I 
110TH CONGRESS 
2D SESSION 
H. R. 5126 
To amend the Internal Revenue Code of 1986 to reduce individual income 
taxes by creating a new 5 percent rate of tax and to increase section 
179 expensing for small businesses. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 23, 2008 
Mr. KNOLLENBERG 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 reduce 
individual income taxes by creating a new 5 percent 
rate of tax and to increase section 179 expensing for 
small businesses. 
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 ‘‘Family Security and 
Small Business Stimulus Act of 2008’’. 
SEC. 2. INDIVIDUAL INCOME TAX RATE REDUCTION AFTER 
2007. 
(a) RATE REDUCTION.— 
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(1) IN GENERAL.—Subparagraph (A) of section 
1(i)(1) of the Internal Revenue Code of 1986 (relat-
ing to tax imposed on individuals) is amended to 
read as follows: 
‘‘(A) IN GENERAL.—In the case of taxable 
years beginning after December 31, 2007— 
‘‘(i) the rate of tax under subsections 
(a), (b), (c), and (d) on taxable income not 
over the initial bracket amount shall be 5 
percent, and 
‘‘(ii) the 15 percent rate of tax shall 
apply only to taxable income over the ini-
tial bracket amount but not over the max-
imum dollar amount for the 15-percent 
rate bracket.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) The heading for paragraph (1) of sec-
tion 1(i) of such Code is amended by striking 
‘‘10-PERCENT’’ and inserting ‘‘5-PERCENT’’. 
(B) Subparagraph (D) of section 1(i)(1) of 
such Code is amended to read as follows: 
‘‘(D) COORDINATION WITH ACCELERATION OF 5 
PERCENT RATE BRACKET BENEFIT FOR 2008.—This 
paragraph shall not apply to any taxable year to 
which section 6428 applies.’’. 
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(3) 
5-PERCENT
BRACKET
MADE 
PERMANMENT.—Title IX of the Economic Growth 
and Tax Relief Reconciliation Act of 2001 shall not 
apply to paragraph (1) of section 1(i) of the Internal 
Revenue Code of 1986, as amended by this sub-
section. 
(b) ADVANCE
PAYMENT
OF
5 PERCENT
RATE 
BRACKET.—Section 6428 of such Code is amended to 
read as follows: 
‘‘SEC. 6428. ACCELERATION OF 5 PERCENT INCOME TAX 
RATE BRACKET BENEFIT FOR 2008. 
‘‘(a) IN GENERAL.—In the case of an eligible indi-
vidual, there shall be allowed as a credit against the tax 
imposed by chapter 1 for the taxpayer’s first taxable year 
beginning in 2008 an amount equal to 5 percent of so 
much of the taxpayer’s taxable income as does not exceed 
the initial bracket amount (as defined in section 
1(i)(1)(B)). 
‘‘(b) CREDIT TREATED AS NONREFUNDABLE PER-
SONAL CREDIT.—For purposes of this title, the credit al-
lowed under this section shall be treated as a credit allow-
able under subpart A of part IV of subchapter A of chap-
ter 1. 
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‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 
section, the term ‘eligible individual’ means any individual 
other than— 
‘‘(1) any estate or trust, 
‘‘(2) any nonresident alien individual, and 
‘‘(3) any individual with respect to whom a de-
duction under section 151 is allowable to another 
taxpayer for a taxable year beginning in the cal-
endar year in which the individual’s taxable year be-
gins. 
‘‘(d) COORDINATION WITH ADVANCE REFUNDS OF 
CREDIT.— 
‘‘(1) IN
GENERAL.—The amount of credit 
which would (but for this paragraph) be allowable 
under this section shall be reduced (but not below 
zero) by the aggregate refunds and credits made or 
allowed to the taxpayer under subsection (e). Any 
failure to so reduce the credit shall be treated as 
arising out of a mathematical or clerical error and 
assessed according to section 6213(b)(1). 
‘‘(2) JOINT RETURNS.—In the case of a refund 
or credit made or allowed under subsection (e) with 
respect to a joint return, half of such refund or cred-
it shall be treated as having been made or allowed 
to each individual filing such return. 
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‘‘(e) ADVANCE REFUNDS
OF CREDIT BASED
ON 
PRIOR YEAR DATA.— 
‘‘(1) IN GENERAL.—Each individual who was 
an eligible individual for such individual’s first tax-
able year beginning in 2006 shall be treated as hav-
ing made a payment against the tax imposed by 
chapter 1 for such first taxable year in an amount 
equal to the advance refund amount for such taxable 
year. 
‘‘(2) ADVANCE
REFUND
AMOUNT.—For pur-
poses of paragraph (1), the advance refund amount 
is the amount that would have been allowed as a 
credit under this section for such first taxable year 
if— 
‘‘(A) this section (other than subsections 
(b) and (d) and this subsection) had applied to 
such taxable year, and 
‘‘(B) the credit for such taxable year were 
not allowed to exceed the excess (if any) of— 
‘‘(i) the sum of the regular tax liabil-
ity (as defined in section 26(b)) plus the 
tax imposed by section 55, over 
‘‘(ii) the sum of the credits allowable 
under part IV of subchapter A of chapter 
1 (other than the credits allowable under 
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subpart C thereof, relating to refundable 
credits). 
‘‘(3) TIMING
OF
PAYMENTS.—In the case of 
any overpayment attributable to this subsection, the 
Secretary shall, subject to the provisions of this title, 
refund or credit such overpayment as rapidly as pos-
sible and, to the extent practicable, before the date 
which is 30 days after the date of the enactment of 
this section. No refund or credit shall be made or al-
lowed under this subsection after December 31, 
2008. 
‘‘(4) NO INTEREST.—No interest shall be al-
lowed on any overpayment attributable to this sub-
section.’’. 
(c) TECHNICAL AMENDMENT.—The item relating to 
section 6428 in the table of sections for subchapter B of 
chapter 65 of such Code is amended to read as follows: 
‘‘Sec. 6428. Acceleration of 5 percent income tax rate bracket benefit for 
2008.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
SEC. 3. INCREASE IN EXPENSING FOR SMALL BUSINESSES. 
(a) $125,000 LIMIT
MADE
PERMANENT; TEM-
PORARY INCREASE TO $375,000.—Paragraph (1) of sec-
tion 179(b) of the Internal Revenue Code of 1986 (relat-
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