I
106TH CONGRESS
1ST SESSION
H. R. 157
To amend the Internal Revenue Code of 1986 to reduce individual capital
gains tax rates.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mr. HEFLEY 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 capital gains tax rates.
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 ‘‘Economic Growth Act
of 1999’’.
SEC. 2. REDUCTION IN INDIVIDUAL CAPITAL GAINS TAX
RATES.
(a) IN GENERAL.—Subsection (h) of section 1 of the
Internal Revenue Code of 1986 is amended to read as fol-
lows:
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‘‘(h) MAXIMUM CAPITAL GAINS RATE.—
‘‘(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,
‘‘(B) 7.5 percent of so much of the net
capital gain (or, if less, taxable income) as does
not exceed the excess (if any) of—
‘‘(i) the amount of taxable income
which would (without regard to this para-
graph) be taxed at a rate below 28 per-
cent, over
‘‘(ii) the taxable income reduced by
the net capital gain, and
‘‘(C) 15 percent of the amount of taxable
income in excess of the sum of the amounts on
which tax is determined under subparagraphs
(A) and (B).
‘‘(2) NET CAPITAL GAIN TAKEN INTO ACCOUNT
AS INVESTMENT INCOME.—For purposes of this sub-
section, the net capital gain for any taxable year
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shall be reduced (but not below zero) by the amount
which the taxpayer takes into account as investment
income under section 163(d)(4)(B)(iii).’’.
(b) 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,
‘‘(B) 7.5 percent of so much of the net
capital gain (or, if less, taxable excess) as does
not exceed the amount on which a tax is deter-
mined under section 1(h)(1)(B), and
‘‘(C) 15 percent of the amount of taxable
excess in excess of the sum of the amounts on
which tax is determined under subparagraphs
(A) and (B).’’.
(c) CONFORMING AMENDMENTS.—
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(1) Paragraph (1) of section 1445(e) of such
Code is amended by striking ‘‘20 percent’’ and in-
serting ‘‘15 percent’’.
(2) 
The 
second 
sentence 
of 
section
7518(g)(6)(A) of such Code, and the second sen-
tence of section 607(h)(6)(A) of the Merchant Ma-
rine Act, 1936, are each amended by striking ‘‘20
percent’’ and inserting ‘‘15 percent’’.
(3) Section 311 of the Taxpayer Relief Act of
1997 is amended by striking subsection (e).
(4) Paragraph (7) of section 57(a) of such Code
(as amended by the Internal Revenue Service Re-
structuring and Reform Act of 1998) is amended by
striking the last sentence.
(5) Paragraphs (11) and (12) of section 1223,
and section 1235(a), of such Code (as amended by
the Internal Revenue Service Restructuring and Re-
form Act of 1998) are each amended by striking ‘‘18
months’’ each place it appears and inserting ‘‘1
year’’.
(d) TRANSITIONAL RULES FOR TAXABLE YEARS
WHICH INCLUDE JANUARY 6, 1999.—
(1) IN GENERAL.—Subsection (h) of section 1
of such Code (as amended by the Internal Revenue
Service Restructuring and Reform Act of 1998) is
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amended by adding at the end the following new
paragraph:
‘‘(14) SPECIAL
RULES
FOR
TAXABLE
YEARS
WHICH INCLUDE JANUARY 6, 1999.—For purposes of
applying this subsection in the case of a taxable year
which includes January 6, 1999—
‘‘(A) Gains or losses properly taken into
account for the period on or after such date
shall be disregarded in applying paragraph
(5)(A)(i), subclauses (I) and (II) of paragraph
(5)(A)(ii), paragraph (5)(B), paragraph (6),
and paragraph (7)(A).
‘‘(B) The amount determined under sub-
paragraph (B) of paragraph (1) shall be the
sum of—
‘‘(i) 7.5 percent of the amount which
would be determined under such subpara-
graph if the amount of gain taken into ac-
count under such subparagraph did not ex-
ceed the net capital gain taking into ac-
count only gain or loss properly taken into
account for the portion of the taxable year
on or after such date, plus
‘‘(ii) 10 percent of the excess of the
amount determined under such subpara-
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graph (determined without regard to this
paragraph) over the amount determined
under clause (i).
‘‘(C) The amount determined under sub-
paragraph (C) of paragraph (1) shall be the
sum of—
‘‘(i) 15 percent of the amount which
would be determined under such subpara-
graph if the adjusted net capital gain did
not exceed the net capital gain taking into
account only gain or loss properly taken
into account for the portion of the taxable
year on or after such date, plus
‘‘(ii) 20 percent of the excess of the
amount determined under such subpara-
graph (determined without regard to this
paragraph) over the amount determined
under clause (i).
‘‘(D) Rules similar to the rules of para-
graph (13)(C) shall apply.’’.
(2) ALTERNATIVE
MINIMUM
TAX.—Paragraph
(3) of section 55(b) of such Code (as amended by
the Internal Revenue Service Restructuring and Re-
form Act of 1998) is amended by adding at the end
the following new sentence: ‘‘For purposes of apply-
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ing this paragraph for a taxable year which includes
January 6, 1999, rules similar to the rules of section
1(h)(14) shall apply.’’.
(e) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to taxable years beginning on
or after January 6, 1999.
(2) TRANSITIONAL RULES FOR TAXABLE YEARS
WHICH
INCLUDE
JANUARY
6, 1999.—The amend-
ments made by subsection (d) shall apply to taxable
years beginning before such date and ending on or
after January 6, 1999.
(3) WITHHOLDING.—The amendment made by
subsection (c)(1) shall apply only to amounts paid
after the date of the enactment of this Act.
(4) CERTAIN CONFORMING AMENDMENTS.—The
amendments made by subsection (c)(5) shall take ef-
fect on January 6, 1999.
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