IB
Union Calendar No. 6
107TH CONGRESS
1ST SESSION
H. R. 3
[Report No. 107–7]
To amend the Internal Revenue Code of 1986 to reduce individual income
tax rates.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 28, 2001
Mr. THOMAS introduced the following bill; which was referred to the
Committee on Ways and Means
MARCH 6, 2001
Additional sponsors: Mr. HASTERT, Mr. ARMEY, Mr. DELAY, Mr. DREIER,
Mr. WATTS of Oklahoma, Mr. COX, Mr. CRANE, Mr. SHAW, Mrs. JOHN-
SON of Connecticut, Mr. HOUGHTON, Mr. HERGER, Mr. MCCRERY, Mr.
CAMP, Mr. RAMSTAD, Mr. NUSSLE, Mr. SAM JOHNSON of Texas, Ms.
DUNN, Mr. COLLINS, Mr. PORTMAN, Mr. ENGLISH, Mr. WATKINS, Mr.
HAYWORTH, Mr. WELLER, Mr. HULSHOF, Mr. MCINNIS, Mr. LEWIS of
Kentucky, Mr. FOLEY, Mr. BRADY of Texas, Mr. RYAN of Wisconsin, Mr.
TOM DAVIS of Virginia, Ms. PRYCE of Ohio, and Mrs. CUBIN
MARCH 6, 2001
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on February 28, 2001]
A BILL
To amend the Internal Revenue Code of 1986 to reduce
individual income 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; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Growth and Tax Relief Act of 2001’’.
(b) AMENDMENT OF 1986 CODE.—Except as otherwise
expressly provided, whenever in this Act an amendment or
repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Inter-
nal Revenue Code of 1986.
(c) SECTION 15 NOT TO APPLY.—No amendment
made by section 2 shall be treated as a change in a rate
of tax for purposes of section 15 of the Internal Revenue
Code of 1986.
SEC. 2. REDUCTION IN INCOME TAX RATES FOR INDIVID-
UALS.
(a) IN GENERAL.—Section 1 is amended by adding
at the end the following new subsection:
‘‘(i) RATE REDUCTIONS AFTER 2000.—
‘‘(1) NEW LOWEST RATE BRACKET.—
‘‘(A) IN GENERAL.—In the case of taxable
years beginning after December 31, 2000—
‘‘(i) the rate of tax under subsections
(a), (b), (c), and (d) on taxable income not
over the initial bracket amount shall be 12
percent (as modified by paragraph (2)),
and
‘‘(ii) the 15 percent rate of tax shall
apply only to taxable income over the ini-
tial bracket amount.
‘‘(B) INITIAL BRACKET AMOUNT.—For pur-
poses of this subsection, the initial bracket
amount is—
‘‘(i) $12,000 in the case of subsection
(a),
‘‘(ii) $10,000 in the case of subsection
(b), and
‘‘(iii) 1⁄2 the amount applicable under
clause (i) in the case of subsections (c) and
(d).
‘‘(C) INFLATION
ADJUSTMENT.—In pre-
scribing the tables under subsection (f) which
apply with respect to taxable years beginning in
calendar years after 2001—
‘‘(i) the Secretary shall make no ad-
justment to the initial bracket amount for
any taxable year beginning before January
1, 2007,
‘‘(ii) the cost-of-living adjustment used
in making adjustments to the initial bracket
amount for any taxable year beginning
after December 31, 2006, shall be deter-
mined under subsection (f)(3) by sub-
stituting ‘2005’ for ‘1992’ in subparagraph
(B) thereof, and
‘‘(iii) such adjustment shall not apply
to the amount referred to in subparagraph
(B)(iii).
If any amount after adjustment under the pre-
ceding sentence is not a multiple of $50, such
amount shall be rounded to the next lowest mul-
tiple of $50.
‘‘(2) REDUCTIONS IN RATES AFTER 2001.—In the
case of taxable years beginning in a calendar year
after 2001, the corresponding percentage specified for
such calendar year in the following table shall be sub-
stituted for the otherwise applicable tax rate in the
tables under subsections (a), (b), (c), (d), and, to the
extent applicable, (e).
‘‘In the case of taxable years
beginning during calendar year:
The corresponding percentages
shall be substituted for
the following percentages:
12%
28%
31%
36%
39.6%
2002 ....................................................................
12%
27%
30%
35%
38%
2003 ....................................................................
11%
27%
29%
35%
37%
2004 ....................................................................
11%
26%
28%
34%
36%
2005 ....................................................................
11%
26%
27%
34%
35%
2006 and thereafter ...........................................
10%
25%
25%
33%
33%
‘‘(3) ADJUSTMENT OF TABLES.—The Secretary
shall adjust the tables prescribed under subsection (f)
to carry out this subsection.’’
(b) REPEAL OF REDUCTION OF REFUNDABLE TAX
CREDITS.—
(1) Subsection (d) of section 24 is amended by
striking paragraph (2) and redesignating paragraph
(3) as paragraph (2).
(2) Section 32 is amended by striking subsection
(h).
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 1(g)(7) is
amended—
(A) by striking ‘‘15 percent’’ in clause
(ii)(II) and inserting ‘‘the first bracket percent-
age’’, and
(B) by adding at the end the following flush
sentence:
‘‘For purposes of clause (ii), the first bracket per-
centage is the percentage applicable to the lowest
income bracket in the table under subsection
(c).’’
(2) Section 1(h) is amended—
(A) by striking ‘‘28 percent’’ both places it
appears 
in 
paragraphs 
(1)(A)(ii)(I) 
and
(1)(B)(i) and inserting ‘‘25 percent’’, and
(B) by striking paragraph (13).
(3) Section 15 is amended by adding at the end
the following new subsection:
‘‘(f) RATE
REDUCTIONS
ENACTED
BY
ECONOMIC
GROWTH AND TAX RELIEF ACT OF 2001.—This section
shall not apply to any change in rates under subsection
(i) of section 1 (relating to rate reductions after 2000).’’
(4) Section 531 is amended by striking ‘‘equal
to’’ and all that follows and inserting ‘‘equal to the
product of the highest rate of tax under section 1(c)
and the accumulated taxable income.’’.
(5) Section 541 is amended by striking ‘‘equal
to’’ and all that follows and inserting ‘‘equal to the
product of the highest rate of tax under section 1(c)
and the undistributed personal holding company in-
come.’’.
(6) Section 3402(p)(1)(B) is amended by strik-
ing ‘‘7, 15, 28, or 31 percent’’ and inserting ‘‘7 per-
cent, any percentage applicable to any of the 3 lowest
income brackets in the table under section 1(c),’’.
(7) Section 3402(p)(2) is amended by striking
‘‘equal to 15 percent of such payment’’ and inserting
‘‘equal to the product of the lowest rate of tax under
section 1(c) and such payment’’.
(8) Section 3402(q)(1) is amended by striking
‘‘equal to 28 percent of such payment’’ and inserting
‘‘equal to the product of the third to the lowest rate
of tax under section 1(c) and such payment’’.
(9) Section 3402(r)(3) is amended by striking
‘‘31 percent’’ and inserting ‘‘the third to the lowest
rate of tax under section 1(c)’’.
(10) Section 3406(a)(1) is amended by striking
‘‘equal to 31 percent of such payment’’ and inserting
‘‘equal to the product of the third to the lowest rate
of tax under section 1(c) and such payment’’.
(11) Section 13273 of the Revenue Reconciliation
Act of 1993 is amended by striking ‘‘28 percent’’ and
inserting ‘‘the third to the lowest rate of tax under
section 1(c) of the Internal Revenue Code of 1986’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to taxable years beginning after December 31,
2000.
(2) AMENDMENTS
TO
WITHHOLDING
PROVI-
SIONS.—The amendments made by paragraphs (6),
(7), (8), (9), (10), and (11) of subsection (c) shall
apply to amounts paid after the 60th day after the
date of the enactment of this Act.
SEC. 3. PROTECTION OF SOCIAL SECURITY AND MEDICARE.
The amounts transferred to any trust fund under the
Social Security Act shall be determined as if this Act had
not been enacted.