I
105TH CONGRESS
2D SESSION
H. R. 3620
To amend the Internal Revenue Code of 1986 to reduce individual income
tax rates, simplify the tax code, eliminate the marriage penalty, provide
for return-free filing of income taxes, prohibit income tax rates from
increasing without a national referendum, eliminate corporate welfare,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 1, 1998
Mr. GEPHARDT introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Rules,
Government Reform and Oversight, and House Oversight, for a period to
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend the Internal Revenue Code of 1986 to reduce
individual income tax rates, simplify the tax code, elimi-
nate the marriage penalty, provide for return-free filing
of income taxes, prohibit income tax rates from increas-
ing without a national referendum, eliminate corporate
welfare, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Gephardt 10 Percent Tax Act of 1998’’.
(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) SECTION 15 NOT TO APPLY.—No amendment
made by section 101 shall be treated as a change in a
rate of tax for purposes of section 15 of the Internal Reve-
nue Code of 1986 .
TITLE I—REDUCTION IN
INDIVIDUAL INCOME TAXES
SEC. 101. REDUCTION IN INDIVIDUAL INCOME TAX RATES;
ELIMINATION OF MARRIAGE PENALTY IN
RATES.
(a) GENERAL RULE.—Section 1 (relating to tax im-
posed) is amended by striking subsections (a) through (e)
and inserting the following:
‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS
AND SURVIVING SPOUSES.—There is hereby imposed on
the taxable income of—
‘‘(1) every married individual (as defined in sec-
tion 7703) who makes a single return jointly with
his spouse under section 6013, and
‘‘(2) every surviving spouse (as defined in sec-
tion 2(a)),
a tax determined in accordance with the following table:
‘‘If taxable income is:
The tax is:
Not over $46,000 ..........................
10% of taxable income
Over 
$46,000 
but 
not 
over
$80,000.
$4,600, plus 20% of the excess over
$46,000
Over 
$80,000 
but 
not 
over
$150,000.
$11,400, plus 26% of the excess over
$80,000
Over 
$150,000 
but 
not 
over
$275,000.
$29,600, plus 32% of the excess over
$150,000
Over $275,000 ...............................
$69,600, plus 34% of the excess over
$275,000
‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im-
posed on the taxable income of every head of a household
(as defined in section 2(b)) a tax determined in accordance
with the following table:
‘‘If taxable income is:
The tax is:
Not over $32,000 ..........................
10% of taxable income.
Over 
$32,000 
but 
not 
over
$40,000.
$3,200, plus 20% of the excess over
$32,000
Over 
$40,000 
but 
not 
over
$75,000.
$4,800, plus 26% of the excess over
$40,000
Over 
$75,000 
but 
not 
over
$137,500.
$13,900, plus 32% of the excess over
$75,000
Over $137,500................ ...............
$33,900, plus 34% of the excess over
$137,500
‘‘(c) OTHER INDIVIDUALS.—There is hereby imposed
on the taxable income of every individual (other than an
individual to whom subsection (a) or (b) applies) a tax
determined in accordance with the following table:
‘‘If taxable income is:
The tax is:
Not over $23,000 ..........................
10% of taxable income.
‘‘If taxable income is:
The tax is:
Over 
$23,000 
but 
not 
over
$40,000.
$2,300, plus 20% of the excess over
$23,000
Over 
$40,000 
but 
not 
over
$75,000.
$5,700, plus 26% of the excess over
$40,000
Over 
$75,000 
but 
not 
over
$137,500.
$14,800, plus 32% of the excess over
$75,000
Over $137,500................ ...............
$34,800, plus 34% of the excess over
$137,500
‘‘(d) ESTATES AND TRUSTS.—There is hereby im-
posed on the taxable income of—
‘‘(1) every estate, and
‘‘(2) every trust,
taxable under this subsection a tax determined in accord-
ance with the following table:
‘‘If taxable income is:
The tax is:
Not over $1,700 ............................
15% of taxable income.
Over $1,700 but not over $4,000 ..
$255, plus 28% of the excess over
$1,700.
Over $4,000 but not over $6,100 ..
$899, plus 31% of the excess over
$4,000.
Over $6,100 but not over $8,350 ..
$1,550, plus 36% of the excess over
$6,100.
Over $8,350 ...................................
$2,360, plus 39.6% of the excess over
$8,350.’’.
(b) REDUCTION IN INDIVIDUAL ALTERNATIVE MINI-
MUM TAX RATES.—Clause (i) of section 55(b)(1)(A) (de-
fining tentative minimum tax) is amended—
(1) by striking ‘‘26 percent’’ and inserting ‘‘19
percent’’, and
(2) by striking ‘‘28 percent’’ and inserting ‘‘21
percent’’.
(c) CONFORMING AMENDMENTS.—
(1) Subsection (f) of section 1 is amended—
(A) by striking ‘‘1993’’ in paragraph (1)
and inserting ‘‘1999’’,
(B) by striking ‘‘1992’’ in paragraph
(3)(B) and inserting ‘‘1998’’, and
(C) by striking paragraph (7).
(2) The following provisions are each amended
by striking ‘‘1992’’ and inserting ‘‘1998’’ each place
it appears:
(A) Section 25A(h).
(B) Section 32(j)(1)(B).
(C) Section 41(e)(5)(C).
(D) Section 59(j)(2)(B).
(E) Section 63(c)(4).
(F) Section 68(b)(2)(B).
(G) Section 135(b)(2)(B)(ii).
(H) Section 151(d)(4).
(I) Section 220(g)(2).
(J) Section 221(g)(1)(B).
(K) Section 512(d)(2)(B).
(L) Section 513(h)(2)(C)(ii).
(M) Section 685(c)(3)(B).
(N) Section 877(a)(2).
(O) Section 911(b)(2)(D)(ii)(II).
(P) Section 2032A(a)(3)(B).
(Q) Section 2503(b)(2)(B).
(R) Section 2631(c)(2).
(S) Section 4001(e)(1)(B).
(T) Section 4261(e)(4)(A)(ii).
(U) Section 6039F(d).
(V) Section 6334(g)(1)(B).
(W) Section 6601(j)(3)(B).
(X) Section 7430(c)(1).
(3) Subparagraph (B) of section 1(f)(6) is
amended to read as follows:
‘‘(B) MARRIED INDIVIDUALS FILING SEPA-
RATELY.—In the case of a married individual
filing a separate return, subparagraph (A) shall
be applied by substituting ‘$25’ for ‘$50’ each
place it appears for purposes of any increase in
the $50,000 amount under section 68(b)(1).’’.
(4) Subclause (II) of section 42(h)(6)(G)(i) is
amended by striking ‘‘1987’’ and inserting ‘‘1998’’.
(5) Subparagraph (B) of section 132(f)(6) is
amended by inserting before the period ‘‘, deter-
mined by substituting ‘calendar year 1992’ for ‘cal-
endar year 1998’ in subparagraph (B) thereof’’.
(6) Sections 468B(b)(1), 511(b)(1), 641(a),
641(d)(2)(A), and 685(d) are each amended by
striking ‘‘section 1(e)’’ each place it appears and in-
serting ‘‘section 1(d)’’.
(7) Sections 1(f)(2) and 904(b)(3)(E)(ii) are
each amended by striking ‘‘(d), or (e)’’ and inserting
‘‘or (d)’’.
(8) Paragraph (1) of section 1(f) is amended by
striking ‘‘(d), and (e)’’ and inserting ‘‘and (d)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 102. INCREASE IN STANDARD DEDUCTION; ELIMI-
NATION OF MARRIAGE PENALTY IN STAND-
ARD DEDUCTION.
(a) IN GENERAL.—Paragraph (2) of section 63(c)
(relating to standard deduction) is amended to read as fol-
lows:
‘‘(2) BASIC STANDARD DEDUCTION.—For pur-
poses of paragraph (1), the basic standard deduction
is—
‘‘(A) $9,000 in the case of—
‘‘(i) a joint return, or
‘‘(ii) a surviving spouse (as defined in
section 2(a)),
‘‘(B) $6,600 in the case of a head of
household (as defined in section 2(b)), or
‘‘(C) $4,500 in any other case.’’
(b) INCREASE IN ADDITIONAL STANDARD DEDUC-
TION FOR AGED AND BLIND.—
(1) IN GENERAL.—Paragraphs (1) and (2) of
section 63(f) are each amended by striking ‘‘$600’’
and inserting ‘‘$950’’.
(2) UNIFORM AMOUNT.—Subsection (f) of sec-
tion 63 is amended by striking paragraph (3) and by
redesignating paragraph (4) as paragraph (3).
(c) TECHNICAL AMENDMENTS.—
(1) Paragraph (4) of section 63(c) is amended
to read as follows:
‘‘(4) ADJUSTMENTS FOR INFLATION.—
‘‘(A) IN
GENERAL.—In the case of any
taxable year beginning in a calendar year after
1988, each dollar amount contained in para-
graph (2) or (5) or subsection (f) shall be in-
creased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins.
‘‘(B) BASE
PERIOD
ADJUSTMENTS.—In
the case of the dollar amounts contained in
paragraph (5), subparagraph (A) shall be ap-
plied by substituting for ‘calendar year 1998’ in
subparagraph (B) thereof—
‘‘(i) ‘calendar year 1987’ in the case
of the dollar amount contained in para-
graph (5)(A), and
‘‘(ii) ‘calendar year 1997’ in the case
of the dollar amount contained in para-
graph (5)(B).’’.
(2) Subparagraph (B) of section 1(f)(6) is
amended by striking ‘‘subsection (c)(4) of section 63
(as it applies to subsections (c)(5)(A) and (f) of such
section)’’ and inserting ‘‘section 63(c)(4)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 103. INCREASE IN PERSONAL EXEMPTION.
(a) IN GENERAL.—Paragraph (1) of section 151(d)
(relating to exemption amount) is amended by striking
‘‘$2,000’’ and inserting ‘‘$2,900’’.
(b) REPEAL OF PHASEOUT.—Subsection (d) of sec-
tion 151 is amended by striking paragraph (3) and by re-
designating paragraph (4) as paragraph (3).
(c) CONFORMING AMENDMENT.—Subparagraph (A)
of section 151(d)(3), as redesignated by subsection (b),
is amended to read as follows:
‘‘(A) ADJUSTMENT TO BASIC AMOUNT OF
EXEMPTION.—In the case of any taxable year
beginning in a calendar year after 1999, the
dollar amount contained in paragraph (1) shall
be increased by an amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
TITLE II—BASE BROADENING
SEC. 201. ADDITIONAL ITEMS INCLUDIBLE IN GROSS IN-
COME.
(a) INTEREST ON STATE AND LOCAL BONDS.—Sec-
tion 103 (relating to interest on State and local bonds)
is amended by adding at the end the following new sub-
section:
‘‘(d) TERMINATION.—This section shall not apply to
obligations issued after December 31, 1998.’’
(b) 
EMPLOYER-PROVIDED
FRINGE
BENEFITS
OTHER THAN HEALTH BENEFITS.—The following provi-
sions of the Internal Revenue Code of 1986 are hereby
repealed:
(1) Section 117(d) (relating to qualified tuition
reduction).
(2) Section 125 (relating to cafeteria plans).
(3) Section 127 (relating to education assist-
ance programs).
(4) Section 129 (relating to dependent care as-
sistance programs).
(5) Section 132 (relating to certain fringe bene-
fits).
(c) EMPLOYER CONTRIBUTIONS
TO RETIREMENT
PLANS.—
(1) IN
GENERAL.—Subsection (a) of section
402 (relating to taxability of beneficiary of employ-
ees’ trust) is amended to read as follows:
‘‘(a) TAXABILITY
OF BENEFICIARY
OF EXEMPT
TRUST.—
‘‘(1) CONTRIBUTIONS.—Contributions to an
employees’ trust made by an employer to a trust
which is exempt from tax under section 501(a) shall
be included in the gross income of the employee in
accordance with section 83 (relating to property
transferred in connection with performance of serv-
ices), except that the value of the employee’s interest
in the trust shall be substituted for the fair market
value of the property for purposes of applying such
section.
‘‘(2) DISTRIBUTIONS.—The amount actually
distributed or made available to any distributee by
any trust described in paragraph (1) shall be taxable
to the distributee, in the taxable year in which so
distributed or made available, under section 72 (re-
lating to annuities), except that distributions of in-
come of such trust before the annuity starting date
(as defined in section 72(c)(4)) shall be included in
the gross income of the employee without regard to
section 72(e)(5) (relating to amounts not received as
annuities).
‘‘(3) GRANTOR TRUSTS.—A beneficiary of any
trust described in paragraph (1) shall not be consid-
ered the owner of any portion of such trust under
subpart E of part I of subchapter J (relating to
grantors and others treated as substantial owners).’’
(2) APPLICATION OF SECTION 83.—Subsection
(e) of section 83 (relating to property transferred in
connection with performance of services) is amended
by striking paragraph (2).
(d) FOREIGN EARNED INCOME.—Section 911 (relat-
ing to citizens or residents of the United States living
abroad) is hereby repealed.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 202. REPEAL OF ALL ITEMIZED DEDUCTIONS OTHER
THAN DEDUCTIONS FOR MORTGAGE INTER-
EST, INVESTMENT INTEREST, AND EMPLOY-
MENT-RELATED EXPENSES.
(a) IN GENERAL.—Subsection (b) of section 63 (de-
fining taxable income) is amended to read as follows:
‘‘(b) TAXABLE INCOME OF INDIVIDUALS.—
‘‘(1) INDIVIDUALS WHO DO NOT ITEMIZE THEIR
DEDUCTIONS.—In the case of an individual who does
not elect to itemize his deductions for the taxable
year, for purposes of this subtitle, the term ‘taxable
income’ means adjusted gross income minus—
‘‘(A) the standard deduction, and
‘‘(B) the deduction for personal exemptions
provided in section 151.
‘‘(2) INDIVIDUALS WHO ITEMIZE THEIR DEDUC-
TIONS.—In the case of an individual who elects to
itemize his deductions for the taxable year, for pur-
poses of this subtitle, the term ‘taxable income’
means adjusted gross income minus—
‘‘(A) the deduction for personal exemptions
provided in section 151, and
‘‘(B) the deduction under section 163 for
qualified mortgage interest (as defined in sub-
section (h) thereof).’’
(b) REPEAL OF LIMITATIONS ON ITEMIZED DEDUC-
TIONS.—Section 67 (relating to 2-percent floor on mis-
cellaneous itemized deductions) and section 68 (relating
to overall limitation on itemized deductions) are hereby re-
pealed.
(c) DEDUCTIONS FOR INVESTMENT INTEREST AND
EMPLOYEE BUSINESS EXPENSES ALLOWED IN DETER-
MINING ADJUSTED GROSS INCOME.—Subsection (a) of
section 62 is amended by inserting after paragraph (17)
the following new paragraphs:
‘‘(18) INVESTMENT INTEREST.—The deduction
under section 163 for investment interest (as defined
in subsection (d) thereof).
‘‘(19) EMPLOYEE
BUSINESS
EXPENSES.—The
deductions allowed by part VI (section 161 and fol-
lowing) which consist of expenses paid or incurred
by the taxpayer in connection with the performance
by him of services as an employee (other than ex-
penses for which a deduction is allowed under para-
graph (2)) to the extent that the aggregate amount
of such expenses exceeds 2 percent of adjusted gross
income (determined without regard to this para-
graph).’’
(d) DEDUCTIONS FOR RETIREMENT SAVINGS NOT
ALLOWED
IN COMPUTING ADJUSTED GROSS INCOME;
TERMINATION OF ROTH IRA.—
(1) Subsection (a) of section 62 (defining ad-
justed gross income) is amended by striking para-
graph (6) (relating to pension, profit-sharing and
annuity plans of self-employed individuals) and para-
graph (7) (relating to retirement savings).
(2) Section 408A (relating to Roth IRA) is
amended by adding at the end the following new
subsection:
‘‘(f) TERMINATION.—The contribution limit under
subsection (c)(2) for any taxable year beginning after De-
cember 31, 1998, shall be zero; and no rollover or other
transfer may be made to a Roth IRA from an individual
retirement plan (other than a Roth IRA) after such date.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 203. REPEAL OF CERTAIN CREDITS.
(a) DEPENDENT CARE CREDIT.—Section 21 (relat-
ing to expenses for household and dependent care services
necessary for gainful employment) is hereby repealed.
(b) ELDERLY CREDIT.—Section 22 (relating to credit
for the elderly and permanently and totally disabled) is
hereby repealed.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
TITLE III—CORPORATE SUBSIDY
REFORM COMMISSION
SEC. 301. THE COMMISSION.
(a) ESTABLISHMENT.—There is established an inde-
pendent commission to be known as the ‘‘Corporate Sub-
sidy Reform Commission’’ (hereafter in this Act, referred
to as the ‘‘Commission’’).
(b) DUTIES.—The Commission shall—
(1) examine the programs and tax laws of the
Federal Government and identify programs and tax
laws that provide inequitable Federal subsidies;
(2) review inequitable Federal subsidies; and
(3) submit the report required under section
302(b) to the President and the Congress.
(c) LIMITATIONS.—
(1) CREATION OF NEW PROGRAMS OR TAXES.—
This Act is not intended to result in the creation of
new programs or taxes, and the Commission estab-
lished in this section shall limit its activities to re-
viewing existing programs or tax laws with the goal
of ensuring fairness and equity in the operation and
application thereof.
(2) ELIMINATION OF AGENCIES AND DEPART-
MENTS.—The Commission shall limit its rec-
ommendations to the termination or reform of pay-
ments, benefits, services, or tax advantages, rather
than the termination of Federal agencies or depart-
ments.
(d) ADVISORY COMMITTEE.—The Commission shall
be considered an advisory committee within the meaning
of the Federal Advisory Committee Act (5 U.S.C. App.).
(e) APPOINTMENT.—
(1) MEMBERS.—The Commissioners shall be
appointed for the life of the Commission and shall
be composed of nine members of whom—
(A) three shall be appointed by the Presi-
dent of the United States;
(B) two shall be appointed by the Speaker
of the House of Representatives;
(C) one shall be appointed by the minority
Leader of the House of Representatives;
(D) two shall be appointed by the majority
Leader of the Senate; and
(E) one shall be appointed by the minority
Leader of the Senate.
(2) CONSULTATION REQUIRED.—The President,
the Speaker of the House of Representatives, the mi-
nority leader of the House of Representatives, the
majority leader of the Senate, and the minority lead-
er of the Senate shall consult among themselves
prior to the appointment of the members of the
Commission in order to achieve, to the maximum ex-
tent possible, fair and equitable representation of
various points of view with respect to the matters to
be studied by the Commission under subsection (b).
(3) APPOINTMENTS.—During the period of
January 1, 1999 through January 31, 1999, the
President shall submit to the Senate the names of
three individuals for appointment to the Commis-
sion.
(4) FAILURE
TO
APPOINT.—If the President
does not submit to Congress the names of three indi-
viduals for appointment to the Commission on or be-
fore the date specified in paragraph (3), the process
established under this Act shall be terminated.
(5) CHAIRMAN.—At the time the President
nominates individuals for appointment to the Com-
mission the President shall designate one such indi-
vidual who shall serve as Chairman of the Commis-
sion.
(6) BACKGROUND.—The members shall rep-
resent a broad array of expertise covering, to the ex-
tent practical, all subject matter, programs, and tax
laws the Commission is likely to review.
(f) TERMS.—Each member of the Commission in-
cluding the Chairman shall serve until the termination of
the Commission.
(g) MEETINGS.—
(1) INITIAL MEETING.—No later than April 1,
1999, the Commission shall conduct its first meet-
ing.
(2) OPEN
MEETINGS.—Each meeting of the
Commission shall be open to the public. In cases
where classified information, trade secrets, or per-
sonnel matters are discussed, the Chairman may
close the meeting. All proceedings, information, and
deliberations of the Commission shall be available,
ence, in accordance with sections 5702 and 5703 of
title 5, United States Code.
(j) DIRECTOR OF STAFF.—
(1) QUALIFICATIONS.—The Chairman shall ap-
point a Director who has not served in any of the
entities or industries that the Commission intends to
review during the 12 months preceding the date of
such appointment.
(2) PAY.—Notwithstanding section 7 of the
Federal Advisory Committee Act (5 U.S.C. App.),
the Director shall be paid at the rate of basic pay
payable for level IV of the Executive Schedule under
section 5315 of title 5, United States Code.
(3) REPORTS.—On administrative and person-
nel matters, the Director shall submit periodic re-
ports to the Chairman of the Commission and the
chairman and ranking member of the Committee on
Governmental Affairs of the Senate and the Com-
mittee on Government Reform and Oversight of the
House of the Representatives.
(k) STAFF.—
(1) ADDITIONAL PERSONNEL.—Subject to para-
graphs (2) and (4), the Director, with the approval
of the Commission, may appoint and fix the pay of
additional personnel.
(2) APPOINTMENTS.—The Director may make
such appointments without regard to the provisions
of title 5, United States Code, governing appoint-
ments in the competitive service, and any personnel
so appointed may be paid without regard to the pro-
visions of chapter 51 and subchapter III of chapter
53 of that title relating to classification and General
Schedule pay rates.
(3) DETAILEES.—Upon the request of the Di-
rector, the head of any Federal department or agen-
cy may detail any of the personnel of that depart-
ment or agency to the Commission to assist the
Commission in accordance with an agreement en-
tered into with the Commission.
(4) 
RESTRICTIONS
ON
PERSONNEL
AND
DETAILEES.—The following restrictions shall apply
to personnel and detailees of the Commission:
(A) PERSONNEL.—No more than one-third
of the personnel detailed to the Commission
may be on detail from Federal agencies that
deal directly or indirectly with the Federal sub-
sidies the Commission intends to review.
(B) ANALYSTS.—No more than one-fifth of
the professional analysts of the Commission
may be persons detailed from a Federal agency
that deals directly or indirectly with the Federal
subsidies the Commission intends to review.
(C) LEAD ANALYST.—No person detailed
from a Federal agency to the Commission may
be assigned as the lead professional analyst
with respect to an entity or industry the Com-
mission intends to review if the person has been
involved in regulatory or policy-making deci-
sions affecting any such entity or industry in
the 12 months preceding such assignment.
(D) DETAILEE.—A person may not be de-
tailed from a Federal agency to the Commission
if, within 12 months before the detail is to
begin, that person participated personally and
substantially in any matter within that particu-
lar agency concerning the preparation of rec-
ommendations under this Act.
(E) FEDERAL OFFICER OR EMPLOYEE.—
No member of a Federal agency, and no officer
or employee of a Federal agency, may—
(i) prepare any report concerning the
effectiveness, fitness, or efficiency of the
performance on the staff of the Commis-
sion of any person detailed from a Federal
agency to that staff;
(ii) review the preparation of such re-
port; or
(iii) approve or disapprove such a re-
port.
(F) LIMITATION ON STAFF SIZE.—
(i) Subject to clause (ii), there may
not be more than 25 persons (including
any detailees) on the staff at any time.
(ii) The Commission may increase
personnel in excess of the limitation under
clause (i), 15 days after submitting notifi-
cation of such increase to the Committee
on Governmental Affairs of the Senate and
the Committee on Government Reform and
Oversight of the House of Representatives.
(G) LIMITATION ON FEDERAL OFFICER.—
No member of a Federal agency and no em-
ployee of a Federal agency may serve as a Com-
missioner or as a paid member of the staff.
(5) ASSISTANCE.—
(A) IN GENERAL.—The Comptroller Gen-
eral of the United States may provide assist-
ance, including the detailing of employees, to
the Commission in accordance with an agree-
ment entered into with the Commission.
(B) 
CONSULTATION.—The 
Commission
and the Comptroller General of the United
States shall consult with the Committee on
Governmental Affairs of the Senate and the
Committee on Government Reform and Over-
sight of the House of Representatives on the
agreement referred to under subparagraph (A)
before entering into such agreement.
(l) OTHER AUTHORITY.—
(1) EXPERTS AND CONSULTANTS.—The Com-
mission may procure by contract, to the extent funds
are available, the temporary or intermittent services
of experts or consultants pursuant to section 3109
of title 5, United States Code.
(2) LEASING.—The Commission may lease
space and acquire personal property to the extent
that funds are available.
(m) FUNDING.—
(1) COMMISSION.—There are authorized to be
appropriated to the Commission such funds as are
necessary to carry out its duties under this Act.
(2) COMPTROLLER GENERAL.—There are au-
thorized to be appropriated to the Comptroller Gen-
eral of the United States such funds as are nec-
essary to carry out its duties under subsection (k)(5)
and section 302(b)(5).
(n) TERMINATION.—The Commission shall terminate
on September 1, 2000.
SEC. 302. PROCEDURE FOR MAKING RECOMMENDATIONS
TO TERMINATE CORPORATE SUBSIDIES.
(a) AGENCY PLAN.—
(1) IN GENERAL.—No later than April 1, 1999,
or the date budget documents are submitted to Con-
gress in 1999, whichever is earlier, in support of the
budget of each Federal department or agency, the
head of each department or agency shall include in
such documents a list identifying all programs or tax
laws within that department or agency that the head
of the department or agency determines provide in-
equitable Federal subsidies.
(2) CONTENTS.—Such a list shall include—
(A) a detailed description of each program
or tax law in question;
(B) a statement detailing the extent to
which a payment, benefit, service, or tax advan-
tage meets the provisions of section 304;
(C) a statement summarizing the legisla-
tive history and purpose of such payment, bene-
fit, service, or tax advantage, and the laws or
policies directly or indirectly giving rise to the
need for such programs or tax laws; and
(D) a recommendation to the Commission
regarding actions to be taken under section
301(b)(3).
(3) INTERNATIONAL
TRADE
PROGRAMS.—As
part of its agency plan submitted pursuant to this
subsection, the United States Trade Representative
shall survey all federally supported international
trade programs in all Federal agencies and shall cer-
tify to the Commission which of those programs
meet the requirements of section 304(4)(D). The
Trade Representative shall provide the Commission
a detailed statement of the reasons each program
was or was not so certified as part of its agency
plan.
(b) REVIEW AND RECOMMENDATIONS BY THE COM-
MISSION.—
(1) REVIEW AND HEARINGS.—At any time after
the submission of the budget documents to Con-
gress, the Commission shall conduct public hearings
on the recommendations included in the lists re-
quired under subsection (a). All testimony before the
Commission at a public hearing conducted under
this paragraph shall be presented under oath.
(2) REPORT OF COMMISSION.—
(A) REPORT
TO
PRESIDENT.—No later
than November 30, 1999, the Commission shall
submit a report to the President containing the
Commission’s findings and recommendations
for termination, modification, or retention of
each of the inequitable Federal subsidies re-
viewed by the Commission. Such findings and
recommendations shall specify—
(i) all actions, circumstances, and con-
siderations relating to or bearing upon the
recommendations; and
(ii) to the maximum extent prac-
ticable, the estimated effect of the rec-
ommendations upon the policies, laws and
programs directly or indirectly affected by
the recommendations.
(B) CHANGES
IN
RECOMMENDATIONS.—
Subject to the deadline in subparagraph (A), in
making its recommendations, the Commission
may make changes in any of the recommenda-
tions made by a department or agency if the
Commission determines that such department
or agency deviated substantially from the provi-
sions of section 304.
(C) CHANGES.—In the case of a change in
the recommendations made by a department or
agency, the Commission may make the change
only if the Commission—
(i) makes the determination required
under subparagraph (B); and
(ii) conducts a public hearing on the
Commission’s proposed changes.
(D) 
APPLICATION.—Subparagraph 
(C)
shall apply to a change by the Commission in
a department or agency recommendation that
would—
(i) add or delete a payment, benefit,
service, or tax advantage to the list rec-
ommended for termination;
(ii) add or delete a payment, benefit,
service, or tax advantage to the list rec-
ommended for modification; or
(iii) increase or decrease the extent of
a recommendation to modify a payment,
benefit, service, or tax advantage included
in 
a 
department’s 
or 
agency’s 
rec-
ommendation.
(3) JUSTIFICATION.—The Commission shall ex-
plain and justify in the report submitted to the
President under paragraph (2) any recommendation
made by the Commission that is different from a
recommendation made by an agency under sub-
section (a).
(4) REPORT
TO
CONGRESS.—After November
30, 1999, or after the date the Commission submits
recommendations to the President, the Commission
shall, upon request, promptly provide to any Member
of Congress the information used by the Commission
in making its recommendations.
(5) COMPTROLLER GENERAL.—The Comptrol-
ler General of the United States shall—
(A) assist the Commission, to the extent
requested, in the Commission’s review and anal-
ysis of the list, statements, and recommenda-
tions made by departments and agencies under
subsection (a); and
(B) no later than 60 days after April 1,
1999, or the public release of the President’s
budget documents in 1999, whichever is earlier,
submit to the Congress and to the Commission
a report containing a detailed analysis of the
list, statements, and recommendations of each
department or agency.
(c) REVIEW BY THE PRESIDENT.—
(1) IN GENERAL.—No later than December 31,
1999, the President shall submit a report to the
Commission and to the Congress containing the
President’s approval or disapproval of the Commis-
sion’s recommendations submitted under subsection
(b).
(2) APPROVAL.—If the President approves all
the recommendations of the Commission, the Presi-
dent shall submit a copy of such recommendations
to the Congress, together with a certification of such
approval.
(3) 
DISAPPROVAL.—If 
the 
President 
dis-
approves the recommendations of the Commission in
whole or in part, the President shall submit to the
Commission and the Congress the reasons for that
disapproval. No later than February 1, 2000, the
Commission shall submit to the President a revised
list of recommendations.
(4) REVISION.—If the President approves all of
the revised recommendations of the Commission sub-
mitted to the President under paragraph (3), the
President shall submit a copy of such revised rec-
ommendations to the Congress, together with a cer-
tification of such approval.
(5) APPROVAL
OF
ENTIRE
PACKAGE.—The
President may only submit an approval certificate
that pertains to the entire package of recommenda-
tions submitted by the Commission under subsection
(b)(2) or paragraph (3) of this subsection.
(6) FAILURE
TO
SUBMIT.—If the President
does not submit to the Congress an approval and
certification described in paragraph (2) or (4) by
February 15, 2000, the process established under
this Act shall be terminated.
SEC. 303. CONGRESSIONAL CONSIDERATION.
(a) SUBMISSION
OF RECOMMENDATIONS
OF
THE
PRESIDENT.—If the President submits the Commission
recommendations to the Congress under section 302(c) (2)
or (4), such recommendations shall be accompanied by in-
formation specifying—
(1) the reasons and justifications for the rec-
ommendations;
(2) to the maximum extent practicable, the esti-
mated fiscal, economic, and budgetary impact of ac-
cepting the recommendations;
(3) the amount of the projected savings result-
ing from each recommendation;
(4) all actions, circumstances, and consider-
ations relating to or bearing upon the recommenda-
tions and to the maximum extent practicable, the es-
timated effect of the recommendations upon the poli-
cies, laws and programs directly or indirectly af-
fected by the recommendations; and
(5) the specific changes in Federal statute nec-
essary to implement the recommendations.
(b) SUBMISSION
OF RECOMMENDATIONS
TO
THE
SENATE AND HOUSE OF REPRESENTATIVES.—
(1) SUBMISSION
TO
CONGRESS.—The rec-
ommendations submitted by the President to the
Congress under subsection (a) shall be submitted to
the Senate and the House of Representatives on the
same day, and shall be delivered to the Secretary of
the Senate if the Senate is not in session, and to the
Clerk of the House of the Representatives if the
House is not in session.
(2) FEDERAL
REGISTER.—Any recommenda-
tions and accompanying information submitted
under subsection (a) shall be printed in the first
issue of the Federal Register after such submission.
(c) INTRODUCTION.—
(1) DATE
OF
INTRODUCTION.—The Majority
Leader of the Senate or his designee, and the Speak-
er of the House of Representatives, or his designee,
shall introduce a bill (or bills as provided under
paragraph (2)) that implements the recommenda-
tions submitted by the President under subsection
(a), no later than the later of 14 calendar days in
session after the date on which—
(A) the Senate or the House of Represent-
atives received the recommendations submitted
by the President under subsection (a), if the
Senate or the House of Representatives (as ap-
plicable) is in session on the date of such sub-
mission; or
(B) the Senate or the House of Represent-
atives is first in session after such recommenda-
tions are submitted, if the Senate or the House
of Representatives (as applicable) is not in ses-
sion on the date of such submission.
(2) MULTIPLE BILLS.—The majority leader of
the Senate, or his designee, or the Speaker of the
House of Representatives, or his designee, shall in-
troduce a bill or separate bills ensuring that all such
recommendations will be implemented.
(d) COMMITTEE REFERRAL AND ACTION.—
(1) IN GENERAL.—Any committee to which a
bill or bills introduced under subsection (c) is re-
ferred shall report such bill no later than 60 cal-
endar days after the date of referral. Any such re-
ported bill shall be referred to the Committee on
Governmental Affairs of the Senate or the Commit-
tee on Government Reform and Oversight of the
House of Representatives, as applicable.
(2) DISCHARGE.—If a committee does not re-
port a bill within the 60-day period as provided
under paragraph (1), such bill shall be discharged
from the committee and referred to the Committee
on Governmental Affairs of the Senate or the Com-
mittee on Government Reform and Oversight of the
House of Representatives, as applicable.
(3) REPORT TO FLOOR; CONSOLIDATION.—
(A) IN GENERAL.—No later than the first
day the Senate or the House of Representatives
(as applicable) is in session following 10 cal-
endar days in session after the end of the 60-
day period described under paragraphs (1) and
(2), the Committee on Governmental Affairs of
the Senate and the Committee on Government
Reform and Oversight of the House of Rep-
resentatives, as applicable, shall—
(i) consolidate all bills referred under
paragraphs (1) and (2) into a single bill
(without substantive amendment) and re-
port such bill to the Senate or the House
of Representatives; or
(ii) if only 1 bill is referred under
paragraph (1) or (2), report such bill
(without amendment) to the Senate or
House of Representatives.
(B) LEGISLATIVE CALENDAR.—The bill re-
ported under subparagraph (A) shall be placed
on the legislative calendar of the appropriate
House.
(e) PROCEDURE IN SENATE AFTER REPORT OF COM-
MITTEE; DEBATE; AMENDMENTS.—
(1) DEBATE ON BILL.—Debate in the Senate
on a bill reported by the Committee on Govern-
mental Affairs under subsection (d)(3), and all
amendments thereto and debatable motions and ap-
peals in connection therewith, shall be limited to not
more than 30 hours. The time shall be equally di-
vided between, and controlled by, the Majority Lead-
er and Minority Leader or their designees.
(2) DEBATE ON AMENDMENTS.—Debate in the
Senate on any amendment to the bill shall be limited
to 1 hour, to be equally divided between, and con-
trolled by, the mover and the manager of the bill,
and debate on any amendment to an amendment,
debatable motion, or appeal shall be limited to 30
minutes, to be equally divided between, and con-
trolled by, the mover and the manager of the bill, ex-
cept that in the event the manager of the bill is in
favor of any such amendment, motion or appeal, the
time in opposition thereto shall be controlled by the
minority leader or his designee.
(3) LIMIT OF DEBATE.—(A) A motion to fur-
ther limit debate is not debatable. A motion by the
majority leader or his designee to extend debate is
not debatable. A motion to recommit is not in order.
(B) No amendment not germane to the bill re-
ported by the Committee on Governmental Affairs
under subsection (d)(3) shall be in order.
(4) CONFERENCE REPORTS.—
(A) MOTION TO PROCEED.—A motion to
proceed to the consideration of the conference
report on a bill subject to the procedures of this
section and reported to the Senate may be
made even though a previous motion to the
same effect has been disagreed to.
(B) TIME LIMITATION.—The consideration
in the Senate of the conference report on the
bill and any amendments in disagreement there-
to, including all debatable motions and appeals
in connection therewith, shall be limited to 5
hours, to be equally divided between, and con-
trolled by, the majority leader and minority
leader or their designees. Debate on any debat-
able motion, appeal related to the conference re-
port, or any amendment to an amendment in
disagreement, shall be limited to 30 minutes, to
be equally divided between, and controlled by,
the mover and the manager of the conference
report (or a message between Houses).
(f) PROCEDURE IN HOUSE OF REPRESENTATIVES
AFTER REPORT OF THE COMMITTEE; DEBATE.—
(1) MOTION TO CONSIDER.—When the Commit-
tee on Government Reform and Oversight of the
House of Representatives reports a bill under sub-
section (d)(3) it is in order (at any time after the
fifth day (excluding Saturdays, Sundays, and legal
holidays) following the day on which any committee
report filed on a bill referred under subsection (d)(1)
to the Committee on Government Reform and Over-
sight has been available to Members of the House)
to move to proceed to the consideration of the bill
reported to the House of Representatives. The mo-
tion is highly privileged and is not debatable. An
amendment to the motion is not in order, and it is
not in order to move to reconsider the vote by which
the motion is agreed to or disagreed to.
(2) DEBATE.—General debate on the bill in the
House of Representatives shall be limited to not
more than 10 hours, which shall be divided equally
between the majority and minority parties. A motion
further to limit debate is not debatable. A motion
to postpone debate is not in order, and it is not in
order to move to reconsider the vote by which the
bill is agreed to or disagreed to.
(3) TERMS OF CONSIDERATION.—Consideration
of the bill by the House of Representatives shall be
in the Committee of the Whole, and the bill shall be
considered for amendment under the 5-minute rule
in accordance with the applicable provisions of rule
XXIII of the Rules of the House of Representatives.
After the committee rises and reports the bill back
to the House, the previous question shall be consid-
ered as ordered on the bill and any amendments
thereto to final passage without intervening motion.
(4) LIMIT ON DEBATE.—Debate in the House
of Representatives on the conference report on a bill
subject to the procedures under this section and re-
ported to the House of Representatives shall be lim-
ited to not more than 5 hours, which shall be divided
equally between the majority and minority parties. A
motion further to limit debate is not debatable. A
motion to recommit the conference report is not in
order, and it is not in order to move to reconsider
the vote by which the conference report is agreed to
or disagreed to. A motion to postpone is not in
order.
(5) APPEALS.—Appeals from decisions of the
Chair relating to the application of the Rules of the
House of Representatives to the procedure relating
to the bill shall be decided without debate.
(g) RULES OF THE SENATE AND HOUSE OF REP-
RESENTATIVES.—This section is enacted by Congress—
(1) as an exercise of the rulemaking power of
the Senate and the House of Representatives, re-
spectively, but applicable only with respect to the
procedure to be followed in that House in the case
of a bill under this section, and it supersedes other
rules only to the extent that it is inconsistent with
such rules; and
(2) with full recognition of the constitutional
right of either House to change the rules as far as
relating to the procedure of that House at any time,
in the same manner, and to the same extent as in
the case of any other rule of that House.
SEC. 304. DEFINITION.
For purposes of this title, the term ‘‘inequitable Fed-
eral subsidy’’ means a payment, benefit, service, or tax
advantage that—
(1) is provided by the Federal Government to
any corporation, partnership, joint venture, associa-
tion, or business trust, not to include—
(A) a nonprofit organization described
under section 501(c)(3) of the Internal Revenue
Code of 1986 that is exempt from taxation
under section 501(a) of the Internal Revenue
Code of 1986; or
(B) a State or local government or Indian
Tribe;
(2) is provided without a reasonable expecta-
tion, demonstrated with the use of reliable perform-
ance criteria, that actions or activities undertaken or
performed in return for such payment, benefit, serv-
ice, or tax advantage would result in a return or
benefit, quantifiable or nonquantifiable, to the public
at least as great as the payment, benefit, service, or
tax advantage;
(3) provides an unfair competitive advantage or
financial windfall; and
(4) shall not include a payment, benefit, service,
or tax advantage that—
(A)(i) is awarded for the purposes of re-
search and development in the broad public in-
terest on the basis of a peer reviewed or other
open, competitive, merit-based procedure;
(ii) is for a purpose consistent with the
mission of the agency;
(iii) supports competing technologies at
levels appropriate to their potential, as deter-
mined by an appropriate priority setting proc-
ess; and
(iv) is for research and development that
the private sector cannot reasonably be ex-
pected to undertake without Federal support at
a level or in a time frame consistent with the
payment, benefit, service, or tax advantage’s po-
tential to provide broad economic or other pub-
lic benefit;
(B) primarily benefits public health, safety,
the environment, or education;
(C) is necessary to comply with inter-
national trade or treaty obligations;
(D) is certified by the United States Trade
Representative as specifically intended and as
substantially needed to protect the foreign trade
interests of the United States; or
(E) is for the purpose of procurement of
property or services by the United States Gov-
ernment.
SEC. 305. CORPORATE RATE INCREASE IF REVENUES FROM
SUBSIDY 
REDUCTIONS 
ARE 
LESS 
THAN
$10,000,000,000 PER YEAR.
(a) IN GENERAL.—If there is a subsidy reduction
shortfall for any fiscal year beginning after September 30,
2000, section 11 of the Internal Revenue Code of 1986
(relating to tax on corporations) shall be applied (for tax-
able years beginning in such fiscal year) by substituting
for the highest rate of tax imposed by such section the
rate estimated by the Director of the Congressional Budg-
et Office to be necessary to increase revenues to the Treas-
ury for such year equal to such shortfall. Proper adjust-
ments shall be made under this subsection to the extent
such rate is less than or greater than the appropriate rate.
(b) SUBSIDY REDUCTION SHORTFALL.—For pur-
poses of subsection (a), the term ‘‘subsidy reduction short-
fall’’ means, for any fiscal year, the excess of—
(1) $10,000,000,000, over
(2) the additional revenues that the Director of
the Congressional Budget Office estimates will be re-
ceived in the Treasury (for taxable years beginning
in such fiscal year) by reason of the enactment of
recommendations of the Commission.
TITLE IV—NATIONAL REFEREN-
DUM 
REQUIRED 
FOR 
FED-
ERAL INCOME TAX RATE IN-
CREASES TO TAKE EFFECT
SEC. 401. NATIONAL REFERENDUM REQUIRED FOR FED-
ERAL INCOME TAX RATE INCREASES TO
TAKE EFFECT.
(a) IN GENERAL.—An individual income tax rate in-
crease shall apply only to taxable years beginning after
the date of a national referendum in which a majority of
individuals voting in the referendum vote in favor of such
increase.
(b) INDIVIDUAL INCOME TAX RATE INCREASE.—For
purposes of this section, the term ‘‘individual income tax
rate increase’’ means any provision of law—
(1) which amends subsection (a), (b), (c), (d),
or (e) of section 1 of the Internal Revenue Code of
1986 (relating to income tax) or section 55(b)(1)(A)
of such Code (relating to alternative minimum tax
on noncorporate taxpayers), and
(2) which imposes a new percentage as a rate
of tax and thereby increases the amount of tax im-
posed by any such section.
(c) ADMINISTRATIVE PROVISIONS.—
(1) IN GENERAL.—The referendum with respect
to any individual income tax rate increase shall
occur at the time of the first regularly scheduled
Federal election after the date of the enactment of
such increase and shall be on the general election
ballot for such election.
(2) FORM.—The form of the referendum ques-
tion shall be as follows:
‘‘REFERENDUM ON INDIVIDUAL INCOME TAX RATE
INCREASE
‘‘Should the provisions enacted on ll which are indi-
vidual income tax rate increases take effect?
‘‘Yes
No’’.
Such blank shall be filled in with the date that the
law containing such provisions was enacted.
(3) PROCEDURES.—The Secretary of the Treas-
ury or such Secretary’s delegate shall take such
steps as are necessary to arrange for any referen-
dum under this section.
(d) AUTHORIZATION.—There are authorized to be ap-
propriated such sums as are necessary to carry out this
section, including amounts to reimburse States for their
tabulation and other costs incurred by reason of any ref-
erendum under this section.
TITLE V—RETURN-FREE FILING
SEC. 501. RETURN-FREE FILING.
The Secretary of the Treasury or the Secretary’s del-
egate shall develop a plan to implement a return-free Fed-
eral income tax system for the largest number of taxpayers
as is practicable. The plan of implementation shall be sub-
mitted to the House of Representatives and the Senate
not later than 180 days after the date of the enactment
of this Act.
Æ