SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Growth and Tax Relief Reconciliation Act of
2001’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) SECTION 15 NOT TO APPLY.—No amendment
made by section 2 shall be treated as a change in a rate
of tax for purposes of section 15 of the Internal Revenue
Code of 1986.
SEC. 2. REDUCTION IN INCOME TAX RATES FOR INDIVID-
UALS.
(a) IN GENERAL.—Section 1 is amended by adding
at the end the following new subsection:
‘‘(i) RATE REDUCTIONS AFTER 2000.—
‘‘(1) NEW LOWEST RATE BRACKET.—
‘‘(A) IN GENERAL.—In the case of taxable
years beginning after December 31, 2000—
‘‘(i) the rate of tax under subsections
(a), (b), (c), and (d) on taxable income not
over the initial bracket amount shall be 12
percent (as modified by paragraph (2)),
and
‘‘(ii) the 15 percent rate of tax shall
apply only to taxable income over the ini-
tial bracket amount.
‘‘(B) INITIAL
BRACKET
AMOUNT.—For
purposes of this subsection, the initial bracket
amount is—
‘‘(i) $12,000 in the case of subsection
(a),
‘‘(ii) $10,000 in the case of subsection
(b), and
‘‘(iii) 1⁄2 the amount applicable under
clause (i) in the case of subsections (c) and
(d).
‘‘(C) INFLATION
ADJUSTMENT.—In pre-
scribing the tables under subsection (f) which
apply with respect to taxable years beginning in
calendar years after 2001—
‘‘(i) the Secretary shall make no ad-
justment to the initial bracket amount for
any taxable year beginning before January
1, 2007,
‘‘(ii) the cost-of-living adjustment
used in making adjustments to the initial
bracket amount for any taxable year begin-
ning after December 31, 2006, shall be de-
termined under subsection (f)(3) by sub-
stituting ‘2005’ for ‘1992’ in subparagraph
(B) thereof, and
‘‘(iii) such adjustment shall not apply
to the amount referred to in subparagraph
(B)(iii).
If any amount after adjustment under the pre-
ceding sentence is not a multiple of $50, such
amount shall be rounded to the next lowest
multiple of $50.
‘‘(2) REDUCTIONS IN RATES AFTER 2001.—In
the case of taxable years beginning in a calendar
year after 2001, the corresponding percentage speci-
fied for such calendar year in the following table
shall be substituted for the otherwise applicable tax
rate in the tables under subsections (a), (b), (c), (d),
and, to the extent applicable, (e).
‘‘In the case of taxable years
beginning during calendar year:
The corresponding percentages shall
be substituted for
the following percentages:
12%
28%
31%
36%
39.6%
2002 ............................................................
12%
27%
30%
35%
38%
2003 ............................................................
11%
27%
29%
35%
37%
2004 ............................................................
11%
26%
28%
34%
36%
2005 ............................................................
11%
26%
27%
34%
35%
2006 and thereafter ....................................
10%
25%
25%
33%
33%
‘‘(3) ADJUSTMENT OF TABLES.—The Secretary
shall adjust the tables prescribed under subsection
(f) to carry out this subsection.’’.
(b) REPEAL OF REDUCTION OF REFUNDABLE TAX
CREDITS.—
(1) Subsection (d) of section 24 is amended by
striking paragraph (2) and redesignating paragraph
(3) as paragraph (2).
(2) Section 32 is amended by striking sub-
section (h).
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 1(g)(7) is
amended—
(A) by striking ‘‘15 percent’’ in clause
(ii)(II) and inserting ‘‘the first bracket percent-
age’’; and
(B) by adding at the end the following
flush sentence:
‘‘For purposes of clause (ii), the first bracket
percentage is the percentage applicable to the
lowest income bracket in the table under sub-
section (c).’’.
(2) Section 1(h) is amended—
(A) by striking ‘‘28 percent’’ both places it
appears 
in 
paragraphs 
(1)(A)(ii)(I) 
and
(1)(B)(i) and inserting ‘‘25 percent’’; and
(B) by striking paragraph (13).
(3) Section 15 is amended by adding at the end
the following new subsection:
‘‘(f) RATE REDUCTIONS ENACTED
BY ECONOMIC
GROWTH
AND TAX RELIEF RECONCILIATION ACT
OF
2001.—This section shall not apply to any change in rates
under subsection (i) of section 1 (relating to rate reduc-
tions after 2000).’’.
(4) Section 531 is amended by striking ‘‘equal
to’’ and all that follows and inserting ‘‘equal to the
product of the highest rate of tax under section 1(c)
and the accumulated taxable income.’’.
(5) Section 541 is amended by striking ‘‘equal
to’’ and all that follows and inserting ‘‘equal to the
product of the highest rate of tax under section 1(c)
and the undistributed personal holding company in-
come.’’.
(6) Section 3402(p)(1)(B) is amended by strik-
ing ‘‘7, 15, 28, or 31 percent’’ and inserting ‘‘7 per-
cent, any percentage applicable to any of the 3 low-
est income brackets in the table under section
1(c),’’.