I
107TH CONGRESS
1ST SESSION
H. R. 3574
To amend the Internal Revenue Code of 1986 to change the calculation
and simplify the administration of the earned income tax credit.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 20, 2001
Mr. COYNE 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 change
the calculation and simplify the administration of 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. CHANGES IN CALCULATION OF EARNED IN-
COME TAX CREDIT.
(a) PERCENTAGES.—Paragraph (1) of section 32 of
the Internal Revenue Code of 1986 (relating to percent-
ages) is amended—
(1) by redesignating subparagraphs (A), (B),
and (C) as subparagraphs (B), (C), and (D),
(2) by striking ‘‘IN GENERAL.—’’ in subpara-
graph (B) (as so redesignated) and inserting ‘‘PER-
CENTAGES AFTER 1995.—’’, and
(3) by inserting before subparagraph (B) (as so
redesignated) the following:
‘‘(A) IN GENERAL.—In the case of taxable
years beginning after 2001:
‘‘In the case of an eligible individual with:
The credit per-
centage is:
The phaseout
percentage is:
1 qualifying child .......................................................
34.00
23.22
2 qualifying children ..................................................
40.00
21.79
3 or more qualifying children ....................................
45.00
24.52
No qualifying children ...............................................
15.3
15.3’’.
(b) 
AMOUNTS.—Subparagraph 
(A) 
of 
section
32(b)(2) of such Code is amended to read as follows:
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the earned income amount and the
phaseout amount shall be determined as fol-
lows:
‘‘In the case of an eligible individual with:
The earned in-
come amount is:
The phaseout
amount is:
1 qualifying child .......................................................
$10,710
$13,520
2 or more qualifying children ....................................
$10,710
$13,520
No qualifying children ...............................................
$6,000
$10,710’’.
(c) INFLATION ADJUSTMENT.—Paragraph (1)(B) of
section 32(j) of such Code (relating to inflation adjust-
ments) is amended to read as follows:
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins,
determined—
‘‘(i) in the case of the amount in sub-
section (i)(1), by substituting ‘calendar
year 1995’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof, and
‘‘(ii) in the case of amounts in sub-
section (b)(2)(A), by substituting ‘calendar
year 2001’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof, and
‘‘(iii) in the case of the $3,000
amount in subsection (b)(2)(B)(iii), by
substituting ‘calendar year 2007’ for ‘cal-
endar year 1992’ in subparagraph (B) of
such section 1.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 2. SIMPLIFICATION OF THE ADMINISTRATION OF THE
EARNED INCOME TAX CREDIT.
(a) MODIFICATION
OF JOINT RETURN REQUIRE-
MENT.—Subsection (d) of section 32 of the Internal Rev-
enue Code of 1986 (relating to married individuals) is
amended to read as follows:
‘‘(d) MARRIED INDIVIDUALS.—
‘‘(1) IN GENERAL.—If the taxpayer is married
at the close of the taxable year, the credit shall be
allowed under subsection (a) only if the taxpayer
and his spouse file a joint return for the taxable
year.
‘‘(2) MARITAL STATUS.—For purposes of para-
graph (1), an individual legally separated from his
spouse under a decree of divorce or of separate
maintenance shall not be considered as married.
‘‘(3) CERTAIN
MARRIED
INDIVIDUALS
LIVING
APART.—For purposes of paragraph (1), if—
‘‘(A) an individual—
‘‘(i) is married and files a separate re-
turn, and
‘‘(ii) has a qualifying child who is a
son, daughter, stepson, or stepdaughter of
such individual, and
‘‘(B) during the last 6 months of such tax-
able year, such individual and such individual’s
spouse do not have the same principal place of
abode,
such individual shall not be considered as married.’’.
(b) REPEAL RELATING TO EXCESSIVE INVESTMENT
INCOME.—Subsection (i) of section 32 of such Code (relat-
ing to denial of credit for individuals having excessive in-
vestment income) is repealed.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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