I
103D CONGRESS
2D SESSION
H. R. 5193
To amend the Internal Revenue Code of 1986 to reform the earned income
tax credit.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 5, 1994
Mr. PETRI 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 reform
the earned income tax credit.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. MODIFICATIONS TO EARNED INCOME TAX
CREDIT.
(a) MODIFICATIONS IN COMPUTATION OF CREDIT;
SUPPLEMENTAL CHILD CREDIT.—
(1) PERCENTAGES.—Subsection (b) of section
32 of the Internal Revenue Code of 1986 (relating
to earned income tax credit) is amended to read as
follows:
‘‘(b) PERCENTAGES.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the credit percentage and the phaseout percent-
age shall be determined as follows:
In the case of an eli-
gible individual with:
The credit percentage
is:
The phaseout percent-
age is:
1 qualifying child .....
30 ...............................
2 or more qualifying
children .................
42 ...............................
‘‘(2) SUPPLEMENTAL CHILD CREDIT.—In the
case of a taxpayer with a qualifying child who has
not attained 6 as of the close of the calendar year
in which or with which the taxable year of the tax-
payer ends—
‘‘(A) the credit percentage shall be in-
creased by 5 percentage points for each such
child, and
‘‘(B) the phaseout percentage shall be in-
creased by 2 percentage points for each such
child.
Not more than 4 children may be taken into account
under this paragraph.’’
(2) UNIFORM EARNED INCOME AMOUNTS AND
PHASEOUT AMOUNTS.—Subsection (a) of section 32
of such Code is amended—
(A) by striking ‘‘the earned income
amount’’ each place it appears and inserting
‘‘$8,500’’, and
(B) by striking ‘‘the phaseout amount’’ in
paragraph (2)(B) and inserting ‘‘$10,000’’.
(b) REPEAL OF CREDIT FOR INDIVIDUALS WITHOUT
CHILDREN.—Subparagraph (A) of section 32(c)(1) of
such Code is amended to read as follows:
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means any individual who has a quali-
fying child for the taxable year.’’
(c) QUALIFYING CHILDREN MUST BE UNDER 18
YEARS OF AGE OR DISABLED.—Subparagraph (C) of sec-
tion 32(c)(3) of such Code is amended by striking ‘‘19’’
in paragraph (1) and inserting ‘‘18’’, by adding ‘‘and’’ at
the end of paragraph (1), by striking paragraph (2), and
by redesignating paragraph (3) as paragraph (2).
(d) ADVANCE PAYMENT PROVISIONS.—
(1) Subsection (b) of section 3507 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (3), by striking the period at the end of para-
graph (4) and inserting ‘‘, and’’, and by inserting
after paragraph (4) the following new paragraph:
‘‘(5) states the number and ages of qualifying
children (as defined in section 32(c)) of the em-
ployee for the taxable year.’’
(2) Paragraph (2) of section 3507(c) of such
Code is amended—
(A) by striking clauses (i) and (ii) of sub-
paragraph (B) and inserting the following:
‘‘(i) of not more than the credit per-
centage of earned income not in excess of
$8,500, which
‘‘(ii) phases out at the phaseout per-
centage between $10,000 and the amount
of earned income at which the credit under
section 32(a) phases out for such em-
ployee, or’’, and
(B) by adding at the end the following new
sentence:
‘‘For purposes of this paragraph, the credit percent-
age and the phaseout percentage shall be determined
under section 32(b) on the basis of the number and
ages of qualifying children specified in the earned in-
come eligibility certificate of the employee.’’
(3) Clause (i) of section 3507(e)(3)(A) of such
Code is amended by inserting before ‘‘, or’’ the fol-
lowing: ‘‘(or changing the percentages applicable to
the employee under section 32(b) for the taxable
year)’’.
(e) VERIFICATION
OF TAXPAYER IDENTIFICATION
NUMBERS.—Section 32 of such Code is amended by add-
ing at the end the following new subsection:
‘‘(k) VERIFICATION OF TAXPAYER IDENTIFICATION
NUMBERS.—No credit shall be allowed under this section
to any taxpayer until the Secretary has verified that the
numbers set forth on the return claiming the credit as—
‘‘(1) the taxpayer identification number of the
taxpayer, and
‘‘(2) the taxpayer identification numbers of all
qualifying children,
are valid.’’
(f) CONFORMING AMENDMENT.—Subsection (i) of
section 32 of such Code is amended to read as follows:
‘‘(i) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning after 1996, each credit percentage
used for purposes of subsection (a) shall be in-
creased by an amount equal to—
‘‘(A) such percentage, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins by sub-
stituting ‘1995’ for ‘1992’ in subparagraph (B)
thereof.
‘‘(2) ROUNDING.—If any percentage after being
increased under paragraph (1) is not a multiple of
0.01 percentage point, such percentage shall be
rounded to the nearest 0.01 percentage point.’’
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995; except that the amendments made
by subsection (d) shall take effect on January 1, 1996.
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