I
103D CONGRESS
1ST SESSION
H. R. 958
To amend the Internal Revenue Code to simplify the earned income credit.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 17, 1993
Mrs. KENNELLY introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code to simplify the earned
income credit.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SIMPLIFICATION OF EARNED INCOME CREDIT.
(a) GENERAL RULE.—Section 32 of the Internal
Revenue Code of 1986 (relating to earned income credit)
is amended by striking subsections (a) and (b) and insert-
ing the following:
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an eligible
individual, there shall be allowed as a credit against
the tax imposed by this subtitle for the taxable year
an amount equal to the credit percentage of so much
of the taxpayer’s earned income for the taxable year
as does not exceed $5,714.
‘‘(2) LIMITATION.—The amount of the credit
allowable to a taxpayer under paragraph (1) for any
taxable year shall not exceed the excess (if any) of—
‘‘(A) the credit percentage of $5,714, over
‘‘(B) the phaseout percentage of so much
of the adjusted gross income (or, if greater, the
earned income) of the taxpayer for the taxable
year as exceeds $9,000.
‘‘(b) PERCENTAGES.—For purposes of subsection
(a)—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection—
‘‘In the case of an eligible individual
with:
The credit percentage is:
The phase-
out percent-
age is:
1 qualifying child ..............................
23.0 ............................
16.43
2 qualifying children .........................
29.0 ............................
20.71
3 or more qualifying children ...........
33.01 ..........................
23.56
‘‘(2) TRANSITIONAL
PERCENTAGES.—In the
case of a taxable year beginning in 1993:
‘‘In the case of an eligible individual
with:
The credit percentage
is:
The
phaseout
percentage
is:
1 qualifying child .............................
18.5 .............................
13.21
2 qualifying children ........................
23.5 .............................
16.78
3 or more qualifying children ..........
28.5 .............................
20.35’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 32(f) is amended
by striking ‘‘subsection (b)’’ each place it appears
and inserting ‘‘subsection (a)(2)’’.
(2) Subparagraph (B) of section 32(i)(2) is
amended—
(A) by striking ‘‘subsection (b)(1)’’ in
clause (i) and inserting ‘‘subsection (a)’’, and
(B) by striking ‘‘subsection (b)(1)(B)(ii)’’
in clause (ii) and inserting ‘‘subsection (a)(2)’’.
(3) Paragraph (3) of section 162(l) is amended
to read as follows:
‘‘(3) COORDINATION
WITH
MEDICAL
DEDUC-
TION.—Any amount paid by a taxpayer for insur-
ance to which paragraph (1) applies shall not be
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section
213(a).’’
(4) Section 213 is amended by striking sub-
section (f).
(5) Subparagraph (B) of section 3507(c)(2) is
amended by striking clauses (i) and (ii) and insert-
ing the following:
‘‘(i) of not more than the percentage
(in effect under section 32(a)(1) for an eli-
gible individual with 1 qualifying child) of
earned income not in excess of the amount
of earned income taken into account under
section 32(a)(1), which
‘‘(ii) phases out between the amount
of earned income at which the phaseout be-
gins under subsection (a)(2) of section 32
and the amount of earned income at which
the credit under section 32 is phased out
under such subsection for an individual
with 1 qualifying child, or’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1992.
SEC. 2. REQUIRED EXPLANATION OF ADVANCE PAYMENT
PROVISIONS.
(a) GENERAL RULE.—Section 3507 of the Internal
Revenue Code of 1986 is amended by adding at the end
thereof the following new subsection:
‘‘(f) REQUIRED EXPLANATION OF ADVANCE PAY-
MENT PROVISIONS.—The Secretary shall include with any
refund of an overpayment of tax made to an individual
eligible for the credit provided by section 32—
‘‘(1) an explanation of the provisions of this
section, and
‘‘(2) a copy of the form to be used in furnishing
an earned income eligibility certificate to the individ-
ual’s employer.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on December 31, 1993.
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