I 
112TH CONGRESS 
2D SESSION 
H. R. 4260 
To amend the Internal Revenue Code of 1986 to allow an income disparity 
tax credit. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 26, 2012 
Ms. CLARKE 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 allow an 
income disparity tax credit. 
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 ‘‘Adjusting for Income 
Disparity Act of 2012’’. 
SEC. 2. INCOME DISPARITY TAX CREDIT. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 32 the following new section: 
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‘‘SEC. 32A. INCOME DISPARITY CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this subtitle for the taxable year an amount 
equal to income disparity credit amount with respect to 
the taxpayer for the taxable year. 
‘‘(b) INCOME DISPARITY CREDIT AMOUNT.—For 
purposes of this section— 
‘‘(1) IN GENERAL.—The income disparity credit 
amount shall be an amount equal to the applicable 
credit amount reduced (but not below zero) by the 
applicable percentage of so much of the taxpayer’s 
modified adjusted gross income as exceeds the 
phaseout threshold. 
‘‘(2) APPLICABLE AMOUNT; PERCENTAGE.—The 
applicable credit amount, the applicable percentage, 
and the phaseout threshold shall be determined as 
follows: 
‘‘In the case of a taxpayer with: 
The 
applicable 
credit 
amount is: 
The 
applicable 
percentage is: 
The 
phaseout 
threshold is: 
No dependents ..........................
$2,500 
31⁄3 
$15,000
1 dependent ..............................
$4,000 
51⁄3 
$20,000
2 dependents .............................
$4,500 
$25,000
3 or more dependents ...............
$5,000 
62⁄3 
$30,000. 
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
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‘‘(1) DEPENDENT.—The term ‘dependent’ has 
the meaning given such term by section 152 (deter-
mined without regard to subsections (b)(2) and 
(d)(1)(B) thereof.) 
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.— 
The term ‘modified adjusted gross income’ means 
adjusted gross income increased by— 
‘‘(A) any amount excluded from gross in-
come under section 911, 931, or 933, 
‘‘(B) any amount of interest received or 
accrued by the taxpayer during the taxable year 
which is exempt from tax, 
‘‘(C) an amount equal to the portion of the 
taxpayer’s social security benefits (as defined in 
section 86(d)) which is not included in gross in-
come under section 86 for the taxable year, and 
‘‘(D) any Federal assistance otherwise ex-
cluded from gross income. 
‘‘(3) MARRIED INDIVIDUALS.—In the case of an 
individual who is married (within the meaning of 
section 7703), this section shall apply only if a joint 
return is filed for the taxable year under section 
6013. 
‘‘(4) RULE
FOR
EXCESSIVE
INVESTMENT
IN-
COME.—No credit shall be allowed under subsection 
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(a) for the taxable year if the aggregate amount of 
disqualified income (as defined in section 32(i)(1)) 
of the taxpayer for the taxable year exceeds $3,100. 
‘‘(5) DEPENDENT
INELIGIBLE.—If an indi-
vidual is a dependent with respect to a taxpayer for 
any taxable year of such taxpayer beginning in a cal-
endar year, such individual shall not be allowed a 
credit under this section for any taxable year of such 
individual beginning in such calendar year. 
‘‘(6) LIMITATION
ON
ELIGIBILITY
OF
NON-
RESIDENT ALIENS.—No credit shall be allowed with 
respect to any individual who is a nonresident alien 
individual for any portion of the taxable year unless 
such individual is treated for such taxable year as a 
resident of the United States for purposes of this 
chapter by reason of an election under subsection 
(g) or (h) of section 6013. 
‘‘(7) PRINCIPAL PLACE OF ABODE IN UNITED 
STATES.— 
‘‘(A) IN GENERAL.—No credit shall be al-
lowed with respect to an individual for a taxable 
year, unless such individual’s principal place of 
abode is in the United States for more than 1⁄2 
of such taxable year. 
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‘‘(B) TREATMENT
OF
MILITARY
PER-
SONNEL
STATIONED
OUTSIDE
THE
UNITED 
STATES.—Rules similar to the rules of section 
32(c)(4) shall apply for purposes of subpara-
graph (A). 
‘‘(8) MINIMUM HOURS OF SERVICE.— 
‘‘(A) IN GENERAL.—No credit shall be al-
lowed under subsection (a) with respect to an 
individual unless such individual (or, if married, 
such individual’s spouse) has performed 390 
hours of service or more for an employer during 
the taxable year. 
‘‘(B) SPECIAL
RULE
FOR
SELF-EMPLOY-
MENT.—A taxpayer who is an employee within 
the meaning of section 401(c)(1) shall be treat-
ed as performing service for an employer for 
purposes of this paragraph. 
‘‘(9) IDENTIFYING INFORMATION REQUIRED.— 
No credit shall be allowed under subsection (a) with 
respect to an individual unless the TIN of such indi-
vidual, and the TIN of any dependent taken into ac-
count under this section with respect to such indi-
vidual, is included on the return claiming the credit. 
‘‘(d) INFLATION ADJUSTMENT.—In the case of any 
taxable year beginning in a calendar year after 2012, each 
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of the dollar amounts in the table in subsection (b)(2) and 
the dollar amount in subsection (c)(4) 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 the calendar year in which 
the taxable year begins, determined by substituting 
‘calendar year 2011’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
Any increase determined under the preceding sentence 
shall be rounded to the nearest multiple of $10.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part IV of subchapter A of chapter 1 of such Code 
is amended by inserting after the item relating to section 
32 the following new item: 
‘‘Sec. 32A. Income disparity credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 3. ACCELERATION OF EGTRRA SUNSET. 
(a) IN GENERAL.—Section 901 of the Economic 
Growth and Tax Relief Reconciliation Act of 2001 is 
amended by striking ‘‘December 31, 2012’’ and inserting 
‘‘December 31, 2011’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in the enact-
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ment of the Economic Growth and Tax Relief Reconcili-
ation Act of 2001. 
SEC. 4. ACCELERATION OF JGTRRA SUNSET. 
(a) IN GENERAL.—Section 303 of the Jobs and 
Growth Tax Relief Reconciliation Act of 2003 is amended 
by striking ‘‘December 31, 2012’’ and inserting ‘‘Decem-
ber 31, 2011’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in the enact-
ment of the Jobs and Growth Tax Relief Reconciliation 
Act of 2003. 
Æ 
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