE ACQUISITIONS.— 

20 If partially creditable acquisition is used partly to 

21 provide a supply described in subsection (c)(2)(B)(ii) 

22 and partly for another use, subsection (c)(2) shall 

23 apply only with respect to acquisitions used to pro24 vide supplies described in subsection (c)(2)(B)(ii). 

25 ‘‘(e) EXCESS CREDIT TREATED AS OVERPAYMENT.— 


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

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

3 exceeds the aggregate amount of the tax imposed by 

4 section 3901 for such period, such excess shall be 

5 treated as an overpayment of the tax imposed by 

6 section 3901. 

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

8 overpayment under paragraph (1) for any taxable 

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

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

11 period, or 

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

13 ‘‘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. 

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

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

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

17 tax imposed by section 3901. 

18 ‘‘(b) SPECIAL RULE FOR IMPORTS.—The person re19 ceiving the supply shall be liable for the tax imposed under 

20 section 3901— 

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

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


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

2 not a supply of tangible property and which is— 

3 ‘‘(A) performed or otherwise done outside 

4 the United States, 

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

6 ‘‘(C) acquired for use— 

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

8 in the United States, 

9 ‘‘(ii) by an organization exempt from 

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

11 activities related to the purpose or function 

12 constituting the basis of its exemption 

13 under section 501, or 

14 ‘‘(iii) by a State, an Indian tribal gov15 ernment, a possession of the United 

16 States, or any political subdivision of any 

17 of the foregoing, or the United States or 

18 the District of Columbia, in carrying out 

19 any activity that is not an essential govern20 mental function. 

21 ‘‘SEC. 3922. TAX INVOICES. 

22 ‘‘(a) IN GENERAL.— 

23 ‘‘(1) SUPPLIES MADE IN CONNECTION WITH

24 THE UNITED STATES.—Except as otherwise provided 

25 in this subsection, any person providing a taxable 


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1 supply shall give the recipient a tax invoice with re2 spect to such supply. 

3 ‘‘(2) CERTAIN SERVICES PERFORMED OUTSIDE

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

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

6 (1) shall not apply and the person receiving the tax7 able supply shall generate a tax invoice with respect 

8 to such supply. 

9 ‘‘(3) IMPORTS.—In the case of any taxable sup10 ply described in section 3911(a), the Secretary, in 

11 consultation with the Commissioner of Customs and 

12 Border Protection, shall promulgate regulations gov13 erning the provision of tax invoices. 

14 ‘‘(b) CONTENT OF INVOICE.—The tax invoice re15 quired by subsection (a) with respect to any supply shall 

16 set forth— 

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

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

19 provider, 

20 ‘‘(2) the name of the recipient, 

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

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

23 taxable supply, 

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

25 3901, and 


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1 ‘‘(6) such other information as may be pre2 scribed by regulations. 

3 ‘‘(c) NO CREDIT WITHOUT INVOICE.— 

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graph (2) or (3), a taxpayer may claim a credit with 

6 respect to a creditable acquisition only if the tax7 payer— 

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

9 invoice which meets the requirements of this 

10 section, and 

11 ‘‘(B) is named as the recipient of the sup12 ply in such invoice. 

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

14 INVOICES.—To the extent provided in regulations, 

15 the naming of an employee or other agent of the re16 cipient of the supply shall be treated as the naming 

17 of the recipient. 

18 ‘‘(3) WAIVER OF INVOICE REQUIREMENT IN

19 CERTAIN CASES.—To the extent provided in regula20 tions, paragraph (1) shall not apply— 

21 ‘‘(A) where the taxpayer can demonstrate 

22 that the failure to receive or to have in the tax23 payer’s possession a tax invoice was without 

24 fault on the taxpayer’s part, or 


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

2 supplies) where— 

3 ‘‘(i) the amount involved is de mini4 mis, or 

5 ‘‘(ii) the information required by sub6 section (b) can be reliably established by 

7 sampling or by another method and can be 

8 adequately documented. 

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

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

11 any supply shall be furnished not later than 15 business 

12 days after the tax point for such supply. 

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

14 CREDIT; DEPOSITS OF TAX. 

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

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

17 which subsection (c)(2) applies) after the close of each tax18 able period, each person liable for tax under this chapter 

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

20 taxable supplies having a tax point within such taxable 

21 period. 

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

23 WHICH RECIPIENT RECEIVES INVOICE.— 

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graph (2), a credit allowable by section 3916 with 


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

2 taxable period by the close of which the taxpayer— 

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

4 allocable to the tax imposed by section 3901 

5 with respect to such supply, and 

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

7 respect to such supply. 

8 ‘‘(2) USE FOR LATER PERIOD.—Under regula9 tions, a credit allowable by section 3916 may be al10 lowed for a period after the period set forth in para11 graph (1). 

12 ‘‘(c) TAXABLE PERIOD.—For purposes of this chap13 ter— 

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graph (2), the term ‘taxable period’ means a cal16 endar quarter. 

17 ‘‘(2) MONTHLY PERIOD FOR CERTAIN TAX18 PAYERS.— 

19 ‘‘(A) IN GENERAL.—In the case of a tax20 payer who makes taxable supplies for any 

21 month in excess of $20,000,000, the term ‘tax22 able period’ means a calendar month. 

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

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

25 means a calendar month. 


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

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

3 PROVIDER GOVERN.—Except as provided in para4 graph (2), the tax point for any supply is the earlier 

5 of— 

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

7 from the provision of the supply should be 

8 treated by the provider as received or accrued 

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

10 seller) for purposes of chapter 1, or 

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

12 receives payment for the sale. 

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

14 property, the tax point is when the property is en15 tered, or withdrawn from warehouse, for consump16 tion in the United States. 

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

18 provided in regulations, monthly deposits may be required 

19 of the estimated liability for any taxable period for the 

20 tax imposed by section 3901. 

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

22 ‘‘For purposes of this chapter, except as provided in 

23 sections 3913(b)(3)(C) and 3916(c)(1)(B)(ii) and in regu24 lations established by the Secretary, the taxpayer may 

25 elect— 


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

2 which may be treated under section 52(b) as 1 em3 ployer, and 

4 ‘‘(2) to treat as separate persons separate divi5 sions of the same business. 

6 ‘‘SEC. 3925. REPORTS. 

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

8 reports on the implementation and administration of this 

9 chapter, including the amount of revenue collected from 

10 the tax imposed under this chapter and estimates of the 

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

12 ‘‘SEC. 3926. REGULATIONS. 

13 ‘‘The Secretary shall prescribe such regulations as 

14 may be necessary to carry out the purposes of this chap15 ter. 

16 ‘‘Subchapter E—Definitions and Special 

17 Rules 

‘‘Sec. 3931. Definitions. 

‘‘Sec. 3932. Special rules. 

18 ‘‘SEC. 3931. DEFINITIONS. 

19 ‘‘For purposes of this chapter— 

20 ‘‘(1) BUSINESS.—The term ‘business’ in21 cludes— 

22 ‘‘(A) a trade, and 

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

24 profit. 


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

2 means any day other than Saturday and Sunday and 

3 other than a legal holiday (within the meaning of 

4 section 7503). 

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

6 meaning such term has for purposes of chapter 24. 

7 ‘‘(4) FINANCIAL SUPPLIES.—The term ‘finan8 cial supplies’ means the provision, acquisition, or 

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

10 debit or credit arrangement, a mortgage, a super11 annuation fund, an annuity, insurance, a financial 

12 guarantee, an indemnity, currency, securities, or de13 rivatives. 

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

15 governmental entity. 

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

17 when used in reference to taxable supplies (other 

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

19 of property and the term ‘provider’ includes the im20 porter of property. 

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

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

23 a Commonwealth and any possession of the United 

24 States. 


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1 ‘‘SEC. 3932. SPECIAL RULES. 

2 ‘‘(a) COORDINATION WITH SUBTITLE A.—For pur3 poses of subtitle A— 

4 ‘‘(1) TREATMENT OF CREDIT.—Any credit al5 lowable to a taxpayer under section 3916 which is 

6 attributable to any supply shall be treated as a re7 duction in the amount paid or incurred by the tax8 payer for such supply. 

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

10 amount allowable as a deduction for the tax imposed 

11 by section 3901 shall be determined without regard 

12 to any credit allowable under section 3916. 

13 ‘‘(3) COMPUTATION OF PERCENTAGE DEPLE14 TION.—For purposes of sections 613 and 613A— 

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

16 amount of the tax imposed by section 3901, 

17 and 

18 ‘‘(B) taxable income shall be determined 

19 without regard to any deduction allowed for 

20 such tax. 

21 ‘‘(b) AUTHORITY TO ZERO RATE DE MINIMIS SUP22 PLIES, ETC.—The Secretary may prescribe regulations 

23 treating as an exempt supply any taxable supply (or cat24 egory of such supplies) where— 

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


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

2 not sufficient to justify the administrative and other 

3 costs involved in the payment and collection of the 

4 tax.’’. 

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

6 for subtitle D is amended by inserting before the item re7 lating to chapter 31 the following: 

‘‘CHAPTER 30. PROGRESSIVE CONSUMPTION TAX’’. 

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

9 this section shall apply to supplies provided after Decem10 ber 31, 2017. 

11 TITLE II—INDIVIDUAL AND 

12 CORPORATE TAX REFORM 

13 Subtitle A—Individual Income Tax 

14 Reforms 

15 SEC. 201. INDIVIDUAL INCOME TAX RATE REDUCTIONS. 

16 (a) IN GENERAL.— 

17 (1) MARRIED INDIVIDUALS FILING JOINT RE18 TURNS AND SURVIVING SPOUSES.—Subsection (a) of 

19 section 1 is amended by striking the table and in20 serting the following: 

‘‘If taxable income is: The tax is: 

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

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.’’. 


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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.— 

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

14 1(f) is amended by inserting ‘‘, except as provided 

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


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1 (2) UPDATED COST-OF-LIVING ADJUSTMENT

2 FOR NEW RATES.—Section 1(f) is amended by strik3 ing paragraphs (7) and (8) and inserting the fol4 lowing: 

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

6 AFTER 2017.— 

7 ‘‘(A) CALENDAR YEAR 2018.—In pre8 scribing the tables under paragraph (1) which 

9 apply in lieu of the tables contained in sub10 sections (a), (b), (c), and (d) with respect to 

11 taxable years beginning in calendar year 2018, 

12 the Secretary shall make no adjustment to the 

13 dollar amounts in any such table. 

14 ‘‘(B) LATER CALENDAR YEARS.—In pre15 scribing tables under paragraph (1) which apply 

16 in lieu of the tables contained in subsections 

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

18 years beginning after December 31, 2018, the 

19 cost-of-living adjustment used in making ad20 justments to the dollar amounts in such tables 

21 shall be determined under paragraph (3) by 

22 substituting ‘2017’ for ‘1992’.’’. 

23 (3) CONFORMING AMENDMENTS.— 

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

25 amended— 


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

2 subparagraph (A) and inserting ‘‘para3 graph (7)(A)’’, and 

4 (ii) by striking ‘‘by adjusting’’ in sub5 paragraph (C) and inserting ‘‘except as 

6 provided in paragraph (7)(A), by adjust7 ing’’. 

8 (B) The heading of subsection (f) of sec9 tion 1 is amended by striking ‘‘PHASEOUT OF

10 MARRIAGE PENALTY IN 15-PERCENT BRACK11 ET; ADJUSTMENTS’’ and inserting ‘‘ADJUST12 MENTS’’. 

13 (c) CONFORMING AMENDMENT RELATING TO

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

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

16 this section shall apply to taxable years beginning after 

17 December 31, 2017. 

18 SEC. 202. FAMILY ALLOWANCE AMOUNTS. 

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

20 follows: 

21 ‘‘SEC. 63. TAXABLE INCOME DEFINED. 

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

23 term ‘taxable income’ means adjusted gross income 

24 minus— 


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

2 (other than those taken into account in determining 

3 adjusted gross income), and 

4 ‘‘(2) the family allowance amount. 

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

6 subtitle— 

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

8 amount with respect to a taxpayer shall be deter9 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. 

10 ‘‘(2) DEFINITIONS.—For purposes of this sub11 section— 

12 ‘‘(A) the term ‘single or married filing sep13 arately’ means a taxpayer to whom subsection 

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

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

16 surviving spouse’ means a taxpayer to whom 

17 subsection (a) of section 1 applies, and 

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

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

20 applies. 

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

22 case of any taxable year beginning after 2018, each 


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1 of the dollar amounts in the table under paragraph 

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

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

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3) for the calendar 

6 year in which the taxable year begins, by sub7 stituting ‘calendar year 2017’ for ‘calendar year 

8 1992’ in subparagraph (B) thereof. 

9 ‘‘(c) CROSS REFERENCES.— 

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

11 lieu of the family allowance amount, see section 

12 642(b). 

13 ‘‘(2) For calculation of family allowance relat14 ing to nonresident aliens, see section 873(b)(3). 

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

16 section 7703.’’. 

17 (b) TERMINATION OF PERSONAL EXEMPTIONS.— 

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

19 151 is amended by inserting ‘‘, for a taxable year 

20 beginning before January 1, 2018’’ after ‘‘In the 

21 case of an individual’’. 

22 (2) IDENTIFYING INFORMATION REQUIRED TO

23 TREAT INDIVIDUAL AS DEPENDENT.—Section 152 is 

24 amended by adding at the end the following new 

25 subsection: 


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

2 individual shall be treated as a dependent of the taxpayer 

3 under this section for a taxable year unless the taxpayer 

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

5 for the taxable year.’’. 

6 (3) CONFORMING AMENDMENTS.— 

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

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

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

10 section 152) who (within the meaning of section 

11 152, determined without regard to subsections 

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

13 stepson, daughter, or stepdaughter of the tax14 payer.’’. 

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

16 striking ‘‘if the taxpayer is entitled to a deduc17 tion for the taxable year for such person under 

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

19 of section 152’’. 

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

21 striking ‘‘if the taxpayer is entitled to a deduc22 tion for the taxable year for such father or 

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

24 such father or mother is a dependent of the 


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1 taxpayer for the taxable year, within the mean2 ing of section 152’’. 

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

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

5 deduction under section 151 for the tax6 able year with respect to a dependent’’ in 

7 clause (ii)(I)(aa) and inserting ‘‘with re8 spect to whom no dependents are taken 

9 into account under section 152 for pur10 poses of any provision of this title for the 

11 taxable year’’, and 

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

13 allowed under section 151 for the taxable 

14 year with respect to a dependent other 

15 than either spouse’’ and inserting ‘‘unless 

16 a dependent other than either spouse is 

17 taken into account under section 152 for 

18 purposes of any provision of this title for 

19 the taxable year’’. 

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

21 striking ‘‘with respect to whom a deduction 

22 under section 151 is allowable to another tax23 payer’’ and inserting ‘‘who is taken into ac24 count as a dependent by another taxpayer 


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1 under section 152 for purposes of any provision 

2 of this title’’. 

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

4 striking ‘‘for whom the taxpayer is allowed a 

5 deduction under section 151 (relating to allow6 ance of deduction for personal exemptions)’’ 

7 and inserting ‘‘who is a dependent of the tax8 payer under section 152’’. 

9 (G) Section 36B(e)(1) is amended by strik10 ing ‘‘for whom a taxpayer is allowed a deduc11 tion under section 151 (relating to allowance of 

12 deduction for personal exemptions)’’ and insert13 ing ‘‘who is a dependent of the taxpayer under 

14 section 152’’. 

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

16 striking ‘‘the exemption amount (as defined in 

17 section 151(d))’’ and inserting ‘‘the family al18 lowance amount applicable to taxpayers who are 

19 single or married filing separately under section 

20 63(b)’’. 

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

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

23 and inserting ‘‘the family allowance amount 

24 under section 63(b)’’. 


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

2 is amended by striking section 153. 

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

4 subchapter B of chapter 1 is amended by strik5 ing the item relating to section 153. 

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

7 as follows: 

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

9 income under section 63 shall be determined without 

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

11 the family allowance amount. No deduction in lieu of 

12 the exclusion of such family allowance amount shall 

13 be allowed.’’. 

14 (M) Section 220(b)(6) is amended by strik15 ing ‘‘with respect to whom a deduction under 

16 section 151 is allowable to another taxpayer’’ 

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

18 dependent by another taxpayer under section 

19 152 for purposes of any provision of this title’’. 

20 (N) Section 223(b)(6) is amended by strik21 ing ‘‘with respect to whom a deduction under 

22 section 151 is allowable to another taxpayer’’ 

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

24 dependent by another taxpayer under section 

25 152 for purposes of any provision of this title’’. 


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

2 ‘‘the exemptions allowed as a deduction under 

3 section 151 (and any deduction in lieu thereof) 

4 shall be reduced to amounts which bear the 

5 same ratio to the full exemptions’’ and inserting 

6 ‘‘the family allowance amount under section 63 

7 (and any deduction in lieu thereof) shall be re8 duced to an amount which bears the same ratio 

9 to the full family allowance amount’’. 

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

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

12 ‘‘151(d) (as in effect for taxable years be13 ginning before January 1, 2018)’’, and 

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

15 subclause (I) and inserting 

16 ‘‘151(d)(3)(C)(iii) (as so in effect)’’. 

17 (Q) Section 642(b)(3) is amended by strik18 ing ‘‘the deductions allowed under section 151 

19 (relating to deduction for personal exemption)’’ 

20 and inserting ‘‘the family allowance amount 

21 under section 63’’. 

22 (R) Section 703(a) is amended— 

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

24 paragraph (1), 


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1 (ii) by striking subparagraph (A) of 

2 paragraph (2) and by redesignating sub3 paragraphs (B), (C), (D), (E), and (F) of 

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

5 (C), (D), and (E), 

6 (iii) by striking the period at the end 

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

8 and 

9 (iv) by adding at the end the following 

10 new paragraph: 

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

12 determined without regard to paragraph (2) of sec13 tion 63(a), relating to the family allowance 

14 amount.’’. 

15 (S) Section 873(b) is amended— 

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

17 matter preceding paragraph (1), and 

18 (ii) by striking paragraph (3) and in19 serting the following: 

20 ‘‘(3) FAMILY ALLOWANCE AMOUNT.—The ex21 clusion of the family allowance amount under section 

22 63(a)(2), except that the taxpayer shall be treated 

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

24 filing separately unless the taxpayer is a resident of 


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1 a contiguous country or is a national of the United 

2 States.’’. 

3 (T) The heading of section 873 is amended 

4 by striking ‘‘DEDUCTIONS’’ and inserting 

5 ‘‘DEDUCTIONS AND ALLOWANCES’’. 

6 (U) The item relating to section 873 in the 

7 table of sections for subpart A of part II of 

8 subchapter N of chapter 1 is amended to read 

9 as follows: 

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

10 (V) Section 874(b) is amended by striking 

11 ‘‘deduction for exemptions under section 151’’ 

12 and inserting ‘‘exclusion of the family allowance 

13 amount under section 63(a)(2)’’. 

14 (W) Section 891 is amended by striking 

15 ‘‘deductions allowable under section 151 and 

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

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

18 the deductions allowable under’’. 

19 (X) Section 904(b)(1) is amended to read 

20 as follows: 

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

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

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

24 computed without regard to the exclusion of the 


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

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

3 (Y) Section 931(b)(1) is amended by strik4 ing ‘‘deductions (other than the deduction 

5 under section 151, relating to personal exemp6 tions)’’ and inserting ‘‘deductions’’. 

7 (Z) Section 933 is amended— 

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

9 the deduction under section 151, relating 

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

11 and inserting ‘‘deductions’’, and 

12 (ii) by striking ‘‘deductions (other 

13 than the deduction for personal exemptions 

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

15 inserting ‘‘deductions’’. 

16 (AA) Section 1212(b)(2)(B)(ii) is amended 

17 to read as follows: 

18 ‘‘(ii) the family allowance amount for 

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

20 deduction allowed in lieu thereof.’’. 

21 (BB) Section 1402(a)(7) is amended to 

22 read as follows: 

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

24 determined without regard to paragraph (2) of secVerDate Sep 11 2014 03:29 Dec 13, 2016 Jkt 069200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S3529.IS S3529

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1 tion 63(a), relating to the family allowance 

2 amount;’’. 

3 (CC) Section 5000A(c)(4)(A) is amended 

4 by striking ‘‘for whom the taxpayer is allowed 

5 a deduction under section 151 (relating to al6 lowance of deduction for personal exemptions)’’ 

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

8 dependent by the taxpayer under section 152 

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

10 (DD) Section 6012(a)(1) is amended to 

11 read as follows: 

12 ‘‘(1)(A) Every individual— 

13 ‘‘(i) having for the taxable year gross in14 come which equals or exceeds the family allow15 ance amount applicable to the individual under 

16 section 63, or 

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

18 make a joint return (but only if the individual 

19 and the individual’s spouse had the same house20 hold as their home at the close of the taxable 

21 year), every individual whose gross income, 

22 when combined with the gross income of the in23 dividual’s spouse, equals or exceeds the family 

24 allowance amount applicable to taxpayers who 

25 are married filing jointly under section 63. 


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1 ‘‘(B) Every individual not described in subpara2 graph (A) who is taken into account as a dependent 

3 by another taxpayer under section 152 for purposes 

4 of any provision of this title, but only if such individ5 ual’s gross income, when combined with the gross in6 come of all individuals taken into account in deter7 mining the family allowance amount under section 

8 63(b) of the taxpayer, equals or exceeds the family 

9 allowance amount applicable to the taxpayer under 

10 such section.’’. 

11 (EE) Section 6012(a)(8) is amended by 

12 striking ‘‘is not less than the sum of the exemp13 tion amount plus the basic standard deduction 

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

15 ‘‘equals or exceeds the family allowance amount 

16 applicable to the estate under section 

17 1398(c)(3)’’. 

18 (FF) Section 6013(b)(3)(A) is amended by 

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

20 and all that follows and inserting ‘‘means the 

21 family allowance amount applicable to a tax22 payer who is single or married filing separately 

23 under section 63(b).’’. 

24 (GG) Section 6014(a) is amended by strik25 ing ‘‘who does not itemize his deductions and 


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1 who is not described in section 

2 6012(a)(1)(C)(i)’’ and inserting ‘‘who is not de3 scribed in section 6012(a)(1)(B)’’. 

4 (HH) Section 6103(l)(21)(A)(iii) is amend5 ed by striking ‘‘for whom a deduction is allowed 

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

7 into account as a dependent under section 152 

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

9 (II) Section 6334(d)(2)(A) is amended to 

10 read as follows: 

11 ‘‘(A) the family allowance amount deter12 mined under section 63(b) with respect to the 

13 taxpayer for the taxable year in which such levy 

14 occurs, divided by’’. 

15 (JJ) Section 7703(b)(1) is amended by 

16 striking ‘‘with respect to whom such individual 

17 is entitled to a deduction for the taxable year 

18 under section 151 (or would be so entitled but 

19 for section 152(e))’’ and inserting ‘‘who is a de20 pendent (within the meaning of section 152) of 

21 the individual for the taxable year’’. 

22 (4) AMENDMENTS RELATING TO PAYROLL

23 WITHHOLDING.— 

24 (A) IN GENERAL.—Paragraph (1) of sec25 tion 3402(f) is amended by striking subparaVerDate Sep 11 2014 03:29 Dec 13, 2016 Jkt 069200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\S3529.IS S3529

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1 graph (A) and all that follows and inserting the 

2 following: 

3 ‘‘(A) an exemption equal to the family al4 lowance exemption amount; and 

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

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

7 employee’s spouse does not have in effect a 

8 withholding exemption certificate claiming such 

9 allowance.’’. 

10 (B) FAMILY ALLOWANCE EXEMPTION

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

12 amended— 

13 (i) by redesignating paragraphs (2), 

14 (3), (4), (5), (6), and (7) as paragraphs 

15 (3), (4), (5), (6), (7), and (8), respectively, 

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

17 paragraph (3)(B)(iii) and inserting ‘‘para18 graph (3)(C)’’, and 

19 (iii) by inserting after paragraph (1) 

20 the following new paragraph: 

21 ‘‘(2) FAMILY ALLOWANCE EXEMPTION

22 AMOUNT.—For purposes of this section— 

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

24 subparagraphs (B) and (C), the term ‘family al25 lowance exemption amount’ means the family 


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1 allowance amount with respect to the taxpayer 

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

3 which the payroll period begins, prorated to the 

4 payroll period. 

5 ‘‘(B) MARRIED EMPLOYEES.—If the em6 ployee is married filing jointly and the employ7 ee’s spouse is an employee receiving wages, the 

8 employee and the employee’s spouse may divide 

9 the family allowance amount determined under 

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

11 for purposes of this paragraph, but the sum of 

12 the family allowance exemption amounts 

13 claimed by the employee and the employee’s 

14 spouse shall not exceed such family allowance 

15 amount. 

16 ‘‘(C) EMPLOYEES WITH MORE THAN 1 EM17 PLOYER.—In the case of an employee that has 

18 withholding exemption certificates in effect with 

19 respect to more than 1 employer, the employee 

20 may divide the family allowance amount (or the 

21 employee’s share of such amount after the ap22 plication of subparagraph (B), if applicable) de23 termined under section 63(b) among employers 

24 in the proportion of the employee’s choice for 

25 purposes of this paragraph, but the sum of the 


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1 family allowance exemption amounts claimed by 

2 the employee with respect to all employers shall 

3 not exceed such family allowance amount (or 

4 the employee’s share of such amount after the 

5 application of subparagraph (B), if applica6 ble).’’. 

7 (C) CONFORMING AMENDMENTS.— 

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

9 is amended by striking ‘‘the number of 

10 withholding exemptions claimed’’ and all 

11 that follows and inserting ‘‘the total 

12 amount of the withholding exemptions 

13 claimed.’’. 

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

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

16 this paragraph, is amended— 

17 (I) by striking ‘‘the number of 

18 withholding exemptions’’ and all that 

19 follows in subparagraph (A) and in20 serting ‘‘the total amount of the with21 holding exemptions which the em22 ployee claims, which shall in no event 

23 exceed the amount to which the em24 ployee is entitled.’’, 


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1 (II) by striking ‘‘the number of 

2 withholding exemptions’’ each place it 

3 appears in subparagraphs (B) and (C) 

4 and inserting ‘‘the total amount of the 

5 withholding exemptions’’, 

6 (III) by striking ‘‘the number to 

7 which he is entitled’’ each place it ap8 pears in subparagraph (B) and insert9 ing ‘‘the amount to which the em10 ployee is entitled’’, 

11 (IV) by striking ‘‘the number to 

12 which the employee is entitled’’ in 

13 subparagraph (C) and inserting ‘‘the 

14 amount to which the employee is enti15 tled’’, and 

16 (V) by striking ‘‘the number to 

17 which he will be, or reasonably may be 

18 expected to be, so entitled’’ in sub19 paragraph (C) and inserting ‘‘the 

20 amount to which the employee will be, 

21 or reasonably may be expected to be, 

22 so entitled’’. 

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

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

25 this paragraph, is amended by striking 


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1 ‘‘shall be entitled to only one withholding 

2 exemption’’ and inserting ‘‘shall be treated 

3 as single or married filing separately for 

4 purposes of determining the family allow5 ance exemption amount’’. 

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

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

8 this paragraph, is amended by inserting ‘‘, 

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

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

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

12 is amended by striking ‘‘deductions (in13 cluding the additional standard deduction 

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

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

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

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

18 that follows and inserting ‘‘the family al19 lowance amount determined under section 

20 63(b) for a taxpayer who is single or mar21 ried filing separately.’’. 

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

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

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

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


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1 (c) CONFORMING AMENDMENTS.— 

2 (1) Section 1(f)(6) is amended— 

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

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

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

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

7 (2) Section 1(g)(4) is amended— 

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

9 (A) and inserting the following: 

10 ‘‘(ii) the sum of— 

11 ‘‘(I) $500, plus 

12 ‘‘(II) the greater of the amount 

13 described in subclause (I) or the 

14 amount of the itemized deductions al15 lowed by this chapter which are di16 rectly connected with the production 

17 of the portion of adjusted gross in18 come referred to in clause (i).’’, and 

19 (B) by redesignating subparagraphs (B) 

20 and (C) as subparagraphs (C) and (D), respec21 tively, and inserting after subparagraph (A) the 

22 following new subparagraph: 

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

24 the case of any taxable year beginning in a cal25 endar year after 1988, the $500 amount in subVerDate Sep 11 2014 03:29 Dec 13, 2016 Jkt 069200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\S3529.IS S3529

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1 paragraph (A)(ii)(I) shall be increased by an 

2 amount equal to— 

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

4 ‘‘(ii) the cost-of-living adjustment de5 termined under subsection (f)(3) for the 

6 calendar year in which the taxable year be7 gins, by substituting ‘calendar year 1987’ 

8 for ‘calendar year 1992’ in subparagraph 

9 (B) thereof.’’. 

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

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

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

13 on the taxable income of every individual whose taxable 

14 income does not exceed the ceiling amount a tax deter15 mined under tables, applicable to such taxable year, which 

16 shall be prescribed by the Secretary and which shall be 

17 in such form as the Secretary determines appropriate. In 

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

19 computed on the basis of the rates prescribed by section 

20 1. 

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

22 paragraph (1), the term ‘ceiling amount’ means, with re23 spect to any taxpayer, the amount (not less than $20,000) 

24 determined by the Secretary for the tax rate category in 

25 which such taxpayer falls.’’. 


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

2 last sentence. 

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

4 last sentence. 

5 (6) Section 1398(c) is amended— 

6 (A) by striking paragraph (3) and insert7 ing the following: 

8 ‘‘(3) FAMILY ALLOWANCE AMOUNT.—The fam9 ily allowance amount under section 63(b) taken into 

10 account for the estate for the taxable year shall be 

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

12 filing separately.’’, and 

13 (B) by striking ‘‘BASIC STANDARD DE14 DUCTION’’ in the heading and inserting ‘‘FAM15 ILY ALLOWANCE AMOUNT’’. 

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

17 subparagraph (A) and by redesignating subpara18 graphs (B) and (C) as subparagraphs (A) and (B), 

19 respectively. 

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

21 ‘‘deductions’’ and all that follows and inserting ‘‘de22 ductions.’’. 

23 (9) Section 6504 is amended by striking para24 graph (2) and by redesignating paragraphs (3), (4), 


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1 (5), (6), (7), (8), (9), and (10) as paragraphs (2), 

2 (3), (4), (5), (6), (7), (8), and (9), respectively. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2017. 

6 SEC. 203. REPEAL OF LIMITATIONS RELATING TO ITEMIZED 

7 DEDUCTIONS. 

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

9 (b) CONFORMING AMENDMENTS.— 

10 (1) Section 162(o) is amended by striking para11 graph (2) and redesignating paragraph (3) as para12 graph (2). 

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

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

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

16 (B) by striking ‘‘, and’’ at the end of sub17 clause (II) and inserting a period, and 

18 (C) by striking subclause (III). 

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

20 ‘‘, as in effect on December 31, 2017’’ after 

21 ‘‘67(c)(2)(B)’’. 

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

23 as in effect on December 31, 2017’’ after 

24 ‘‘67(c)(2)(B)’’. 


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

2 inserting ‘‘, and as in effect on December 31, 2017’’ 

3 after ‘‘642(b)’’. 

4 (6) Section 1411(a)(2)(B)(i) is amended by in5 serting ‘‘, as in effect on December 31, 2017’’ after 

6 ‘‘67(e)’’. 

7 (7) Subparagraphs (C)(iii) and (D)(v) of sec8 tion 6654(d)(1) are each amended by inserting ‘‘, as 

9 in effect on December 31, 2017’’ before the period. 

10 (c) EFFECTIVE DATE.—The repeal and the amend11 ments made by this section shall apply to taxable years 

12 beginning after December 31, 2017. 

13 SEC. 204. TERMINATION OF SEPARATE TREATMENT OF 

14 CAPITAL GAINS. 

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

16 the end the following new paragraph: 

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

18 apply to any taxable year beginning after December 

19 31, 2017.’’. 

20 SEC. 205. REPEALS. 

21 (a) IN GENERAL.—The following provisions of the In22 ternal Revenue Code of 1986 are repealed: 

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

24 chapter 1 (relating to nonrefundable personal cred25 its). 


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

2 chapter 1 (relating to other credits), other than sec3 tion 27 (relating to taxes of foreign countries and 

4 possessions of the United States; possession tax 

5 credit). 

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

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

8 sections 32 (relating to earned income) and 36B (re9 lating to refundable credit for coverage under a 

10 qualified health plan). 

11 (4) Part VI of subchapter A of chapter 1 (relat12 ing to alternative minimum tax). 

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

14 (6) Section 221 (relating to interest on edu15 cation loans). 

16 (7) Section 222 (relating to qualified tuition 

17 and related expenses). 

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

19 medicare contribution). 

20 (b) EFFECTIVE DATE.—The repeals made by sub21 section (a) shall take effect for taxable years beginning 

22 after December 31, 2017. 

23 SEC. 206. ESTABLISHMENT OF PROGRESSIVE TAX REBATE. 

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

25 follows: 


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1 ‘‘SEC. 32. PROGRESSIVE TAX REBATE. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli3 gible taxpayer, there shall be allowed as a credit against 

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

5 amount equal to the sum of— 

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

7 under subsection (b)), 

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

9 under subsection (c)), plus 

10 ‘‘(3) the additional child benefit amount (as de11 termined under subsection (d)). 

12 ‘‘(b) EARNED INCOME AMOUNT.— 

13 ‘‘(1) SINGLE WORKERS.—In the case of an eli14 gible taxpayer (other than a head of a household as 

15 defined in section 2(b)) who is not filing a joint re16 turn for the taxable year under section 6013, the 

17 earned income 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 $6,100, 25.1 percent of such earned in21 come, 

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

23 earned income for the taxable year exceeds 

24 $6,100 but does not exceed $9,000, $1,530 plus 

25 17.1 percent of such earned income in excess of 

26 $6,100, 


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

2 earned income (or, if greater, adjusted gross in3 come) for the taxable year exceeds $9,000, but 

4 does not exceed $49,494, $2,025 minus 5 per5 cent of such earned income or adjusted gross 

6 income in excess of $9,000, 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 $49,494, $0. 

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

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

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

13 shall be equal to— 

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

15 earned income for the taxable year does not ex16 ceed $9,150, 25.1 percent of such earned in17 come, 

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

19 earned income for the taxable year exceeds 

20 $9,150 but does not exceed $13,500, $2,294 

21 plus 17.1 percent of such earned income in ex22 cess of $9,150, 

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

24 earned income (or, if greater, adjusted gross in25 come) for the taxable year exceeds $13,500, but 


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1 does not exceed $74,241, $3,037 minus 5 per2 cent of such earned income or adjusted gross 

3 income in excess of $13,500, or 

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

5 earned income (or, if greater, adjusted gross in6 come) for the taxable year exceeds $74,241, $0. 

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

8 an eligible taxpayer filing a joint return under sec9 tion 6013, the earned income amount shall be deter10 mined pursuant to paragraph (1), except that the 

11 dollar amounts in effect under such paragraph shall 

12 be multiplied by 2. 

13 ‘‘(c) CHILD BENEFIT AMOUNT.— 

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

15 taxpayer with a qualifying child, the child benefit 

16 amount shall be equal to 15 percent of the earned 

17 income of such taxpayer for the taxable year. 

18 ‘‘(2) LIMITATIONS.— 

19 ‘‘(A) LIMITATION BASED ON NUMBER OF

20 CHILDREN.—The child benefit amount deter21 mined under paragraph (1) shall not exceed an 

22 amount equal to the product of— 

23 ‘‘(i) the number of qualifying children 

24 of the taxpayer, multiplied by 

25 ‘‘(ii) $1,590. 


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1 ‘‘(B) REDUCTION BASED ON EARNINGS OR

2 ADJUSTED GROSS INCOME.—The child benefit 

3 amount determined under this subsection (as 

4 determined after application of subparagraph 

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

6 amount equal to 5 percent of the earned income 

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

8 the taxpayer for the taxable year in excess of 

9 $75,000 ($110,000 in the case of a joint re10 turn). 

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

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

13 taxpayer with a qualifying child, the additional child 

14 benefit amount shall be equal to— 

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

16 earned income for the taxable year does not ex17 ceed $20,000, the applicable percentage of such 

18 earned income, 

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

20 earned income exceeds $20,000 but does not ex21 ceed $25,000, the applicable percentage of 

22 $20,000, 

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

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1 come) exceeds $25,000 but does not exceed the 

2 applicable amount, an amount equal to— 

3 ‘‘(i) the applicable percentage of 

4 $20,000, minus 

5 ‘‘(ii) 15 percent of such earned in6 come or adjusted gross income in excess of 

7 $25,000, or 

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

9 earned income (or, if greater, adjusted gross in10 come) exceeds the applicable amount, $0. 

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

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

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

14 qualifying child, 11 percent, 

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

16 qualifying children, 17 percent, and 

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

18 more qualifying children, 19 percent. 

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

20 paragraph (1), the applicable amount is— 

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

22 qualifying child, $39,667, 

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

24 qualifying children, $47,667, and 


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

2 more qualifying children, $50,333. 

3 ‘‘(e) ELIGIBLE TAXPAYER.— 

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

5 means an individual— 

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

7 the United States for more than one-half of 

8 such taxable year, and 

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

10 section 152) to another taxpayer for any tax11 able year beginning in the same calendar year 

12 as such taxable year. 

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

14 individual is the qualifying child of a taxpayer for 

15 any taxable year of such taxpayer beginning in a cal16 endar year, such individual shall not be treated as 

17 an eligible taxpayer for any taxable year of such in18 dividual beginning in such calendar year. 

19 ‘‘(3) EXCEPTION FOR TAXPAYER CLAIMING

20 BENEFITS UNDER SECTION 911.—The term ‘eligible 

21 taxpayer’ does not include any taxpayer who claims 

22 the benefits of section 911 for the taxable year. 

23 ‘‘(4) LIMITATION ON ELIGIBILITY OF NON24 RESIDENT ALIENS.—The term ‘eligible taxpayer’ 

25 shall not include any individual who is a nonresident 


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1 alien individual for any portion of the taxable year 

2 unless such individual is treated for such taxable 

3 year as a resident of the United States for purposes 

4 of this chapter by reason of an election under sub5 section (g) or (h) of section 6013. 

6 ‘‘(5) IDENTIFICATION NUMBER REQUIRE7 MENT.—No credit shall be allowed under this section 

8 to an eligible taxpayer who does not include on the 

9 return of tax for the taxable year— 

10 ‘‘(A) such individual’s taxpayer identifica11 tion number, and 

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

13 the meaning of section 7703), the taxpayer 

14 identification number of such individual’s 

15 spouse. 

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

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

18 be allowed under this section to any eligible taxpayer 

19 who has one or more qualifying children if no quali20 fying child of such taxpayer is taken into account 

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

22 (f)(4). 

23 ‘‘(7) TREATMENT OF MILITARY PERSONNEL

24 STATIONED OUTSIDE OF THE UNITED STATES.—For 

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


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1 the principal place of abode of a member of the 

2 Armed Forces of the United States shall be treated 

3 as in the United States during any period during 

4 which such member is stationed outside the United 

5 States while serving on extended active duty with 

6 the Armed Forces of the United States. For pur7 poses of the preceding sentence, the term ‘extended 

8 active duty’ means any period of active duty pursu9 ant to a call or order to such duty for a period in 

10 excess of 90 days or for an indefinite period. 

11 ‘‘(8) JOINT RETURN.— 

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

13 of an individual who is married (within the 

14 meaning of section 7703), this section shall 

15 apply only if a joint return is filed for the tax16 able year under section 6013. 

17 ‘‘(B) OTHER.—In the case of taxpayer fil18 ing a joint return under section 6013, such tax19 payer shall not be treated as an eligible tax20 payer for purposes of this section unless either 

21 the taxpayer or the taxpayer’s spouse satisfies 

22 each of the requirements under this subsection. 

23 ‘‘(f) QUALIFYING CHILD.— 

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

25 means a qualifying child of the taxpayer (as defined 


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

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

3 ‘‘(2) MARRIED INDIVIDUAL.—The term ‘quali4 fying child’ shall not include an individual who is 

5 married as of the close of the eligible taxpayer’s tax6 able year unless the individual qualifies as a depend7 ent (as defined under section 152) of the taxpayer 

8 for such taxable year. 

9 ‘‘(3) PLACE OF ABODE.—For purposes of para10 graph (1), the requirements of section 152(c)(1)(B) 

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

12 in the United States. 

13 ‘‘(4) IDENTIFICATION REQUIREMENTS.— 

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

15 shall not be taken into account under sub16 section (c) or (d) unless the taxpayer includes 

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

18 on the return of tax for the taxable year. 

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

20 may prescribe other methods for providing the 

21 information described in subparagraph (A). 

22 ‘‘(g) EARNED INCOME.— 

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

24 means— 


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1 ‘‘(A) wages, salaries, tips, and other em2 ployee compensation, but only if such amounts 

3 are includible in gross income for the taxable 

4 year, plus 

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

6 earnings from self-employment for the taxable 

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

8 but such net earnings shall be determined with 

9 regard to the deduction allowed to the taxpayer 

10 by section 164(f). 

11 ‘‘(2) SPECIAL RULES.—For purposes of para12 graph (1)— 

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

14 annuity shall be taken into account, 

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

16 applies (relating to income of nonresident alien 

17 individuals not connected with United States 

18 business) shall be taken into account, 

19 ‘‘(C) no amount received for services pro20 vided by an individual while the individual is an 

21 inmate at a penal institution shall be taken into 

22 account, 

23 ‘‘(D) no amount described in paragraph 

24 (1) received for service performed in work ac25 tivities as defined in paragraph (4) or (7) of 


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

2 which the taxpayer is assigned under any State 

3 program under part A of title IV of such Act 

4 shall be taken into account, but only to the ex5 tent such amount is subsidized under such 

6 State program, and 

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

8 amounts excluded from gross income by reason 

9 of section 112 as earned income. 

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

11 YEAR.—Except in the case of a taxable year closed by rea12 son of the death of the eligible taxpayer, no credit shall 

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

14 year covering a period of less than 12 months. 

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

16 PROGRAMS.—For purposes of— 

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

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

19 ‘‘(3) section 101 of the Housing and Urban De20 velopment Act of 1965, 

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

22 National Housing Act, and 

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

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

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


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1 account in determining resources for the month of its re2 ceipt and the following month). 

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

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

5 this section shall be determined under tables prescribed 

6 by the Secretary. 

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

8 EXCESSIVE INVESTMENT INCOME.— 

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

10 under subsection (a) for the taxable year if the ag11 gregate amount of disqualified income of the tax12 payer for the taxable year exceeds $5,000. 

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

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

15 means— 

16 ‘‘(A) interest or dividends to the extent in17 cludible in income for the taxable year, 

18 ‘‘(B) interest received or accrued during 

19 the taxable year which is exempt from tax im20 posed by this chapter, 

21 ‘‘(C) the excess (if any) of— 

22 ‘‘(i) gross income from rents or royal23 ties not derived in the ordinary course of 

24 a trade or business, over 

25 ‘‘(ii) the sum of— 


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1 ‘‘(I) the deductions (other than 

2 interest) which are clearly and directly 

3 allocable to such gross income, plus 

4 ‘‘(II) interest deductions properly 

5 allocable to such gross income, 

6 ‘‘(D) the capital gain net income (as de7 fined in section 1222) of the taxpayer for such 

8 taxable year, and 

9 ‘‘(E) the excess (if any) of— 

10 ‘‘(i) the aggregate income from all 

11 passive activities for the taxable year (de12 termined without regard to any amount in13 cluded in earned income under subsection 

14 (f) or described in a preceding subpara15 graph), over 

16 ‘‘(ii) the aggregate losses from all pas17 sive activities for the taxable year (as so 

18 determined). 

19 ‘‘(3) PASSIVE ACTIVITY.—For purposes of para20 graph (2)(E), the term ‘passive activity’ has the 

21 meaning given such term by section 469. 

22 ‘‘(l) INFLATION ADJUSTMENTS.— 

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

24 year beginning after 2018, each of the dollar 


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

2 each be increased by an amount equal to— 

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

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3) for the calendar 

6 year in which the taxable year begins, deter7 mined by substituting ‘calendar year 2017’ for 

8 ‘calendar year 1992’ in subparagraph (B) 

9 thereof. 

10 ‘‘(2) ROUNDING.—If any dollar amount in sub11 sections (b), (c), (d), and (j)(1), after being in12 creased under paragraph (1), is not a multiple of 

13 $100, such dollar amount shall be rounded to the 

14 nearest multiple of $100. 

15 ‘‘(m) RESTRICTIONS ON TAXPAYERS WHO IMPROP16 ERLY CLAIMED CREDIT IN PRIOR YEAR.— 

17 ‘‘(1) TAXPAYERS MAKING PRIOR FRAUDULENT

18 OR RECKLESS CLAIMS.— 

19 ‘‘(A) IN GENERAL.—No credit shall be al20 lowed under this section for any taxable year in 

21 the disallowance period. 

22 ‘‘(B) DISALLOWANCE PERIOD.—For pur23 poses of subparagraph (A), the disallowance pe24 riod is— 


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

2 after the most recent taxable year for 

3 which there was a final determination that 

4 the taxpayer’s claim of credit under this 

5 section was due to fraud, and 

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

7 after the most recent taxable year for 

8 which there was a final determination that 

9 the taxpayer’s claim of credit under this 

10 section was due to reckless or intentional 

11 disregard of rules and regulations (but not 

12 due to fraud). 

13 ‘‘(2) TAXPAYERS MAKING IMPROPER PRIOR

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

15 credit under this section for any taxable year as a 

16 result of the deficiency procedures under subchapter 

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

18 this section for any subsequent taxable year unless 

19 the taxpayer provides such information as the Sec20 retary may require to demonstrate eligibility for 

21 such credit.’’. 

22 (b) CONFORMING AMENDMENTS.— 

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

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


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

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

3 (3) Section 6213(g)(2) is amended— 

4 (A) in subparagraph (G), by striking ‘‘sec5 tion 32(c)(2)(A)’’ and inserting ‘‘section 

6 32(g)(1)’’, and 

7 (B) in subparagraph (K), by striking ‘‘sec8 tion 32(k)(2)’’ and inserting ‘‘section 

9 32(m)(2)’’. 

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

11 31, United States Code, is amended by inserting 

12 ‘‘32,’’ after ‘‘25A,’’. 

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

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

15 amended by striking the item relating to section 32 

16 and inserting the following: 

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

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2017. 

20 SEC. 207. TECHNICAL AND CONFORMING AMENDMENTS. 

21 The Secretary of the Treasury or the Secretary’s del22 egate shall, not later than 90 days after the date of the 

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

24 and Means of the House of Representatives and the Com25 mittee on Finance of the Senate a draft of any technical 


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1 and conforming changes in the Internal Revenue Code of 

2 1986 which are necessary to reflect throughout such Code 

3 the purposes of the provisions of, and amendments made 

4 by, this title. 

5 Subtitle B—Corporate Tax Reforms 

6 SEC. 211. CORPORATE INCOME TAX RATE REDUCTION. 

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

8 amended to read as follows: 

9 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im10 posed by subsection (a) shall be an amount equal to 17 

11 percent of the taxable income.’’. 

12 (b) CONFORMING AMENDMENT.—Section 1551 is 

13 amended— 

14 (1) by striking ‘‘BENEFITS OF THE GRAD15 UATED CORPORATE RATES AND’’ in the heading, 

16 (2) by striking ‘‘the benefits of the rates con17 tained in section 11(b) which are lower than the 

18 highest rate specified in such section, or’’ in sub19 section (a), and 

20 (3) by striking ‘‘such benefits or credit’’ in sub21 section (a) and inserting ‘‘such credit’’. 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2017. 


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1 TITLE III—REFUND OF EXCESS 

2 CONSUMPTION TAX REVENUE 

3 SEC. 301. REFUNDS OF EXCESS CONSUMPTION TAX REV4 ENUE. 

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

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

7 ‘‘SEC. 6433. REFUNDS OF EXCESS CONSUMPTION TAX REV8 ENUE. 

9 ‘‘(a) IN GENERAL.—In the case of any qualifying ex10 cess consumption tax revenue year, the Secretary shall pay 

11 to each eligible filer an amount equal to the consumption 

12 tax refund amount. 

13 ‘‘(b) QUALIFYING EXCESS CONSUMPTION TAX REV14 ENUE YEAR.—For purposes of this section— 

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

16 consumption tax revenue year’ means any calendar 

17 year for which the net consumption tax revenues ex18 ceed 10 percent of gross domestic product for such 

19 year. 

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

21 net consumption tax revenues for any calendar year 

22 shall be the excess of— 

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

24 with respect to taxable supplies the tax point 

25 for which is during such calendar year, over 


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1 ‘‘(B) the credits allowed under section 

2 3916 for such calendar year. 

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

4 domestic product for any calendar year shall be the 

5 last estimate of the gross domestic product for such 

6 calendar year by the Department of Commerce 

7 which is published before the date that is 3 months 

8 after the close of such calendar year. 

9 ‘‘(c) ELIGIBLE FILER.—For purposes of this sec10 tion— 

11 ‘‘(1) DEFINITION.— 

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

13 filer’ means, with respect to any qualifying ex14 cess consumption tax revenue year, any indi15 vidual (other than an individual described in 

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

17 for the individual’s qualifying rebate taxable 

18 year. 

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

20 shall not include— 

21 ‘‘(i) any nonresident alien individual, 

22 ‘‘(ii) any individual who is a depend23 ent (as defined in section 152) of another 

24 taxpayer for the individual’s qualifying re25 bate taxable year, or 


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1 ‘‘(iii) an estate or trust. 

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

3 The term ‘qualifying rebate taxable year’ means, 

4 with respect to any individual in connection with a 

5 qualifying excess consumption tax revenue year, the 

6 taxable year of such individual which contains 6 or 

7 more months of such qualifying excess consumption 

8 tax revenue year. 

9 ‘‘(3) IDENTIFICATION REQUIREMENT.— 

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

11 not be treated as an eligible filer for any year 

12 unless such individual includes on the return of 

13 tax for such year— 

14 ‘‘(i) such individual’s valid identifica15 tion number, 

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

17 valid identification number of such individ18 ual’s spouse, and 

19 ‘‘(iii) the valid identification number 

20 of any qualifying child (as defined in sec21 tion 32(f)) claimed on such return. 

22 ‘‘(B) VALID IDENTIFICATION NUMBER.— 

23 For purposes of subparagraph (A), the term 

24 ‘valid identification number’ means a social se25 curity number issued to an individual by the 


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1 Social Security Administration. Such term shall 

2 not include a TIN issued by the Internal Rev3 enue Service. 

4 ‘‘(C) SPECIAL RULE FOR MEMBERS OF

5 THE ARMED FORCES.—Subparagraph (A) shall 

6 not apply to a joint return where at least 1 

7 spouse was a member of the Armed Forces of 

8 the United States at any time during the tax9 able year. 

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

11 ‘‘(1) IN GENERAL.—The consumption tax re12 fund amount for any eligible filer for any qualifying 

13 excess consumption tax year shall be the product 

14 of— 

15 ‘‘(A) the applicable amount, times 

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

17 filer. 

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

19 amount for any qualifying excess revenue consump20 tion tax year is an amount equal to— 

21 ‘‘(A) the excess described in subsection 

22 (b)(1), divided by 

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

24 of all eligible filers for such year. 


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1 ‘‘(3) APPLICABLE SHARE.—The number of ap2 plicable shares for any eligible filer shall be the sum 

3 of— 

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

5 plus 

‘‘(B) 1 6 ⁄2 of the number of qualifying chil7 dren (as defined in section 32(f)) claimed on 

8 the eligible filer’s return for the filer’s quali9 fying rebate taxable year. 

10 ‘‘(e) TIME FOR PAYMENT.—Payments under sub11 section (a) shall be made as soon as practical after the 

12 Secretary has determined the consumption tax refund 

13 amount.’’. 

14 (b) CONFORMING AMENDMENTS.— 

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

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

17 inserting ‘‘6431, or 6433’’. 

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

19 chapter 65 is amended by adding at the end the fol20 lowing new item: 

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

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

22 this section shall apply to calendar years beginning after 

23 the date of the enactment of this Act. 

Æ 


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