I

103D CONGRESS

1ST SESSION H. R. 2228

To amend the Internal Revenue Code of 1986 to increase the amount of

the earned income tax credit for taxpayers with school age or preschool

age children, to repeal the health insurance credit thereunder, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 20, 1993

Mr. PETRI (for himself, Mr. MURPHY, Mr. BALLENGER, Mr. PENNY, Mr.

GUNDERSON, Mr. GOODLING, and Mr. FAWELL) introduced the following

bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to increase

the amount of the earned income tax credit for taxpayers

with school age or preschool age children, to repeal the

health insurance credit thereunder, 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.

4 This Act may be cited as the ‘‘Family Living Wage

5 Act’’.
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1 SEC. 2. INCREASE IN EARNED INCOME TAX CREDIT.

2 (a) GENERAL RULE.—Subsections (a) and (b) of sec3 tion 32 of the Internal Revenue Code of 1986 (relating

4 to earned income tax credit) are amended to read as fol5 lows:

6 ‘‘(a) ALLOWANCE OF CREDIT.—

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

8 individual, there shall be allowed as a credit against

9 the tax imposed by this subtitle for the taxable year

10 an amount equal to the credit percentage of so much

11 of the earned income for the taxable year as does

12 not exceed $8,000.

13 ‘‘(2) LIMITATION.—The amount of the credit

14 allowable to a taxpayer under this subsection for any

15 taxable year shall not exceed the excess (if any) of—

16 ‘‘(A) the credit percentage of $8,000, over

17 ‘‘(B) the phaseout percentage of so much

18 of the adjusted gross income (or, if greater, the

19 earned income) of the taxpayer for the taxable

20 year as exceeds $10,000.

21 ‘‘(b) PERCENTAGES.—For purposes of subsection

22 (a)—

23 ‘‘(1) CREDIT PERCENTAGE.—

24 ‘‘(A) IN GENERAL.—The credit percentage

25 is the percentage equal to the sum of—

26 ‘‘(i) 20 percent,
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1 ‘‘(ii) 5 percent for each school age

2 qualifying child, plus

3 ‘‘(iii) 10 percent for each preschool

4 age qualifying child.

5 ‘‘(B) NOT MORE THAN 4 CHILDREN TAKEN

6 INTO ACCOUNT.—Not more than 4 children

7 shall be taken into account under subparagraph

8 (A), and preschool age qualifying children shall

9 be taken into account before any other children

10 are taken into account.

11 ‘‘(2) PHASEOUT PERCENTAGE.—

12 ‘‘(A) PHASEDOWN TO MINIMUM BENE13 FIT.—

14 ‘‘(i) IN GENERAL.—The phaseout per15 centage is the percentage determined in ac16 cordance with the following table:

‘‘If the combination of

qualifying children taken

into account under The phaseout

paragraph (1) is— percentage is—

1 S .................................................... 13

2 S, or 1 P ....................................... 14

3 S, or 1 S and 1 P ......................... 15

4 S, or 2 S and 1 P, or 2 P ............. 16

3 S and 1 P, or 1 S and 2 P ........... 17

2 S and 2 P, or 3 P ......................... 18

1 S and 3 P ...................................... 19

4 P ................................................... 20.

17 ‘‘(ii) SYMBOLS USED IN TABLE.—For

18 purposes of clause (i)—

19 ‘‘(I) S means school age qualify20 ing child, and
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1 ‘‘(II) P means preschool age

2 qualifying child.

3 ‘‘(B) MINIMUM BENEFIT FOR TAXPAYERS

4 WITH INCOMES BELOW $50,000.—Except as pro5 vided in subparagraph (C), subparagraph (A)

6 shall not apply so as to reduce the credit al7 lowed by this section to a taxpayer to less than

8 the minimum benefit determined in accordance

9 with the following table:

‘‘If the phaseout percentage The minimum

applicable to the taxpayer is— benefit is—

13 ........................................................... $200

14 ........................................................... 400

15 ........................................................... 600

16 ........................................................... 800

17 ........................................................... 1,000

18 ........................................................... 1,200

19 ........................................................... 1,400

20 ........................................................... 1,600.

10 ‘‘(C) PHASEOUT OF MINIMUM BENEFIT.—

11 If the adjusted gross income (or, if greater, the

12 earned income) of the taxpayer for the taxable

13 year exceeds $50,000, the minimum benefit de14 termined under subparagraph (B) shall be re15 duced by 15 percent of such excess.

16 ‘‘(3) SPECIAL RULES FOR INDIVIDUAL WHOSE

17 ONLY CHILDREN HAVE ATTAINED AGE 16.—For pur18 poses of this section, in the case of an individual

19 who is an eligible individual solely by reason of chil-
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1 dren each of whom has attained age 16 as of the

2 close of the taxable year—

3 ‘‘(A) the credit percentage shall be 20 per4 cent,

5 ‘‘(B) the phaseout percentage shall be 12

6 percent, and

7 ‘‘(C) subparagraphs (B) and (C) of para8 graph (2) shall not apply.’’

9 (b) PRESCHOOL AGE AND SCHOOL AGE QUALIFYING

10 CHILDREN DEFINED.—Subsection (c) of section 32 of

11 such Code is amended by adding at the end the following

12 new paragraph:

13 ‘‘(4) PRESCHOOL AGE AND SCHOOL AGE QUALI14 FYING CHILDREN.—

15 ‘‘(A) PRESCHOOL AGE QUALIFYING

16 CHILD.—The term ‘preschool age qualifying

17 child’ means any qualifying child who has not

18 attained age 6 as of the close of the taxable

19 year.

20 ‘‘(B) SCHOOL AGE QUALIFYING CHILD.—

21 The term ‘school age qualifying child’ means

22 any qualifying child who has attained age 6 but

23 not age 16 as of the close of the taxable year.’’

24 (c) ADVANCE PAYMENT PROVISIONS.—
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1 (1) Subsection (b) of section 3507 of such Code

2 is amended by striking ‘‘and’’ at the end of para3 graph (2), by striking the period at the end of para4 graph (3) and inserting ‘‘, and’’, and by inserting

5 after paragraph (3) the following new paragraph:

6 ‘‘(4) states the number and ages of qualifying

7 children (as defined in section 32(c)) of the em8 ployee for the taxable year.’’

9 (2) Paragraph (2) of section 3507(c) of such

10 Code is amended—

11 (A) in subparagraph (B)(i), by striking

12 ‘‘(without regard to subparagraph (D)’’ and by

13 striking ‘‘section 32(a)(1)’’ and inserting ‘‘sec14 tion 32(a)’’,

15 (B) in subparagraph (B)(ii), by striking

16 ‘‘section 32(b)(1)(B)(ii)’’ and inserting ‘‘section

17 32(a)(2)’’ and by striking ‘‘section 32(a)(1)’’

18 and inserting ‘‘section 32(a)’’, and

19 (C) by adding at the end the following new

20 sentence:

21 ‘‘For purposes of this paragraph, the credit percent22 age shall be determined under section 32(b) on the

23 basis of the number and ages of qualifying children

24 specified in the earned income eligibility certificate

25 and the determination of the amounts referred to in
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1 subparagraph (B)(ii) shall be made on the basis of

2 the number and ages of qualifying children so speci3 fied.’’

4 (3) Clause (i) of section 3507(e)(3)(A) of such

5 Code is amended by inserting before ‘‘, or’’ the fol6 lowing: ‘‘(or changing the percentages applicable to

7 the employee under section 32(b) for the taxable

8 year)’’.

9 (d) CONFORMING AMENDMENTS.—

10 (1) Paragraph (2) of section 32(f) of such Code

11 is amended—

12 (A) by striking ‘‘subsection (b)’’ each place

13 it appears in subparagraphs (A) and (B) and

14 inserting ‘‘subsection (a)(2)’’, and

15 (B) by adding at the end the following new

16 sentence:

17 ‘‘Separate tables shall be prescribed for each of the

18 phaseout percentages specified in the table contained

19 in subsection (b)(2)(A)(i).’’

20 (2) Paragraphs (1) and (2) of section 32(i) of

21 such Code are amended to read as follows:

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

23 year beginning after 1995, each amount referred to

24 in paragraph (2) shall be increased by an amount

25 equal to—
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1 ‘‘(A) such amount, multiplied by

2 ‘‘(B) the cost-of-living adjustment deter3 mined under section 1(f)(3) for the calendar

4 year in which the taxable year begins by sub5 stituting ‘1994’ for ‘1989’ in subparagraph (B)

6 thereof.

7 ‘‘(2) AMOUNTS.—The amounts referred to in

8 this paragraph are—

9 ‘‘(A) the credit percentages used for pur10 poses of subsection (a),

11 ‘‘(B) the $10,000 amount contained in

12 subsection (a)(2)(B), and

13 ‘‘(C) the $50,000 amount contained in

14 subsection (b)(2)(C).’’

15 (3) Section 213 of such Code (relating to medi16 cal, dental, etc., expenses) is amended by striking

17 subsection (f).

18 (4) Paragraph (3) of section 162(l) of such

19 Code is amended to read as follows:

20 ‘‘(3) COORDINATION WITH MEDICAL DEDUC21 TION.—Any amount paid by a taxpayer for insur22 ance to which paragraph (1) applies shall not be

23 taken into account in computing the amount allow24 able to the taxpayer as a deduction under section

25 213(a).’’
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1993; except that the amendments made

4 by subsection (c) shall take effect on January 1, 1994.

5 SEC. 3. DEPENDENT CARE CREDIT LIMITED TO HANDI6 CAPPED DEPENDENTS AND SPOUSES.

7 (a) IN GENERAL.—Paragraph (1) of section 21(b) of

8 the Internal Revenue Code of 1986 (defining qualifying

9 individual and employment-related expenses) is amended

10 by striking subparagraph (A), by redesignating subpara11 graphs (B) and (C) as subparagraphs (A) and (B), respec12 tively, and by adding at the end the following new sen13 tence:

14 ‘‘In the case of an individual described in subpara15 graph (A) who has not attained age 16 as of the

16 close of the taxable year, such individual may be

17 treated as a qualifying individual for purposes of

18 this section only if the taxpayer elects not to treat

19 such individual as a qualifying child under section

20 32 for such year.’’

21 (b) CONFORMING AMENDMENTS.—

22 (1) Subparagraph (B) of section 21(b)(2) of

23 such Code is amended by striking ‘‘care of—’’ and

24 all that follows and inserting ‘‘care of a qualifying
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1 individual who regularly spends at least 8 hours

2 each day in the taxpayer’s household.’’

3 (2) Paragraph (2) of section 21(d) of such Code

4 is amended by striking ‘‘subsection (b)(1)(C)’’ and

5 inserting ‘‘subsection (b)(1)(B)’’.

6 (3) Paragraph (5) of section 21(e) of such Code

7 is amended—

8 (A) by striking ‘‘is under the age of 13 or’’

9 in subparagraph (B), and

10 (B) by striking ‘‘subparagraph (A) or (B)

11 of subsection (b)(1) (whichever is appropriate)’’

12 and inserting ‘‘subsection (b)(1)(A)’’.

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

14 this section shall apply to taxable years beginning after

15 December 31, 1993.

16 SEC. 4. ELIMINATION OF PROPOSED CHANGES IN TREAT17 MENT OF EARNED INCOME CREDIT IN DE18 TERMINING CERTAIN WELFARE BENEFITS.

19 Paragraphs (1) and (2)(A) of section 402(c) of the

20 Family Support Act of 1988 are repealed.

Æ