I 
109TH CONGRESS 
1ST SESSION 
H. R. 574
To amend the Internal Revenue Code of 1986 to provide for regional cost 
of living adjustments. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 2, 2005
Mr. NADLER 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 provide 
for regional cost of living adjustments.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Tax Equity Act’’. 
SEC. 2. REGIONAL COST-OF-LIVING ADJUSTMENTS IN INDI-
VIDUAL INCOME TAX RATES. 
(a) GENERAL RULE.—Subsection (f) of section 1 of 
the Internal Revenue Code of 1986 (relating to adjust-
ments in tax tables so that inflation will not result in tax
increases) is amended by adding at the end the following 
new paragraphs: 
‘‘(9) 
REGIONAL
COST-OF-LIVING
ADJUST-
MENTS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual, the rate table otherwise in effect under 
this section for any taxable year (determined 
after the application of paragraph (1)) shall be 
further adjusted as provided in subparagraph 
(B). 
‘‘(B) METHOD OF MAKING REGIONAL AD-
JUSTMENT.—The rate table otherwise in effect 
under this section with respect to any individual 
for any taxable year shall be adjusted as fol-
lows: 
‘‘(i) The minimum and maximum dol-
lar amounts otherwise in effect for each 
rate bracket shall be multiplied by the ap-
plicable multiplier (for the calendar year in 
which the taxable year begins) which ap-
plies to the statistical area in which the in-
dividual’s primary place of abode during 
the taxable year is located.
‘‘(ii) The rate applicable to any rate 
bracket (as adjusted by clause (i)) shall 
not be changed. 
‘‘(iii) The amount setting forth the 
tax shall be adjusted to the extent nec-
essary to reflect the adjustments in the 
rate brackets. 
If any amount determined under clause (i) is 
not a multiple of $50, such amount shall be 
rounded to the nearest multiple of $50. 
‘‘(10) DETERMINATION OF MULTIPLIERS.—
‘‘(A) IN
GENERAL.—Not later than De-
cember 15 of each calendar year, the Secretary 
shall prescribe an applicable multiplier for each 
statistical area of the United States, which shall 
apply to taxable years beginning during the suc-
ceeding calendar year. 
‘‘(B) DETERMINATION OF MULTIPLIERS.—
‘‘(i) For each statistical area where 
the cost-of-living differential for any cal-
endar year is greater than 100 percent, the 
applicable multiplier for such calendar year 
shall be 100 percent of such differential. 
‘‘(ii) For each statistical area where 
the cost-of-living differential for any cal-
endar year does not exceed 100 percent, 
the applicable multiplier for such calendar 
year shall be 1. 
‘‘(C) COST-OF-LIVING
DIFFERENTIAL.—
The cost-of-living differential for any statistical 
area for any calendar year is the percentage de-
termined by dividing—
‘‘(i) the cost-of-living for such area for 
the preceding calendar year, by 
‘‘(ii) the average cost-of-living for the 
United States for the preceding calendar 
year. 
‘‘(D) COST-OF-LIVING FOR AREA.—
‘‘(i) IN GENERAL.—For calendar year 
2005 and each calendar year thereafter, 
the Secretary of Labor shall determine and 
publish a cost-of-living index for each sta-
tistical area. 
‘‘(ii) METHODOLOGY.—The cost-of-liv-
ing index determined under clause (i) for 
any statistical area for any calendar year 
shall be based on average market prices for 
the area for the 12-month period ending 
on August 31 of such calendar year. The 
market prices taken into account under the
preceding sentence shall be selected and 
used under the same methodology as is 
used by the Secretary of Labor in devel-
oping the Consumer Price Index for All 
Urban Consumers. 
‘‘(E) STATISTICAL AREA.—For purposes of 
this subsection, the term ‘statistical area’ 
means—
‘‘(i) any metropolitan statistical area 
as defined by the Secretary of Commerce, 
and 
‘‘(ii) the portion of any State not 
within a metropolitan statistical area as so 
defined. 
‘‘(F) 
AREAS
OUTSIDE
THE
UNITED 
STATES.—The applicable multiplier for any 
area outside the United States shall be 1.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005.
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