I 
109TH CONGRESS 
1ST SESSION H. R. 1500 
To amend the Internal Revenue Code of 1986 to make the 2003 reduction 
in the individual capital gains tax rates permanent and to further reduce 
and simplify such rates and to reduce the corporate capital gains rate. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 6, 2005 
Mr. DREIER (for himself and Mr. ENGLISH of Pennsylvania) 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 make 
the 2003 reduction in the individual capital gains tax 
rates permanent and to further reduce and simplify such 
rates and to reduce the corporate capital gains rate. 
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 ‘‘Investment Tax Sim-
plification Act of 2005’’.
SEC. 2. PERMANENT REDUCTION IN CAPITAL GAINS RATES 
FOR INDIVIDUALS AND CORPORATIONS. 
(a) REPEAL OF SUNSET OF REDUCTION IN CAPITAL 
GAINS RATES FOR INDIVIDUALS.—Section 303 of the 
Jobs and Growth Tax Relief Reconciliation Act of 2003 
shall not apply to section 301 of such Act. 
(b) FURTHER REDUCTION IN AND SIMPLIFICATION 
OF CAPITAL GAINS RATES FOR INDIVIDUALS.— 
(1) IN
GENERAL.—Paragraph (1) of section 
1(h) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(1) IN GENERAL.—If a taxpayer has a net 
capital gain for any taxable year, the tax imposed by 
this section for such taxable year shall not exceed 
the sum of— 
‘‘(A) a tax computed at the rates and in 
the same manner as if this subsection had not 
been enacted on taxable income reduced by the 
net capital gain, and 
‘‘(B) 15 percent of the excess (if any) of— 
‘‘(i) the net capital gain (or, if less, 
taxable income), over 
‘‘(ii) the amount of taxable income 
which would (without regard to this para-
graph) be taxed at a rate below 25 per-
cent.’’.
(2) ALTERNATIVE MINIMUM TAX.—Paragraph 
(3) of section 55(b) of such Code is amended to read 
as follows: 
‘‘(3) MAXIMUM RATE OF TAX ON NET CAPITAL 
GAIN OF NONCORPORATE TAXPAYERS.—The amount 
determined under the first sentence of paragraph 
(1)(A)(i) shall not exceed the sum of— 
‘‘(A) the amount determined under such 
first sentence computed at the rates and in the 
same manner as if this paragraph had not been 
enacted on the taxable excess reduced by the 
net capital gain, plus 
‘‘(B) the amount determined under section 
1(h)(1)(B).’’. 
(3) CONFORMING AMENDMENTS.— 
(A)(i) Subsection (h) of section 1 of such 
Code is amended by striking paragraphs (3) 
through (8) and by redesignating paragraphs 
(9), (10), and (11) as paragraphs (3), (4), and 
(5), respectively. 
(ii) Sections 163(d)(4)(B), 854(b)(5), and 
857(c)(2)(D) of such Code are each amended 
by striking ‘‘section 1(h)(11)(B)’’ and inserting 
‘‘section 1(h)(5)(B)’’.
(iii) 
Sections 
301(f)(4), 
306(a)(1)(D), 
584(c), 702(a)(5), 854(a), and 854(b)(2) of 
such Code are each amended by striking ‘‘sec-
tion 1(h)(11)’’ and inserting ‘‘section 1(h)(5)’’. 
(iv) The heading of section 857(c)(2) of 
such Code is amended by striking ‘‘SECTION 
1(h)(11)’’ and inserting ‘‘SECTION 1(h)(5)’’. 
(B) Section 4985(a)(1) of such Code is 
amended by striking ‘‘section 1(h)(1)(C)’’ and 
inserting ‘‘section 1(h)(1)(B)’’. 
(c) REDUCED CAPITAL GAINS RATE FOR CORPORA-
TIONS.— 
(1) IN GENERAL.—Section 1201 of such Code 
is amended by striking ‘‘35 percent’’ both places it 
appears and inserting ‘‘15 percent’’. 
(2) 
ALTERNATIVE
MINIMUM
TAX.—Section 
55(b) of such Code is amended by adding at the end 
the following new paragraph: 
‘‘(4) MAXIMUM RATE OF TAX ON NET CAPITAL 
GAIN OF CORPORATIONS.—The amount determined 
under paragraph (1)(B)(i) shall not exceed the sum 
of— 
‘‘(A) the amount determined under such 
paragraph computed at the rates and in the 
same manner as if this paragraph had not been
enacted on the taxable excess reduced by the 
net capital gain, plus 
‘‘(B) the amount determined under section 
1201.’’. 
(3) TECHNICAL AMENDMENTS.— 
(A) Section 1445(e)(1) of such Code is 
amended by striking ‘‘35 percent (or, to the ex-
tent provided in regulations, 15 percent)’’ and 
inserting ‘‘15 percent’’. 
(B) Section 1445(e)(2) of such Code is 
amended by striking ‘‘35 percent’’ and inserting 
‘‘15 percent’’. 
(C) Section 7518(g)(6)(A) of such Code is 
amended by striking ‘‘(34 percent in the case of 
a corporation)’’. 
(D) Section 607(h)(6)(A) of the Merchant 
Marine Act, 1936 is amended by striking ‘‘(34 
percent in the case of a corporation)’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years ending after the date of 
the enactment of this Act.
(2) WITHHOLDING.—The amendment made by 
subsection (c)(3)(B) shall apply to amounts paid 
after the date of the enactment of this Act. 
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