SEC. 2. REPEAL OF TAXATION OF CORPORATIONS.
The following provisions of the Internal Revenue
Code of 1986 are hereby repealed:
(1) section 11 (relating to corporate income
tax),
(2) section 55 (relating to alternative minimum
tax) insofar as it applies to corporations,
(3) section 511 (relating to unrelated business
income tax),
(4) section 531 (relating to accumulated earn-
ings tax),
(5) section 541 (relating to personal holding
company tax),
(6) section 594 (relating to alternative tax for
certain mutual savings banks),
(7) section 801 (relating to tax imposed on life
insurance companies),
(8) section 821 (relating to tax imposed on cer-
tain mutual insurance companies),
(9) section 831 (relating to tax on certain other
insurance companies),
(10) section 852 (relating to tax on regulated
investment companies),
(11) section 857 (relating to tax on real estate
investment trusts), and
(12) section 882 (relating to tax on income of
foreign corporations connected with United States
business).
SEC. 3. 10 PERCENT INCOME TAX RATE FOR INDIVIDUALS.
Section 1 of the Internal Revenue Code of 1986 (re-
lating to tax imposed on individuals) is amended to read
as follows:
‘‘SECTION 1. TAX IMPOSED.
‘‘(a) IN GENERAL.—There is hereby imposed on the
income of every individual a tax equal to 10 percent of
the excess of the earned income of such individual for the
taxable year over the exemption amount for such year.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) EXEMPTION AMOUNT.—
‘‘(A) IN GENERAL.—The term ‘exemption
amount’ means, for any taxable year, $10,000
increased (for taxable years beginning after De-
cember 31, 1995) by an amount equal to
$10,000 multiplied by the cost-of-living adjust-
ment for the calendar year in which the taxable
year begins.
‘‘(B) COST-OF-LIVING ADJUSTMENT.—For
purposes of this paragraph—
‘‘(i) IN GENERAL.—The cost-of-living
adjustment for any calendar year is the
percentage (if any) by which—
‘‘(I) the CPI for October of the
preceding calendar year, exceeds
‘‘(II) the CPI for October of
1994.
‘‘(ii) CPI.—The term ‘CPI’ means the
last Consumer Price Index for all-urban
consumers published by the Department of
Labor.
‘‘(C) ROUNDING.—If the increase deter-
mined under this paragraph is not a multiple of
$10, such increase shall be rounded to the near-
est multiple of $10 (or if such increase is a
multiple of $5, such increase shall be increased
to the next highest multiple of $10).
‘‘(2) EARNED INCOME.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘earned income’
means—
‘‘(i) wages, salaries, and other em-
ployee compensation,
‘‘(ii) the amount of the taxpayer’s net
earnings from self-employment for the tax-
able year, and
‘‘(iii) the amount of dividends which
are from a personal service corporation or
which are otherwise directly or indirectly
compensation for services.
‘‘(B) EXCEPTIONS.—The term ‘earned in-
come’ does not include—
‘‘(i) any amount received as a pension
or annuity, or
‘‘(ii) any tip unless the amount of the
tip is not within the discretion of the serv-
ice-recipient.
‘‘(C) FRINGE BENEFITS VALUED AT EM-
PLOYER COST.—The amount of any fringe ben-
efit which is included as earned income shall be
the cost to the employer of such benefit.’’
SEC. 4. AMNESTY FOR ALL PRIOR TAX LIABILITY.
(a) IN GENERAL.—No person shall be liable for any
tax imposed by chapter 1 of the Internal Revenue Code
of 1986 (or for penalties and interest with respect to such
tax) for any taxable year ending before January 1, 1994.
(b) EXCEPTIONS.—
(1) AMOUNTS PAID.—Subsection (a) shall not
apply to amounts paid before the date of the enact-
ment of this Act.
(2) TAX
ATTRIBUTABLE
TO
ILLEGAL
ACTIVI-
TIES.—Subsection (a) shall not apply to any tax (in-
cluding penalties and interest with respect to such
tax) attributable to any business activity which is in
violation of any Federal, State, or local law.
SEC. 5. REPEAL OF SPECIAL DEDUCTIONS, CREDITS, AND
EXCLUSIONS FROM INCOME FOR INDIVID-
UALS.
Chapter 1 of the Internal Revenue Code of 1986 is
amended by striking out all specific exclusions from gross
income, all deductions, and all credits against income tax
to the extent related to the computation of individual in-
come tax liability.
SEC. 6. REPEAL OF ESTATE AND GIFT TAXES.
Subtitle B of the Internal Revenue Code of 1986 (re-
lating to estate, gift, and generation-skipping taxes) is
hereby repealed.
SEC. 7. EFFECTIVE DATES.
(a) IN GENERAL.—Except as provided in subsection
(b), the amendments made by this Act shall apply to tax-
able years beginning after the date of the enactment of
this Act.
(b) REPEAL OF ESTATE AND GIFT TAXES.—The re-
peal made by section 6 shall apply to estates of decedents
dying, and transfers made, after the date of the enactment
of this Act.
(c) TECHNICAL AND CONFORMING CHANGES.—The
Secretary of the Treasury or his delegate shall, as soon
as practicable but in any event not later than 90 days
after the date of the enactment of this Act, submit to the
Committee on Ways and Means of the House of Rep-
resentatives a draft of any technical and conforming
changes in the Internal Revenue Code of 1986 which are
necessary to reflect throughout such Code the changes in
the substantive provisions of law made by this Act.
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