I
106TH CONGRESS
1ST SESSION
H. R. 2646
To amend the Internal Revenue Code of 1986 to provide common sense
tax relief for families.
IN THE HOUSE OF REPRESENTATIVES
JULY 29, 1999
Mrs. MCCARTHY of New York 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
common sense tax relief for families.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Common Sense Family Tax Relief Act of 1999’’.
(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.
TITLE I—TAX RELIEF FOR FAMILIES
Sec. 101. Elimination of marriage penalty in standard deduction.
Sec. 102. Expansion of dependent care tax credit.
Sec. 103. Credit for employer expenses in providing certain dependent care
services.
Sec. 104. Reduction in individual capital gain tax rates.
Sec. 105. Capital gains tax rates applied to capital gains of designated settle-
ment funds.
TITLE II—TAX RELIEF FOR BUSINESSES
Sec. 201. Permanent extension of research credit; increase in percentages under
alternative incremental credit.
Sec. 202. Repeal of limitation on estate tax deduction for family-owned busi-
ness interests.
TITLE III—EDUCATIONAL OPPORTUNITIES
Sec. 301. Elimination of 60-month limit on student loan interest deduction.
Sec. 302. Credit for information technology training program expenses.
Sec. 303. Certain credits related to education and children allowed against al-
ternative minimum tax.
TITLE IV—TAX RELIEF FOR RETIREMENT SAVINGS
Sec. 401. Increase in deduction for individual retirement plan savings.
Sec. 402. Adjustment in monthly exempt amount for purposes of the social se-
curity earnings test.
TITLE V—INCENTIVE FOR AFFORDABLE HOUSING
Sec. 501. Increase in State ceiling on low-income housing credit.
TITLE VI—INCENTIVES FOR HEALTH CARE AND LONG-TERM
CARE
Sec. 601. Deduction for 100 percent of health insurance costs of self-employed
individuals.
Sec. 602. Credit for taxpayers with long-term care needs.
TITLE I—TAX RELIEF FOR
FAMILIES
SEC. 101. ELIMINATION OF MARRIAGE PENALTY IN STAND-
ARD DEDUCTION.
(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 AMENDMENTS.—
(1) Subparagraph (B) of section 1(f)(6) is
amended by striking ‘‘(other than with’’ and all that
follows through ‘‘shall be applied’’ and inserting
‘‘(other than with respect to sections 63(c)(4) and
151(d)(4)(A)) shall be applied’’.
(2) Paragraph (4) of section 63(c) is amended
by adding at the end the following flush sentence:
‘‘The preceding sentence shall not apply to the
amount referred to in paragraph (2)(A).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 102. EXPANSION OF DEPENDENT CARE TAX CREDIT.
(a) IN GENERAL.—Paragraph (2) of section 21(a)
(relating to expenses for household and dependent care
services necessary for gainful employment) is amended to
read as follows:
‘‘(2) APPLICABLE PERCENTAGE DEFINED.—For
purposes of paragraph (1), the term ‘applicable per-
centage’ means 50 percent reduced (but not below
20 percent) by 1 percentage point for each $1,000
(or fraction thereof) by which the taxpayer’s ad-
justed gross income for the taxable year exceeds
$30,000.’’
(b) MINIMUM CREDIT ALLOWED FOR STAY-AT-HOME
PARENTS.—Section 21(e) (relating to special rules) is
amended by adding at the end the following:
‘‘(11) MINIMUM CREDIT ALLOWED FOR STAY-
AT-HOME
PARENTS.—Notwithstanding 
subsection
(d), in the case of any taxpayer with one or more
qualifying 
individuals 
described 
in 
subsection
(b)(1)(A) under the age of 1 at any time during the
taxable year, such taxpayer shall be deemed to have
employment-related expenses with respect to such
qualifying individuals in an amount equal to the
greater of—
‘‘(A) the amount of employment-related ex-
penses incurred for such qualifying individuals
for the taxable year (determined under this sec-
tion without regard to this paragraph), or
‘‘(B) $125 for each month in such taxable
year during which such qualifying individual is
under the age of 1.’’.
(c) 
INFLATION
ADJUSTMENT
OF
DOLLAR
AMOUNTS.—
(1) Section 21 is amended by redesignating
subsection (f) as subsection (g) and by inserting
after subsection (e) the following new subsection:
‘‘(f) INFLATION ADJUSTMENT.—In the case of any
taxable year beginning in a calendar year after 2000, the
$30,000 amount contained in subsection (a), the $2,400
amount in subsection (c), and the $125 amount in sub-
section (e)(11)(B) shall be increased by an amount equal
to—
‘‘(1) such dollar amount, multiplied by
‘‘(2) the cost-of-living adjustment determined
under section 1(f)(3) for such calendar year by sub-
stituting ‘calendar year 1999’ for ‘calendar year
1992’ in subparagraph (B) thereof.
If the increase determined under the preceding sentence
is not a multiple of $50 ($1 in the case of the $60 amount
in subsection (e)(11)(B)), such amount shall be rounded
to the next lowest multiple thereof.’’
(2) Paragraph (2) of section 21(c) is amended
by striking ‘‘$4,800’’ and inserting ‘‘twice the dollar
amount applicable under paragraph (1)’’.
(3) Paragraph (2) of section 21(d) is amended
by striking ‘‘less than—’’ and all that follows
through the end of the first sentence and inserting
‘‘less than 1⁄12 of the amount which applies under
subsection (c) to the taxpayer for the taxable year.’’
(d) CREDIT ALLOWED BASED
ON RESIDENCY
IN
CERTAIN CASES.—Subsection (e) of section 21 is amend-
ed by adding at the end the following new paragraph:
‘‘(12) CREDIT ALLOWED BASED ON RESIDENCY
IN CERTAIN CASES.—In the case of a taxpayer—
‘‘(A) who does not satisfy the household
maintenance test of subsection (a) for any pe-
riod, but
‘‘(B) whose principal place of abode for
such period is also the principal place of abode
of any qualifying individual, then such taxpayer
shall be treated as satisfying such test for such
period but the amount of credit allowable under
this section with respect to such individual shall
be determined by allowing only 1⁄12 of the limi-
tation under subsection (c) for each full month
that the requirement of subparagraph (B) is
met.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 103. CREDIT FOR EMPLOYER EXPENSES IN PRO-
VIDING CERTAIN DEPENDENT CARE SERV-
ICES.
(a) GENERAL RULE.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at the end
the following new section:
‘‘SEC. 45D. EMPLOYER EXPENSES IN PROVIDING DEPEND-
ENT CARE SERVICES.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the employer day care center credit determined under this
section for the taxable year is the amount determined
under subsection (b) with respect to each qualified day
care center of the taxpayer.
‘‘(b) CREDIT PER FACILITY.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The amount determined
under this subsection for any taxable year with re-
spect to any qualified day care facility of the tax-
payer is 50 percent of the excess (if any) of—
‘‘(A) the expenses paid or incurred by the
taxpayer during the taxable year in providing
dependent care services at such facility for em-
ployees, over
‘‘(B) the aggregate amount received or ac-
crued during the taxable year by the employer
for such services.
‘‘(2) DEPRECIATION
ALLOWANCES.—For pur-
poses of paragraph (1), depreciation allowances
under section 167 shall be treated as expenses.
‘‘(c) QUALIFIED DAY CARE CENTER.—For purposes
of this section, the term ‘qualified day care center’ means
any day care center—
‘‘(1) which is operated by the taxpayer exclu-
sively for purposes of providing dependent care serv-
ices to employees,
‘‘(2) which is located on the business premises
of the taxpayer or on a site adjacent to such prem-
ises,
‘‘(3) which complies with all applicable laws and
regulations of a State or unit of local government,
and
TITLE V—INCENTIVE FOR
AFFORDABLE HOUSING
SEC. 501. INCREASE IN STATE CEILING ON LOW-INCOME
HOUSING CREDIT.
(a) IN GENERAL.—Clause (i) of section 42(h)(3)(C)
(relating to State housing credit ceiling) is amended by
striking ‘‘$1.25’’ and inserting ‘‘$1.75’’.
(b) ADJUSTMENT
OF
STATE
CEILING
FOR
IN-
CREASES IN COST-OF-LIVING.—Paragraph (3) of section
42(h) (relating to housing credit dollar amount for agen-
cies) is amended by adding at the end the following new
subparagraph:
‘‘(H) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—In the case of a
calendar year after 2000, the dollar
amount contained in subparagraph (C)(i)
shall be increased by an amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3)
for such calendar year by substituting
‘calendar year 1999’ for ‘calendar
year 1992’ in subparagraph (B) there-
of.