I
106TH CONGRESS
1ST SESSION
H. R. 2350
To amend the Internal Revenue Code of 1986 to repeal taxes on American
Values.
IN THE HOUSE OF REPRESENTATIVES
JUNE 24, 1999
Mr. SAM JOHNSON of Texas (for himself, Mr. MCINTOSH, Mr. DOOLITTLE,
Mr. ISTOOK, Mr. BURTON of Indiana, Mr. HILLEARY, Mr. HOSTETTLER,
Mrs. CHENOWETH, Mr. GRAHAM, Mr. BARTLETT of Maryland, Mr.
TANCREDO, Mr. PITTS, Mr. DICKEY, Mr. JONES of North Carolina, Mr.
SUNUNU, Mr. HANSEN, Mr. SOUDER, Mr. WELDON of Florida, Mr.
CHABOT, Mrs. CUBIN, Mr. DEMINT, Mr. HERGER, Mr. MCINNIS, Mr.
WATKINS, Mr. HULSHOF, Mr. HAYWORTH, Mr. DELAY, Mr. PAUL, Mr.
MANZULLO, Mrs. MYRICK, Mr. SKEEN, Mr. BILIRAKIS, Mr. HEFLEY, Mr.
ROHRABACHER, Mr. MILLER
of Florida, Mr. THORNBERRY, Mr.
BONILLA, Mr. COBURN, Mr. POMBO, Mr. ISAKSON, Mr. SESSIONS, Mr.
PICKERING, Mr. RYUN of Kansas, Mr. GREEN of Wisconsin, Mr. RILEY,
Mr. SHADEGG, Mr. RYAN of Wisconsin, Mr. DREIER, Mr. HOBSON, Mr.
HYDE, Mr. SPENCE, and Mr. METCALF) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on the Budget, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to repeal
taxes on American Values.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE;
TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘American Values Tax Savings Plan for the 21st Cen-
tury’’.
(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) TABLE OF CONTENTS.—
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I—MARRIAGE PENALTY RELIEF
Sec. 101. Basic standard deduction for married individuals to be twice the de-
duction for unmarried individuals.
Sec. 102. Elimination of marriage penalty in individual income tax rates.
TITLE II—PHASEOUT OF ESTATE AND GIFT TAXES
Sec. 201. Phaseout of estate and gift taxes.
TITLE III—PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL
TAXPAYERS
Sec. 301. Phaseout of alternative minimum tax for all taxpayers.
TITLE IV—REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES
Sec. 401. Reduction in individual capital gain tax rates.
TITLE V—INCREASED INCENTIVES FOR RETIREMENT SAVINGS
Sec. 501. Increase in limitation on IRA contributions and indexing of limitation
for inflation.
Sec. 502. Increase in income limitation applicable to conversions, etc. from tra-
ditional IRA to Roth IRA.
TITLE VI—INCENTIVES FOR HEALTH INSURANCE COVERAGE
Sec. 601. 100 percent deduction for health insurance costs of self-employed in-
dividuals.
Sec. 602. Carryover of unused benefits from cafeteria plans and flexible spend-
ing arrangements.
TITLE VII—INCENTIVES FOR EDUCATION
Sec. 701. Exclusion from gross income of education distributions from qualified
State tuition programs.
TITLE VIII—REPEAL OF TELEPHONE EXCISE TAX
Sec. 801. Repeal of excise tax on telephone and other communications services.
Sec. 802. Sense of Congress to repeal Federal Communications Commission E-
rate discount program for schools and libraries.
TITLE IX—EXTENSION OF EXPIRING PROVISIONS
Sec. 901. Research credit.
Sec. 902. Work opportunity credit.
Sec. 903. Subpart F exemption for active financing income.
TITLE X—PAY-GO REFORM
Sec. 1001. Special pay-as-you-go rule.
Sec. 1002. Additional reporting requirement.
TITLE I—MARRIAGE PENALTY
RELIEF
SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED IN-
DIVIDUALS TO BE TWICE THE DEDUCTION
FOR UNMARRIED INDIVIDUALS.
(a) IN GENERAL.—Paragraph (2) of section 63(c)
(relating to standard deduction) is amended—
(1) by striking ‘‘$5,000’’ in subparagraph (A)
and inserting ‘‘twice the dollar amount in effect
under subparagraph (C) for the taxable year’’,
(2) by adding ‘‘or’’ at the end of subparagraph
(B),
(3) by striking ‘‘in the case of’’ and all that fol-
lows in subparagraph (C) and inserting ‘‘in any
other case.’’, and
(4) by striking subparagraph (D).
(b) TECHNICAL AMENDMENT.—Subparagraph (B) of
section 1(f)(6) is amended by striking ‘‘(other than with’’
and all that follows through ‘‘shall be applied’’ and insert-
ing ‘‘(other than sections 63(c)(4) and 151(d)(4)(A)) shall
be applied’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 102. ELIMINATION OF MARRIAGE PENALTY IN INDI-
VIDUAL INCOME TAX RATES.
(a) IN GENERAL.—Subsection (f) of section 1 (relat-
ing to tax imposed) is amended by adding at the end the
following new paragraph:
‘‘(8) ELIMINATION OF MARRIAGE PENALTY.—In
prescribing the table under paragraph (1) which ap-
plies in lieu of the table contained in subsection (a)
with respect to taxable years beginning in a calendar
year after 2004, the minimum and maximum dollar
amounts for each rate bracket shall be twice the
minimum and maximum dollar amounts (respec-
tively) prescribed by the Secretary under this sub-
section for the comparable rate bracket under sub-
section (c) for such taxable years. The preceding
sentence shall apply in lieu of applying paragraph
(2)(A) to the table contained in subsection (a).’’
(b) TECHNICAL AMENDMENTS.—
(1) Subparagraph (A) of section 1(f)(2) is
amended by inserting ‘‘except as provided in para-
graph (8),’’ before ‘‘by increasing’’.
(2) The heading for subsection (f) of section 1
is amended by inserting ‘‘ELIMINATION OF MAR-
RIAGE PENALTY AFTER
2004;’’ before ‘‘ADJUST-
MENTS’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2004.
TITLE II—PHASEOUT OF ESTATE
AND GIFT TAXES
SEC. 201. PHASEOUT OF ESTATE AND GIFT TAXES.
(a) REPEAL OF ESTATE AND GIFT TAXES.—Subtitle
B (relating to estate and gift taxes) is repealed effective
with respect to estates of decedents dying, and gifts made,
after December 31, 2009.
(b) PHASEOUT OF TAX.—Subsection (c) of section
2001 (relating to imposition and rate of tax) is amended
by adding at the end the following new paragraph:
‘‘(3) PHASEOUT OF TAX.—In the case of es-
tates of decedents dying, and gifts made, during any
calendar year after 1999 and before 2010—
‘‘(A) IN
GENERAL.—The tentative tax
under this subsection shall be determined by
using a table prescribed by the Secretary (in
lieu of using the table contained in paragraph
(1)) which is the same as such table; except
that—
‘‘(i) each of the rates of tax shall be
reduced (but not below zero) by the num-
ber of percentage points determined under
subparagraph (B), and
‘‘(ii) the amounts setting forth the tax
shall be adjusted to the extent necessary to
reflect the adjustments under clause (i).
‘‘(B) PERCENTAGE
POINTS
OF
REDUC-
TION.—
The number of
‘‘For calendar year:
percentage points is:
2000 .............................................................................
2001 .............................................................................
2002 .............................................................................
2003 .............................................................................
2004 .............................................................................
2005 .............................................................................
2006 .............................................................................
2007 .............................................................................
2008 .............................................................................
2009 .............................................................................
50.
‘‘(C) COORDINATION
WITH
PARAGRAPH
(2).—Paragraph (2) shall be applied by reduc-
(a) of section 55 (relating to alternative minimum tax im-
posed) is amended to read as follows:
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed
(in addition to any other tax imposed by this sub-
title) a tax equal to the excess (if any) of—
‘‘(A) the tentative minimum tax for the
taxable year, over
‘‘(B) the regular tax for the taxable year.
‘‘(2) TERMINATION.—No tax shall be imposed
by this section for any taxable year beginning after
December 31, 2003 (December 31, 2004, in the case
of a corporation), and the tentative minimum tax of
any taxpayer for any taxable year beginning after
December 31, 2003 (December 31, 2004, in the case
of a corporation) shall be zero for purposes of this
title.’’
(b) PHASEOUT OF TAX ON NONCORPORATE TAX-
PAYERS.—
(1) IN
GENERAL.—Paragraph (1) of section
55(d) (relating to exemption amounts) is amended—
(A) by striking ‘‘$45,000’’ in subparagraph
(A) and inserting ‘‘the applicable amount’’,
(B) by striking ‘‘$33,750’’ in subpara-
graph (B) and inserting ‘‘3⁄4 of the applicable
amount’’, and
(C) by striking ‘‘$22,500’’ in subparagraph
(C) and inserting ‘‘1⁄2
of the applicable
amount’’.
(2) APPLICABLE AMOUNT.—Subsection (d) of
section 55 is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) APPLICABLE AMOUNT.—For purposes of
paragraph (1), the applicable amount shall be deter-
mined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
amount is—
2000 ..........................................................................
$70,000
2001 ..........................................................................
95,000
2002 ..........................................................................
120,500
2003 ..........................................................................
145,000.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
TITLE IV—REDUCTION IN INDI-
VIDUAL CAPITAL GAIN TAX
RATES
SEC. 401. REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX
RATES.
(a) IN GENERAL.—Subparagraph (C) of section
1(h)(1) (relating to maximum capital gains rate) is
amended by striking ‘‘20 percent’’ and inserting ‘‘15 per-
cent (10 percent in the case of taxable years beginning
after December 31, 2004)’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1(h) is amended to
read as follows:
‘‘(2) 8 PERCENT RATE FOR QUALIFIED 5-YEAR
GAIN OTHERWISE IN 15 PERCENT BRACKET.—In the
case of any taxable year beginning after December
31, 2000, the rate under paragraph (1)(B) shall be
8 percent with respect to so much of the amount to
which the 10-percent rate under paragraph (1)(B)
would otherwise apply as does not exceed qualified
5-year gain, and 10 percent with respect to the re-
mainder of such amount.’’
(2) Section 1(h) is amended by striking para-
graph (13).
(3) Subparagraph (C) of section 55(a)(3) is
amended by striking ‘‘20 percent’’ and inserting ‘‘15
percent (10 percent in the case of taxable years be-
ginning after December 31, 2004)’’.
(4) Paragraph (1) of section 1445(e) is amend-
ed by striking ‘‘20 percent’’ and inserting ‘‘15 per-
cent (10 percent in the case of taxable years begin-
ning after December 31, 2004)’’.
(5) Subparagraph (A) of section 7518(g)(6)(A),
and section 607(h)(6)(A) of the Merchant Marine
Act, 1936, are each amended by striking ‘‘20 per-
cent’’ and inserting ‘‘15 percent (10 percent in the
case of taxable years beginning after December 31,
2004)’’.
(6) Section 311 of the Taxpayer Relief Act of
1997 is amended by striking subsection (e).
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to taxable years beginning after Decem-
ber 31, 1999.
(2) WITHHOLDING.—The amendment made by
subsection (b)(4) shall apply to amounts paid after
December 31, 1999.
TITLE 
V—INCREASED 
INCEN-
TIVES FOR RETIREMENT SAV-
INGS
SEC. 501. INCREASE IN LIMITATION ON IRA CONTRIBU-
TIONS AND INDEXING OF LIMITATION FOR
INFLATION.
(a) INCREASE IN MAXIMUM AMOUNT OF DEDUC-
TION.—Paragraph (1) of section 219(b) (relating to max-
imum amount of deduction) is amended to read as follows:
‘‘(1) MAXIMUM AMOUNT.—
‘‘(A) IN GENERAL.—The amount allowable
as a deduction under subsection (a) to any indi-
vidual for any taxable year shall not exceed the
lesser of—
‘‘(i) the applicable dollar limitation, or
‘‘(ii) an amount equal to the com-
pensation includible in the individual’s
gross income for such taxable year.
‘‘(B) APPLICABLE DOLLAR LIMITATION.—
For purposes of subparagraph (A), the applica-
ble dollar limitation shall be determined in ac-
cordance with the following table:
‘‘For taxable years beginning
The applicable dollar
in calendar year—
limitation is—
2000 ............................................................................. $2,500
2001 .............................................................................
3,000
2002 .............................................................................
3,500
2003 .............................................................................
4,000
2004 .............................................................................
4,500
2006 and thereafter .....................................................
5,000.’’
(b) INFLATION ADJUSTMENTS.—Subsection (f) of
section 219 is amended by adding at the end the following
new paragraph:
‘‘(8) INFLATION ADJUSTMENT.—In the case of
taxable years beginning in a calendar year after
2006, the $5,000 amount set forth in subsection
(b)(1)(B) shall be increased by an amount equal
to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year by substituting ‘calendar year 2005’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
If any increase determined under the preceding sen-
tence is not a multiple of $100, such increase shall
be rounded to the nearest multiple of $100.’’
(c) CONFORMING AMENDMENTS.—
(1) Section 408(a)(1) is amended by striking
‘‘in excess of $2,000 on behalf of any individual’’
and inserting ‘‘on behalf of any individual in excess
of the applicable dollar limitation in effect for such
taxable year under section 219(b)(1)’’.
(2) Section 408(b)(2)(B) is amended by strik-
ing ‘‘$2,000’’ and inserting ‘‘the applicable dollar
limitation in effect under section 219(b)(1)’’.
(3) Section 408(b) is amended by striking
‘‘$2,000’’ in the matter following paragraph (4) and
inserting ‘‘the applicable dollar limitation in effect
under section 219(b)(1)’’.
(4) Section 408(j) is amended by striking
‘‘$2,000’’.
(5) Section 408(p)(8) is amended by striking
‘‘$2,000’’ and inserting ‘‘the applicable dollar limita-
tion in effect under section 219(b)(1)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 502. INCREASE IN INCOME LIMITATION APPLICABLE
TO CONVERSIONS, ETC. FROM TRADITIONAL
IRA TO ROTH IRA.
(a) 
IN
GENERAL.—Clause 
(i) 
of 
section
408A(c)(3)(B) (relating to rollover from IRA) is amended
by striking ‘‘$100,000’’ and inserting ‘‘$1,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
TITLE VI—INCENTIVES FOR
HEALTH INSURANCE COVERAGE
SEC. 601. 100 PERCENT DEDUCTION FOR HEALTH INSUR-
ANCE COSTS OF SELF-EMPLOYED INDIVID-
UALS.
(a) IN GENERAL.—Section 162(l)(1) (relating to spe-
cial rules for health insurance costs of self-employed indi-
viduals) is amended to read as follows:
‘‘(1) ALLOWANCE OF DEDUCTION.—In the case
of an individual who is an employee within the
meaning of section 401(c)(1), there shall be allowed
as a deduction under this section an amount equal
to the amount paid during the taxable year for in-
surance which constitutes medical care for the tax-
payer, the taxpayer’s spouse, and dependents.’’
(b) CLARIFICATION OF LIMITATIONS ON OTHER COV-
ERAGE.—The first sentence of section 162(l)(2)(B) is
amended to read as follows: ‘‘Paragraph (1) shall not
apply to any taxpayer for any calendar month for which
the taxpayer participates in any subsidized health plan
maintained by any employer (other than an employer de-
scribed in section 401(c)(4)) of the taxpayer or the spouse
of the taxpayer.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 
602. 
CARRYOVER 
OF 
UNUSED 
BENEFITS 
FROM
CAFETERIA PLANS AND FLEXIBLE SPENDING
ARRANGEMENTS.
(a) IN GENERAL.—Section 125 (relating to cafeteria
plans) is amended by redesignating subsections (h) and
(i) as subsections (i) and (j), respectively, and by inserting
after subsection (g) the following new subsection:
‘‘(h) ALLOWANCE OF CARRYOVERS OF UNUSED BEN-
EFITS TO LATER TAXABLE YEARS.—
‘‘(1) IN GENERAL.—For purposes of this title—
‘‘(A) a plan or other arrangement shall not
fail to be treated as a cafeteria plan or flexible
spending or similar arrangement, and
‘‘(B) no amount shall be required to be in-
cluded in gross income by reason of this section
or any other provision of this chapter,
solely because under such plan or other arrangement
any nontaxable benefit which is unused as of the
close of a taxable year may be carried forward to 1
or more succeeding taxable years.
‘‘(2) LIMITATION.—Paragraph (1) shall not
apply to amounts carried from a plan to the extent
such amounts exceed $2,000 (applied on an annual
basis). For purposes of this paragraph, all plans and
arrangements maintained by an employer or any re-
lated person shall be treated as 1 plan.
‘‘(3) ALLOWANCE OF ROLLOVER.—
‘‘(A) IN GENERAL.—Each flexible spending
or similar arrangement which permits a carry-
over under paragraph (1) of an amount of un-
used benefit shall provide that each participant
may elect, in lieu of a carryover of such
amount, to have such amount distributed to the
participant.
‘‘(B) AMOUNTS
NOT
INCLUDED
IN
IN-
COME.—Any distribution under subparagraph
(A) shall not be included in gross income to the
extent that such amount is transferred in a
trustee-to-trustee transfer, or is contributed
within 60 days of the date of the distribution,
to—
‘‘(i) an individual retirement plan,
‘‘(ii) a qualified cash or deferred ar-
rangement described in section 401(k),
‘‘(iii) a plan under which amounts are
contributed by an individual’s employer for
an annuity contract described in section
403(b),
‘‘(iv) an eligible deferred compensa-
tion plan described in section 457,
‘‘(v) a medical savings account (within
the meaning of section 220), or
‘‘(vi) an education individual retire-
ment account (within the meaning of sec-
tion 530(b)).
Any amount rolled over under this subpara-
graph shall be treated as a rollover contribution
for the taxable year from which the unused
amount would otherwise be carried.
‘‘(C) TREATMENT
OF
ROLLOVER.—Any
amount rolled over under subparagraph (B)—
‘‘(i) shall be treated as an eligible roll-
over under section 219, 220, 401(k),
403(b), 457, or 530, whichever is applica-
ble,
‘‘(ii) shall be taken into account in ap-
plying any limitation on contributions
under such section or any other provision
of this chapter for the taxable year of the
rollover, and
‘‘(iii) shall not be taken into account
in applying any participation requirement
on contributions under such section or
other provision for such taxable year.
‘‘(4) COST-OF-LIVING
ADJUSTMENT.—In the
case of any taxable year beginning in a calendar
year after 1999, the $2,000 amount under para-
graph (2) shall be adjusted at the same time and in
the same manner as under section 415(d)(2), except
that the base period taken into account shall be the
calendar quarter beginning October 1, 1999, and
any increase which is not a multiple of $50 shall be
rounded to the next lowest multiple of $50.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
TITLE VII—INCENTIVES FOR
EDUCATION
SEC. 701. EXCLUSION FROM GROSS INCOME OF EDUCATION
DISTRIBUTIONS 
FROM 
QUALIFIED 
STATE
TUITION PROGRAMS.
(a) IN GENERAL.—Section 529(c)(3)(B) (relating to
distributions) is amended to read as follows:
‘‘(B) 
DISTRIBUTIONS
FOR
QUALIFIED
HIGHER EDUCATION EXPENSES.—
‘‘(i) IN GENERAL.—No amount shall
be includible in gross income under sub-
paragraph (A) if the qualified higher edu-
cation expenses of the designated bene-
ficiary during the taxable year are not less
than the aggregate distributions during the
taxable year.
‘‘(ii) DISTRIBUTIONS
IN
EXCESS
OF
EXPENSES.—If such aggregate distribu-
tions exceed such expenses during the tax-
able year, the amount otherwise includible
in gross income under subparagraph (A)
shall be reduced by the amount which
bears the same ratio to the amount so in-
cludible (without regard to this subpara-
graph) as such expenses bear to such ag-
gregate distributions.
‘‘(iii) ELECTION
TO
WAIVE
EXCLU-
SION.—A taxpayer may elect to waive the
application of this subparagraph for any
taxable year.
‘‘(iv) IN-KIND
DISTRIBUTIONS.—Any
benefit furnished to a designated bene-
ficiary under a qualified State tuition pro-
gram shall be treated as a distribution to
the beneficiary for purposes of this para-
graph.
‘‘(v) DISALLOWANCE
OF
EXCLUDED
AMOUNTS AS CREDIT OR DEDUCTION.—No
deduction or credit shall be allowed to the
taxpayer under any other section of this
chapter for any qualified higher education
expenses to the extent taken into account
in determining the amount of the exclusion
under this paragraph.’’.
(b) COORDINATION WITH EDUCATION CREDITS.—
Section 25A(e)(2) (relating to coordination with exclu-
sions) is amended—
(1) by inserting ‘‘a qualified State tuition pro-
gram or’’ before ‘‘an education individual retirement
account’’; and
(2) by striking ‘‘section 530(d)(2)’’ and insert-
ing ‘‘section 529(c)(3)(B) or 530(d)(2)’’.
(c) ELIGIBLE EDUCATIONAL INSTITUTIONS PER-
MITTED TO MAINTAIN QUALIFIED TUITION PROGRAMS.—
(1) IN GENERAL.—Section 529(b)(1) (defining
qualified State tuition program) is amended by in-
serting ‘‘or by one or more eligible educational insti-
tutions’’ after ‘‘maintained by a State or agency or
instrumentality thereof’’.
(2) PRIVATE
QUALIFIED
TUITION
PROGRAMS
LIMITED TO PREPAID PLANS.—Section 529(b)(1) is
amended by adding at the end the following flush
sentence:
‘‘Clause (ii) of subparagraph (A) shall only apply to
a program established and maintained by a State or
any agency or instrumentality thereof.’’.
(3) TAX ON EXCESS CONTRIBUTIONS.—
(A) IN GENERAL.—Section 4973(a) (relat-
ing to tax imposed) is amended by striking ‘‘or’’
at the end of paragraph (3), inserting ‘‘or’’ at
the end of paragraph (4), and inserting after
paragraph (4) the following new paragraph:
‘‘(5) a private qualified tuition program (as de-
fined in subsection (g)),’’.
(B) EXCESS CONTRIBUTIONS DEFINED.—
Section 4973 is amended by adding at the end
the following new subsection:
‘‘(g) EXCESS CONTRIBUTIONS TO PRIVATE QUALI-
FIED TUITION PROGRAM.—For purposes of this section—
‘‘(1) IN
GENERAL.—In the case of private
qualified tuition programs, the term ‘excess con-
tributions’ means, with respect to any one bene-
ficiary, the amount contributed to a private qualified
tuition program for any taxable year if any amount
is contributed during such year for the benefit of
such beneficiary to a qualified tuition program (as
defined in section 529) other than a private qualified
tuition program.
‘‘(2) PRIVATE QUALIFIED TUITION PROGRAM.—
The term ‘private qualified tuition program’ means
a qualified tuition program (as defined in section
529) not established and maintained by a State or
any agency or instrumentality thereof.’’.
(4) TECHNICAL AMENDMENTS.—
(A) The text of sections 25A(e)(2),
72(e)(9), 
529, 
530(b)(2)(B), 
and
4973(e)(1)(B), as previously amended by this
Act, are each amended by striking ‘‘qualified
State tuition program’’ each place it appears
and inserting ‘‘qualified tuition program’’.
(B)(i) The heading of section 529 is
amended to read as follows:
‘‘SEC. 529. QUALIFIED TUITION PROGRAMS.’’.
(ii) The item relating to section 529 in the
table of sections for part VIII of subchapter F
of chapter 1 is amended by striking ‘‘State’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
TITLE VIII—REPEAL OF
TELEPHONE EXCISE TAX
SEC. 801. REPEAL OF EXCISE TAX ON TELEPHONE AND
OTHER COMMUNICATIONS SERVICES.
(a) IN GENERAL.—Paragraph (2) of section 4251(b)
is amended to read as follows:
‘‘For bills first rendered
The applicable
during calendar year—
percentage is—
2000 .............................................................................................
2.4
2001 .............................................................................................
1.8
2002 .............................................................................................
1.2
2003 .............................................................................................
0.6
2004 and thereafter .....................................................................
0.0.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to amounts paid pursuant to bills
first rendered after December 31, 1999.
SEC. 802. SENSE OF CONGRESS TO REPEAL FEDERAL COM-
MUNICATIONS 
COMMISSION 
E-RATE 
DIS-
COUNT PROGRAM FOR SCHOOLS AND LI-
BRARIES.
It is the sense of the Congress that the Federal Com-
munications Commission E-rate discount program for
schools and libraries should be terminated.
TITLE IX—EXTENSION OF
EXPIRING PROVISIONS
SEC. 901. RESEARCH CREDIT.
(a) EXTENSION.—
(1) IN
GENERAL.—Paragraph (1) of section
41(h) (relating to termination) is amended—
(A) by striking ‘‘June 30, 1999’’ and in-
serting ‘‘June 30, 2004’’;
(B) by striking ‘‘36-month’’ and inserting
‘‘96-month’’; and
(C) by striking ‘‘36 months’’ and inserting
‘‘96 months’’.
(2) TECHNICAL
AMENDMENT.—Subparagraph
(D) of section 45C(b)(1) is amended by striking
‘‘June 30, 1999’’ and inserting ‘‘June 30, 2004’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to amounts paid or in-
curred after June 30, 1999.
‘‘(I) a long-term family assistance recipi-
ent.’’
(2) DEFINITION.—Subsection (d) of section 51
is amended by redesignating paragraphs (10), (11),
and (12) as paragraphs (11), (12), and (13), respec-
tively, and by inserting after paragraph (9) the fol-
lowing new paragraph:
‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI-
ENT.—
‘‘(A) IN GENERAL.—The term ‘long-term
family assistance recipient’ means any indi-
vidual who is certified by the designated local
agency—
‘‘(i) as being a member of a family re-
ceiving assistance under a IV–A program
for at least the 18-month period ending on
the hiring date,
‘‘(ii)(I) as being a member of a family
receiving such assistance for at least 18
months beginning after August 5, 1997,
and
‘‘(II) as having a hiring date which is
not more than 2 years after the end of the
18th month beginning after August 5,
1997, that the individual is a member of a
family receiving such assistance, or
‘‘(iii)(I) as being a member of a fam-
ily which ceased to be eligible after August
5, 1997, for such assistance by reason of
any limitation imposed by Federal or State
law on the maximum period such assist-
ance is payable to a family, and
‘‘(II) as having a hiring date which is
not more than 2 years after the date of
such cessation.
‘‘(B) SPECIAL RULES FOR DETERMINING
AMOUNT OF CREDIT.—For purposes of applying
this subpart to wages paid or incurred to any
long-term family assistance recipient—
‘‘(i) the credit determined under this
section shall include 40 percent of the
qualified second-year wages for the taxable
year,
‘‘(ii) 
notwithstanding 
subsection
(b)(3), the amount of the qualified first-
year wages, and the amount of qualified
second-year wages, which may be taken
into account with respect to any individual
shall not exceed $10,000 per year, and
‘‘(iii) paragraph (1) of subsection (h)
shall be applied by substituting ‘$10,000’
for ‘$6,000’ in subparagraph (A) and
‘$833.33’ for ‘$500’ in subparagraph (B).
‘‘(C) QUALIFIED SECOND-YEAR WAGES.—
For purposes of subparagraph (B), the term
‘qualified second-year wages’ means, with re-
spect to any individual, qualified wages attrib-
utable to service rendered during the 1-year pe-
riod beginning on the day after the last day of
the 1-year period with respect to such indi-
vidual determined under subsection (b)(2).’’
(3) REPEAL OF SEPARATE WELFARE-TO-WORK
CREDIT.—
(A) Section 51A is hereby repealed.
(B) The table of sections for subpart E of
part IV of subchapter A of chapter 1 is amend-
ed by striking the item relating to section 51A.
(d) CLARIFICATION OF FIRST YEAR OF EMPLOY-
MENT.—Paragraph (2) of section 51(i) is amended by
striking ‘‘during which he was not a member of a targeted
group’’.
(e) TECHNICAL CORRECTION.—Subparagraph (B) of
section 51(d)(2) is amended—
(1) by striking ‘‘plan approved’’ and inserting
‘‘program funded’’, and
(2) by striking ‘‘(relating to assistance for
needy families with minor children)’’.
(f) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to individuals who begin
work for the employer after June 30, 1999.
(2) CLARIFICATION.—The amendment made by
subsection (d) shall apply to individuals who begin
work for the employer after June 30, 1999.
(3) TECHNICAL CORRECTION.—The amendment
made by subsection (e) shall take effect as if in-
cluded in the amendments made by section 1201 of
the Small Business Job Protection Act of 1996.
SEC. 903. SUBPART F EXEMPTION FOR ACTIVE FINANCING
INCOME.
(a) 
IN
GENERAL.—Sections 
953(e)(10) 
and
954(h)(9) are each amended by striking ‘‘January 1,
2000’’ and inserting ‘‘January 1, 2001’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1999.
TITLE X—PAY-GO REFORM
SEC. 1001. SPECIAL PAY-AS-YOU-GO RULE.
Section 252 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by adding at the
end the following new subsections:
‘‘(f) SPECIAL RULE
ON INTERRELATIONSHIP BE-
TWEEN SECTIONS 251(c) and 252.—If legislation is en-
acted that—
‘‘(1) reduces receipts; and
‘‘(2) decreases the discretionary spending limits
for budget authority and outlays for the fiscal years
set forth in section 251(c) of the Balanced Budget
and Emergency Deficit Control Act of 1985 for
which there is such a reduction in receipts;
then, for purposes of subsection (b), an amount equal to
that decrease in the discretionary spending limit for out-
lays shall be treated as direct spending legislation decreas-
ing the deficit for that fiscal year.
‘‘(g) SPECIAL RULE FOR TREATMENT OF BUDGET
SURPLUSES.—For purposes of subsection (b), the amount,
if any, designated by OMB in the pay-as-you-go sequestra-
tion preview report as the projected budget surplus for the
current year shall be treated for purposes of offsetting any
receipts legislation as direct spending legislation decreas-
ing the deficit for that fiscal year.’’.
SEC. 1002. ADDITIONAL REPORTING REQUIREMENT.
Section 254(c)(3) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 is amended by adding
at the end the following new subparagraph:
‘‘(D) The projected budget surplus, if
any.’’.
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