I
106TH CONGRESS
1ST SESSION
H. R. 159
To amend the Internal Revenue Code of 1986 to lower the maximum capital
gains rate to 15 percent with respect to assets held for more than
3 years, to replace the estate and gift tax rate schedules, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mr. HILL of Montana (for himself, Mr. TALENT, Mrs. CHENOWETH, and Mr.
SCHAFFER) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to lower the
maximum capital gains rate to 15 percent with respect
to assets held for more than 3 years, to replace the
estate and gift tax rate schedules, and for other pur-
poses.
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 ‘‘American Dream Tax
Fairness Equity Act of 1997’’.
SEC. 2. REDUCTION OF MAXIMUM CAPITAL GAINS RATE
FOR INDIVIDUALS TO 15 PERCENT WITH RE-
SPECT TO ASSETS HELD FOR MORE THAN 3
YEARS.
(a) IN GENERAL.—Subsection (h) of section 1 of the
Internal Revenue Code of 1986 (relating to tax imposed)
is amended to read as follows:
‘‘(h) MAXIMUM CAPITAL GAINS RATE.—
‘‘(1) IN GENERAL.—If a taxpayer has a net
capital gain for any taxable year, then the tax im-
posed by this section 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 the greater of—
‘‘(i) taxable income reduced by the
amount of the net capital gain, or
‘‘(ii) the amount of taxable income
taxed at a rate below 28 percent,
‘‘(B) 15 percent of qualified 3-year capital
gain (to the extent not taken into account
under subparagraph (A)), and
‘‘(C) 28 percent of the excess (if any) of
taxable income over the amounts taken into ac-
count under subparagraphs (A) and (B).
‘‘(2) QUALIFIED
3-YEAR
CAPITAL
GAIN.—For
purposes of this subsection, the term ‘qualified 3-
year capital gain’ means the lesser of—
‘‘(A) net long-term capital gain for the tax-
able year, determined by substituting ‘held for
more than 3 years’ for ‘held for more than 1
year’ in paragraphs (3) and (4) of section 1222,
or
‘‘(B) net capital gain for such taxable year.
‘‘(3) COORDINATION
WITH
INVESTMENT
IN-
COME ELECTION.—For purposes of this subsection,
the net capital gain for any taxable year shall be re-
duced (but not below zero) by the amount which the
taxpayer elects to take into account as investment
income 
for 
the 
taxable 
year 
under 
section
163(d)(4)(B)(iii).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1997.
SEC. 2. REPLACEMENT OF ESTATE AND GIFT TAX RATE
SCHEDULES.
(a) ESTATE TAX RATE SCHEDULE REPLACED BY 15
AND 28 PERCENT TAX RATES.—
(1) IN
GENERAL.—Subsection (b) of section
2001 of the Internal Revenue Code of 1986 (relating
to imposition and rate of tax) is amended to read as
follows:
‘‘(b) COMPUTATION OF TAX.—The amount imposed
by this section shall be—
‘‘(1) 15 percent of all qualified 3-year capital
gain (within the meaning of section 1(h)) included in
the taxable estate, and
‘‘(2) 28 percent of all capital gain (other than
such qualified 3-year capital gain) included in the
taxable estate,
determined as if all property included in the taxable estate
had been sold for its fair market value on the date of the
decedent’s death (or the date applicable with respect to
the valuation of such property under section 2032, if
any).’’
(2) REPEAL
OF
RATE
SCHEDULE.—Section
2001 of such Code is amended by striking sub-
section (c).
(3) CONFORMING AMENDMENTS.—Section 2001
of such Code is amended by striking subsections (d)
and (e).
(b) REDUCTION OF GIFT TAX.—Subsection (a) of
section 2502 of such Code is amended to read as follows:
‘‘(a) COMPUTATION OF TAX.—The tax imposed by
section 2501 for each calendar year shall be—