I
106TH CONGRESS
2D SESSION
H. R. 5171
To amend the Internal Revenue Code of 1986 to permit a husband and
wife to file a combined return to which separate tax rates apply.
IN THE HOUSE OF REPRESENTATIVES
Mr. POMEROY 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 permit
a husband and wife to file a combined return to which
separate tax rates apply.
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 ‘‘Marriage Penalty Re-
lief Act’’.
SEC. 2. COMBINED RETURN TO WHICH UNMARRIED RATES
APPLY.
(a) IN GENERAL.—Subpart B of part II of sub-
chapter A of chapter 61 of the Internal Revenue Code of
1986 (relating to income tax returns) is amended by in-
serting after section 6013 the following new section:
‘‘SEC. 6013A. COMBINED RETURN WITH SEPARATE RATES.
‘‘(a) GENERAL RULE.—A husband and wife may
make a combined return of income taxes under subtitle
A under which—
‘‘(1) a separate taxable income is determined
for each spouse by applying the rules provided in
this section, and
‘‘(2) the tax imposed by section 1 is the aggre-
gate amount resulting from applying the separate
rates set forth in section 1(c) to each such taxable
income.
‘‘(b) TREATMENT OF INCOME.—For purposes of this
section—
‘‘(1) earned income (within the meaning of sec-
tion 911(d)), and any income received as a pension
or annuity which arises from an employer-employee
relationship, shall be treated as the income of the
spouse who rendered the services,
‘‘(2) income from property shall be divided be-
tween the spouses in accordance with their respec-
tive ownership rights in such property (equally in
the case of property held jointly by the spouses), and
‘‘(3) any exclusion from income shall be allow-
able to the spouse with respect to whom the income
would be otherwise includible.
‘‘(c) TREATMENT OF DEDUCTIONS.—For purposes of
this section—
‘‘(1) except as otherwise provided in this sub-
section, the deductions described in section 62(a)
shall be allowed to the spouse treated as having the
income to which such deductions relate,
‘‘(2) the deductions allowable by section 151(b)
(relating to personal exemptions for taxpayer and
spouse) shall be determined by allocating 1 personal
exemption to each spouse,
‘‘(3) section 63 shall be applied as if such
spouses were not married, except that the election
whether or not to itemize deductions shall be made
jointly by both spouses and apply to each, and
‘‘(4) each spouse’s share of all other deductions
shall be determined by multiplying the aggregate
amount thereof by the fraction—
‘‘(A) the numerator of which is such
spouse’s gross income, and
‘‘(B) the denominator of which is the com-
bined gross incomes of the 2 spouses.
Any fraction determined under paragraph (4) shall be
rounded to the nearest percentage point.
‘‘(d) TREATMENT OF CREDITS.—For purposes of this
section—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), each spouse’s share of credits allowed to
both spouses shall be determined by multiplying the
aggregate amount of the credits by the fraction de-
termined under subsection (c)(4).
‘‘(2) EARNED INCOME CREDIT.—The earned in-
come credit under section 32 shall be determined as
if each spouse were a separate taxpayer, except
that—
‘‘(A) the earned income and the modified
adjusted gross income of each spouse shall be
determined under the rules of subsections (b),
(c), and (e), and
‘‘(B) qualifying children shall be allocated
between spouses proportionate to the earned in-
come of each spouse (rounded to the nearest
whole number).
‘‘(e) SPECIAL RULES REGARDING INCOME LIMITA-
TIONS.—
‘‘(1) EXCLUSIONS AND DEDUCTIONS.—For pur-
poses of making a determination under subsection
(b) or (c), any eligibility limitation with respect to
each spouse shall be determined by taking into ac-
count the limitation applicable to a single individual.
‘‘(2) CREDITS.—For purposes of making a de-
termination under subsection (d)(1), in no event
shall an eligibility limitation for any credit allowable
to both spouses be less than twice such limitation
applicable to a single individual.
‘‘(f) SPECIAL RULES FOR ALTERNATIVE MINIMUM
TAX.—If a husband and wife elect the application of this
section—
‘‘(1) the tax imposed by section 55 shall be
computed separately for each spouse, and
‘‘(2) for purposes of applying section 55—
‘‘(A) the rules under this section for allo-
cating items of income, deduction, and credit
shall apply, and
‘‘(B) the exemption amount for each
spouse shall be the amount determined under
section 55(d)(1)(B).
‘‘(g) TREATMENT AS JOINT RETURN.—Except as
otherwise provided in this section or in the regulations
prescribed hereunder, for purposes of this title (other than
sections 1 and 63(c)) a combined return under this section
shall be treated as a joint return.
‘‘(h) LIMITATIONS.—
‘‘(1) PHASE-IN OF BENEFIT.—
‘‘(A) IN
GENERAL.—In the case of any
taxable year beginning before January 1, 2004,
the tax imposed by section 1 or 55 shall in no
event be less than the sum of—
‘‘(i) the tax determined after the ap-
plication of this section, plus
‘‘(ii) the applicable percentage of the
excess of—
‘‘(I) the tax determined without
the application of this section, over
‘‘(II) the amount determined
under clause (i).
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A), the applicable
percentage shall be determined in accordance
with the following table:
The applicable
‘‘For taxable years beginning in:
percentage is:
2002 .........................................................................................
2003 .........................................................................................
10.
‘‘(2) LIMITATION OF BENEFIT BASED ON COM-
BINED ADJUSTED GROSS INCOME.—With respect to
spouses electing the treatment of this section for any
taxable year, the tax under section 1 or 55 shall be
increased by an amount which bears the same ratio
to the excess of the tax determined without the ap-
plication of this section over the tax determined
after the application of this section as the ratio (but
not over 100 percent) of the excess of the combined
adjusted gross income of the spouses over $100,000
bears to $50,000.
‘‘(i) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out this section.’’.
(b) UNMARRIED
RATE
MADE
APPLICABLE.—So
much of subsection (c) of section 1 of the Internal Rev-
enue Code of 1986 as precedes the table is amended to
read as follows:
‘‘(c) SEPARATE OR UNMARRIED RETURN RATE.—
There is hereby imposed on the taxable income of every
individual (other than a married individual (as defined in
section 7703) filing a return which is not a combined re-
turn under section 6013A, a surviving spouse as defined
in section 2(a), or a head of household as defined in sec-
tion 2(b)) a tax determined in accordance with the fol-
lowing table:’’.
(c) PENALTY FOR SUBSTANTIAL UNDERSTATEMENT
OF INCOME FROM PROPERTY.—Section 6662 of the Inter-
nal Revenue Code of 1986 (relating to imposition of accu-
racy-related penalty) is amended—
(1) by adding at the end of subsection (b) the
following:
‘‘(6) Any substantial understatement of income
from property under section 6013A.’’, and
(2) by adding at the end the following new sub-
section:
‘‘(i) SUBSTANTIAL UNDERSTATEMENT OF INCOME
FROM PROPERTY UNDER SECTION 6013A.—For pur-
poses of this section, there is a substantial understatement
of income from property under section 6013A if—
‘‘(1) the spouses electing the treatment of such
section for any taxable year transfer property from
1 spouse to the other spouse in such year,
‘‘(2) such transfer results in reduced tax liabil-
ity under such section, and
‘‘(3) the significant purpose of such transfer is
the avoidance or evasion of Federal income tax.’’.
(d) PROTECTION OF SOCIAL SECURITY AND MEDI-
CARE TRUST FUNDS.—
(1) IN GENERAL.—Nothing in this section shall
be construed to alter or amend the Social Security
Act (or any regulation promulgated under that Act).
(2) TRANSFERS.—
(A) ESTIMATE OF SECRETARY.—The Sec-
retary of the Treasury shall annually estimate
the impact that the enactment of this section
has on the income and balances of the trust
funds established under sections 201 and 1817
of the Social Security Act (42 U.S.C. 401 and
1395i).
(B) TRANSFER OF FUNDS.—If, under sub-
paragraph (A), the Secretary of the Treasury
estimates that the enactment of this section has
a negative impact on the income and balances
of such trust funds, the Secretary shall trans-
fer, not less frequently than quarterly, from the
general revenues of the Federal Government an
amount sufficient so as to ensure that the in-
come and balances of such trust funds are not
reduced as a result of the enactment of this sec-
tion.
(e) CLERICAL AMENDMENT.—The table of sections
for subpart B of part II of subchapter A of chapter 61
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 6013 the fol-
lowing:
‘‘Sec. 6013A. Combined return with separate rates.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
Æ