Food and Fuel Family Savings Act
Bill: S.4060 | Sponsor: Sen. Reed, Jack (D-RI)
Policy area: Taxation

Summary:
Food and Fuel Family Savings Act
This bill allows an individual taxpayer an inflation rebate for the first taxable year beginning in 2022. The amount of such rebate is $600 ($1,200 for joint returns), plus $600 for each of the taxpayer's dependents. The amount of the rebate is reduced for taxpayers whose adjusted gross income exceeds certain levels.
The bill imposes a 5% surcharge on individuals whose modified adjusted gross income exceeds $10 million and a 3% surcharge for incomes exceeding $25 million. It also imposes surcharges on certain high income estates and trusts.
The bill increases the maximum corporate income tax rate to 26.5% for corporate taxable income exceeding $5 million.

To amend the Internal Revenue Code of 1986 to provide for inflation 
                    rebates, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Food and Fuel Family Savings Act''.

SEC. 2. INFLATION REBATES TO INDIVIDUALS.

    (a) In General.--Subchapter B of chapter 65 of the Internal Revenue 
Code of 1986 is amended by inserting after section 6428B the following 
new section:

``SEC. 6428C. INFLATION REBATES TO INDIVIDUALS.

    ``(a) In General.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by subtitle A for 
the first taxable year beginning in 2022 an amount equal to the 
inflation rebate amount determined for such taxable year.
    ``(b) Inflation Rebate Amount.--For purposes of this section, the 
term `inflation rebate amount' means, with respect to any taxpayer for 
any taxable year, the sum of--
            ``(1) $600 ($1,200 in the case of a joint return), plus
            ``(2) $600 multiplied by the number of dependents of the 
        taxpayer for such taxable year.
    ``(c) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual other than--
            ``(1) any nonresident alien individual,
            ``(2) any individual who is a dependent of another taxpayer 
        for a taxable year beginning in the calendar year in which the 
        individual's taxable year begins, and
            ``(3) an estate or trust.
    ``(d) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--The amount of the credit allowed by 
        subsection (a) (determined without regard to this subsection 
        and subsection (f)) shall be reduced (but not below zero) by 
        the amount which bears the same ratio to such credit (as so 
        determined) as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's adjusted gross income 
                        for such taxable year, over
                            ``(ii) $40,000, bears to
                    ``(B) $5,000.
            ``(2) Special rules.--
                    ``(A) Joint return or surviving spouse.--In the 
                case of a joint return or a surviving spouse (as 
                defined in section 2(a)), paragraph (1) shall be 
                applied by substituting `$80,000' for `$40,000' and 
                `$10,000' for `$5,000'.
                    ``(B) Head of household.--In the case of a head of 
                household (as defined in section 2(b)), paragraph (1) 
                shall be applied by substituting `$60,000' for 
                `$40,000' and `$7,500' for `$5,000'.
    ``(e) Definitions and Special Rules.--
            ``(1) Dependent defined.--For purposes of this section, the 
        term `dependent' has the meaning given such term by section 
        152.
            ``(2) Identification number requirement.--
                    ``(A) In general.--In the case of a return other 
                than a joint return, the $600 amount in subsection 
                (b)(1) shall be treated as being zero unless the 
                taxpayer includes the valid identification number of 
                the taxpayer on the return of tax for the taxable year.
                    ``(B) Joint returns.--In the case of a joint 
                return, the $1,200 amount in subsection (b)(1) shall be 
                treated as being--
                            ``(i) $600 if the valid identification 
                        number of only 1 spouse is included on the 
                        return of tax for the taxable year, and
                            ``(ii) zero if the valid identification 
                        number of neither spouse is so included.
                    ``(C) Dependents.--A dependent shall not be taken 
                into account under subsection (b)(2) unless the valid 
                identification number of such dependent is included on 
                the return of tax for the taxable year.
                    ``(D) Valid identification number.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `valid identification 
                        number' means a social security number issued 
                        to an individual by the Social Security 
                        Administration on or before the due date for 
                        filing the return for the taxable year.
                            ``(ii) Adoption taxpayer identification 
                        number.--For purposes of subparagraph (C), in 
                        the case of a dependent who is adopted or 
                        placed for adoption, the term `valid 
                        identification number' shall include the 
                        adoption taxpayer identification number of such 
                        dependent.
                    ``(E) Special rule for members of the armed 
                forces.--Subparagraph (B) shall not apply in the case 
                where at least 1 spouse was a member of the Armed 
                Forces of the United States at any time during the 
                taxable year and the valid identification number of at 
                least 1 spouse is included on the return of tax for the 
                taxable year.
                    ``(F) Coordination with certain advance payments.--
                In the case of any payment determined pursuant to 
                subsection (g)(6), a valid identification number shall 
                be treated for purposes of this paragraph as included 
                on the taxpayer's return of tax if such valid 
                identification number is available to the Secretary as 
                described in such subsection.
                    ``(G) Mathematical or clerical error authority.--
                Any omission of a correct valid identification number 
                required under this paragraph shall be treated as a 
                mathematical or clerical error for purposes of applying 
                section 6213(g)(2) to such omission.
            ``(3) Credit treated as refundable.--The credit allowed by 
        subsection (a) shall be treated as allowed by subpart C of part 
        IV of subchapter A of chapter 1.
    ``(f) Coordination With Advance Refunds of Credit.--
            ``(1) Reduction of refundable credit.--The amount of the 
        credit which would (but for this paragraph) be allowable under 
        subsection (a) shall be reduced (but not below zero) by the 
        aggregate refunds and credits made or allowed to the taxpayer 
        (or, except as otherwise provided by the Secretary, any 
        dependent of the taxpayer) under subsection (g). 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.--Except as otherwise provided by the 
        Secretary, in the case of a refund or credit made or allowed 
        under subsection (g) with respect to a joint return, half of 
        such refund or credit shall be treated as having been made or 
        allowed to each individual filing such return.
            ``(3) Coordination with possessions of the united states.--
        For purposes of this subsection, payments made under subsection 
        (g) include payments made by any jurisdiction other than the 
        United States under section 6428C(g) of the income tax law of 
        such jurisdiction, and payments made by possessions to which 
        section 2(b)(2) of the Food and Fuel Family Savings Act 
        pursuant to a plan described in such section. In carrying out 
        this section, the Secretary shall coordinate with each 
        possession of the United States to prevent any application of 
        this paragraph that is inconsistent with the purposes of this 
        subsection.
    ``(g) Advance Refunds and Credits.--
            ``(1) In general.--Subject to paragraphs (5) and (6), each 
        individual who was an eligible individual for such individual's 
        first taxable year beginning in 2020 shall be treated as having 
        made a payment against the tax imposed by chapter 1 for such 
        taxable year in an amount equal to the advance refund amount 
        for such taxable year.
            ``(2) Advance refund amount.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the advance refund amount is the amount that would have 
                been allowed as a credit under this section for such 
                taxable year if this section (other than subsection (f) 
                and this subsection) had applied to such taxable year.
                    ``(B) Treatment of deceased individuals.--For 
                purposes of determining the advance refund amount with 
                respect to such taxable year--
                            ``(i) any individual who was deceased 
                        before January 1, 2022, shall be treated for 
                        purposes of applying subsection (e)(2) in the 
                        same manner as if the valid identification 
                        number of such person was not included on the 
                        return of tax for such taxable year (except 
                        that subparagraph (E) thereof shall not apply),
                            ``(ii) notwithstanding clause (i), in the 
                        case of a joint return with respect to which 
                        only 1 spouse is deceased before January 1, 
                        2022, such deceased spouse was a member of the 
                        Armed Forces of the United States at any time 
                        during the taxable year, and the valid 
                        identification number of such deceased spouse 
                        is included on the return of tax for the 
                        taxable year, the valid identification number 
                        of 1 (and only 1) spouse shall be treated as 
                        included on the return of tax for the taxable 
                        year for purposes of applying subsection 
                        (e)(2)(B) with respect to such joint return, 
                        and
                            ``(iii) no amount shall be determined under 
                        subsection (e)(2) with respect to any dependent 
                        of the taxpayer if the taxpayer (both spouses 
                        in the case of a joint return) was deceased 
                        before January 1, 2022.
            ``(3) Timing and manner of payments.--
                    ``(A) Timing.--
                            ``(i) In general.--The Secretary shall, 
                        subject to the provisions of this title, refund 
                        or credit any overpayment attributable to this 
                        section as rapidly as possible.
                            ``(ii) Deadline.--No refund or credit shall 
                        be made or allowed under this subsection after 
                        December 31, 2022.
                    ``(B) Manner.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of law (including section 913 
                        of the Electronic Fund Transfer Act (15 U.S.C. 
                        1693k)), the Secretary shall disburse refunds 
                        payable under this subsection by means of a 
                        Treasury-sponsored account (as defined in 
                        section 208.2 of title 31, Code of Federal 
                        Regulations) which is limited to uses at 
                        grocery stores and for gasoline.
                            ``(ii) Application to possessions.--In the 
                        case of a possession described in section 
                        2(b)(1) of the Food and Fuel Family Savings 
                        Act, refunds payable under this subsection 
                        shall be disbursed in a manner determined by 
                        the Secretary, in consultation with the chief 
                        executive officer of such possession, to be 
                        best suited to meet the purposes of this 
                        section and, to the extent possible, subject to 
                        the same limitations applicable to refunds made 
                        under clause (i).
            ``(4) No interest.--No interest shall be allowed on any 
        overpayment attributable to this subsection.
            ``(5) Application to individuals who have filed a return of 
        tax for 2021.--
                    ``(A) Application to 2021 returns filed at time of 
                initial determination.--If, at the time of any 
                determination made pursuant to paragraph (3), the 
                individual referred to in paragraph (1) has filed a 
                return of tax for the individual's first taxable year 
                beginning in 2021, paragraph (1) shall be applied with 
                respect to such individual by substituting `2021' for 
                `2020'.
                    ``(B) Additional payment.--
                            ``(i) In general.--In the case of any 
                        individual who files, before the additional 
                        payment determination date, a return of tax for 
                        such individual's first taxable year beginning 
                        in 2021, the Secretary shall make a payment (in 
                        addition to any payment made under paragraph 
                        (1)) to such individual equal to the excess (if 
                        any) of--
                                    ``(I) the amount which would be 
                                determined under paragraph (1) (after 
                                the application of subparagraph (A)) by 
                                applying paragraph (1) as of the 
                                additional payment determination date, 
                                over
                                    ``(II) the amount of any payment 
                                made with respect to such individual 
                                under paragraph (1).
                            ``(ii) Additional payment determination 
                        date.--The term `additional payment 
                        determination date' means the earlier of--
                                    ``(I) the date which is 90 days 
                                after the 2021 calendar year filing 
                                deadline, or
                                    ``(II) September 1, 2022.
                            ``(iii) 2021 calendar year filing 
                        deadline.--The term `2021 calendar year filing 
                        deadline' means the date specified in section 
                        6072(a) with respect to returns for calendar 
                        year 2021.
            ``(6) Application to certain individuals who have not filed 
        a return of tax for 2020 or 2021 at time of determination.--In 
        the case of any individual who, at the time of any 
        determination made pursuant to paragraph (3), has filed a tax 
        return for neither the year described in paragraph (1) nor for 
        the year described in paragraph (5)(A), the Secretary shall, 
        consistent with rules similar to the rules of section 
        6428A(f)(5), apply paragraph (1) on the basis of information 
        available to the Secretary and shall, on the basis of such 
        information, determine the advance refund amount with respect 
        to such individual without regard to subsection (d) unless the 
        Secretary has reason to know that such amount would otherwise 
        be reduced by reason of such subsection.
            ``(7) Special rule related to time of filing return.--
        Solely for purposes of this subsection, a return of tax shall 
        not be treated as filed until such return has been processed by 
        the Internal Revenue Service.
    ``(h) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including--
            ``(1) regulations or other guidance providing taxpayers the 
        opportunity to provide the Secretary information sufficient to 
        allow the Secretary to make payments to such taxpayers under 
        subsection (g) (including the determination of the amount of 
        such payment) if such information is not otherwise available to 
        the Secretary, and
            ``(2) regulations or other guidance to ensure to the 
        maximum extent administratively practicable that, in 
        determining the amount of any credit under subsection (a) and 
        any credit or refund under subsection (g), an individual is not 
        taken into account more than once, including by different 
        taxpayers and including by reason of a change in joint return 
        status or dependent status between the taxable year for which 
        an advance refund amount is determined and the taxable year for 
        which a credit under subsection (a) is determined.
    ``(i) Outreach.--The Secretary shall carry out a robust and 
comprehensive outreach program to ensure that all taxpayers described 
in subsection (h)(1) learn of their eligibility for the advance refunds 
and credits under subsection (g); are advised of the opportunity to 
receive such advance refunds and credits as provided under subsection 
(h)(1); and are provided assistance in applying for such advance 
refunds and credits.''.
    (b) Treatment of Certain Possessions.--
            (1) Payments to possessions with mirror code tax systems.--
        The Secretary of the Treasury shall pay to each possession of 
        the United States which has a mirror code tax system amounts 
        equal to the loss (if any) to that possession by reason of the 
        amendments made by this section. Such amounts shall be 
        determined by the Secretary of the Treasury based on 
        information provided by the government of the respective 
        possession.
            (2) Payments to other possessions.--The Secretary of the 
        Treasury shall pay to each possession of the United States 
        which does not have a mirror code tax system amounts estimated 
        by the Secretary of the Treasury as being equal to the 
        aggregate benefits (if any) that would have been provided to 
        residents of such possession by reason of the amendments made 
        by this section if a mirror code tax system had been in effect 
        in such possession. The preceding sentence shall not apply 
        unless the respective possession has a plan, which has been 
        approved by the Secretary of the Treasury, under which such 
        possession will promptly distribute such payments to its 
        residents.
            (3) Inclusion of administrative expenses.--The Secretary of 
        the Treasury shall pay to each possession of the United States 
        to which the Secretary makes a payment under paragraph (1) or 
        (2) an amount equal to the lesser of--
                    (A) the increase (if any) of the administrative 
                expenses of such possession--
                            (i) in the case of a possession described 
                        in paragraph (1), by reason of the amendments 
                        made by this section, and
                            (ii) in the case of a possession described 
                        in paragraph (2), by reason of carrying out the 
                        plan described in such paragraph, or
                    (B) $500,000 ($10,000,000 in the case of Puerto 
                Rico).
        The amount described in subparagraph (A) shall be determined by 
        the Secretary of the Treasury based on information provided by 
        the government of the respective possession.
            (4) Coordination with credit allowed against united states 
        income taxes.--No credit shall be allowed against United States 
        income taxes under section 6428C of the Internal Revenue Code 
        of 1986 (as added by this section), nor shall any credit or 
        refund be made or allowed under subsection (g) of such section, 
        to any person--
                    (A) to whom a credit is allowed against taxes 
                imposed by the possession by reason of the amendments 
                made by this section, or
                    (B) who is eligible for a payment under a plan 
                described in paragraph (2).
            (5) Mirror code tax system.--For purposes of this 
        subsection, the term ``mirror code tax system'' means, with 
        respect to any possession of the United States, the income tax 
        system of such possession if the income tax liability of the 
        residents of such possession under such system is determined by 
        reference to the income tax laws of the United States as if 
        such possession were the United States.
            (6) Treatment of payments.--For purposes of section 1324 of 
        title 31, United States Code, the payments under this 
        subsection shall be treated in the same manner as a refund due 
        from a credit provision referred to in subsection (b)(2) of 
        such section.
    (c) Administrative Provisions.--
            (1) Definition of deficiency.--Section 6211(b)(4)(A) of the 
        Internal Revenue Code of 1986 is amended by inserting 
        ``6428C,'' after ``6428B,''.
            (2) Exception from reduction or offset.--Any refund payable 
        by reason of section 6428C(g) of the Internal Revenue Code of 
        1986 (as added by this section), or any such refund payable by 
        reason of subsection (b) of this section, shall not be--
                    (A) subject to reduction or offset pursuant to 
                subsection (c), (d), (e), or (f) of section 6402 of the 
                Internal Revenue Code of 1986 or any similar authority 
                permitting offset, or
                    (B) reduced or offset by other assessed Federal 
                taxes that would otherwise be subject to levy or 
                collection.
            (3) Conforming amendments.--
                    (A) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting ``6428C,'' 
                after ``6428B,''.
                    (B) The table of sections for subchapter B of 
                chapter 65 of the Internal Revenue Code of 1986 is 
                amended by inserting after the item relating to section 
                6428B the following new item:

``Sec. 6428C. Inflation rebates to individuals.''.
    (d) Other Provisions.--
            (1) Exception from reduction or offset.--
                    (A) In general.--The right of any person to any 
                applicable payment under this section shall not be 
                transferable or assignable, at law or in equity, and no 
                applicable payment shall be subject to, execution, 
                levy, attachment, garnishment, or other legal process, 
                or the operation of any bankruptcy or insolvency law.
                    (B) Applicable payment.-- For purposes of this 
                subsection, the term ``applicable payment''means--
                            (i) any advance refund amount paid pursuant 
                        to section 6428C(g) of Internal Revenue Code of 
                        1986 (as added by this section),
                            (ii) any payment made by a possession of 
                        the United States with a mirror code tax system 
                        (as defined in subsection (b) of this section) 
                        pursuant to such subsection which corresponds 
                        to a payment described in clause (i), and
                            (iii) any payment made by a possession of 
                        the United States without a mirror code tax 
                        system (as so defined) pursuant to subsection 
                        (b) of this section.
            (2) Agency information sharing and assistance.--
                    (A) In general.--The Commissioner of Social 
                Security, the Railroad Retirement Board, and the 
                Secretary of Veterans Affairs shall each provide the 
                Secretary of the Treasury (or the Secretary's delegate) 
                such information and assistance as the Secretary of the 
                Treasury (or the Secretary's delegate) may require for 
                purposes of--
                            (i) making payments under section 6428C(g) 
                        of the Internal Revenue Code of 1986 to 
                        individuals described in section 6428A(f)(5)(A) 
                        thereof, or
                            (ii) providing administrative assistance to 
                        a possession of the United States to allow such 
                        possession to promptly distribute payments 
                        under subsection (b) to its residents.
                    (B) Exchange of information with possessions.--Any 
                information provided to the Secretary of the Treasury 
                (or the Secretary's delegate) pursuant to subparagraph 
                may be exchanged with a possession of the United States 
                in accordance with the applicable tax coordination 
                agreement for information exchange and administrative 
                assistance that the Internal Revenue Service has agreed 
                to with such possession.
    (e) Appropriations.--
            (1) In general.--Immediately upon the enactment of this 
        Act, in addition to amounts otherwise available, there are 
        appropriated for fiscal year 2022, out of any money in the 
        Treasury not otherwise appropriated:
                    (A) $1,464,500,000 to remain available until 
                September 30, 2024 for necessary expenses for the 
                Internal Revenue Service for the administration of the 
                advance payments, the provision of taxpayer assistance, 
                and the furtherance of integrated, modernized, and 
                secure Internal Revenue Service systems, of which up to 
                $20,000,000 is available for premium pay for services 
                related to the development of information technology as 
                determined by the Commissioner of the Internal Revenue 
                occurring between January 1, 2022 and December 31, 
                2023, and all of which shall supplement and not 
                supplant any other appropriations that may be available 
                for this purpose.
                    (B) $7,000,000 to remain available without fiscal 
                year limitation, for necessary expenses for the Bureau 
                of the Fiscal Service to carry out this section (and 
                the amendments made by this section), which shall 
                supplement and not supplant any other appropriations 
                that may be available for this purpose, and
                    (C) $8,000,000 to remain available until September 
                30, 2024, for the Treasury Inspector General for Tax 
                Administration for the purposes of overseeing 
                activities related to the administration of this 
                section (and the amendments made by this section), 
                which shall supplement and not supplant any other 
                appropriations that may be available for this purpose.
            (2) Social security administration.--For an additional 
        amount for ``Social Security Administration-- Limitation on 
        Administrative Expenses'', $38,000,000, to remain available 
        until September 30, 2023.
            (3) Railroad retirement board.--For an additional amount 
        for ``Railroad Retirement Board--Limitation on 
        Administration'', $8,300, to remain available until September 
        30, 2023.

SEC. 3. SURCHARGE ON HIGH INCOME INDIVIDUALS, ESTATES, AND TRUSTS.

    (a) In General.--Part I of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 1 
the following new section:

``SEC. 1A. SURCHARGE ON HIGH INCOME INDIVIDUALS, ESTATES, AND TRUSTS.

    ``(a) General Rule.--In the case of a taxpayer other than a 
corporation, there is hereby imposed (in addition to any other tax 
imposed by this subtitle) a tax equal to the sum of--
            ``(1) 5 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds--
                    ``(A) $10,000,000, in the case of any taxpayer not 
                described in subparagraph (B) or (C),
                    ``(B) $5,000,000, in the case of a married 
                individual filing a separate return, and
                    ``(C) $200,000, in the case of an estate or trust, 
                plus
            ``(2) 3 percent of so much of the modified adjusted gross 
        income of the taxpayer as exceeds--
                    ``(A) $25,000,000, in the case of any taxpayer not 
                described in subparagraph (B) or (C),
                    ``(B) $12,500,000, in the case of a married 
                individual filing a separate return, and
                    ``(C) $500,000, in the case of an estate or trust.
    ``(b) Modified Adjusted Gross Income.--For purposes of this 
section, the term `modified adjusted gross income' means adjusted gross 
income reduced by any deduction (not taken into account in determining 
adjusted gross income) allowed for investment interest (as defined in 
section 163(d)) or business interest (as defined in section 163(j)). In 
the case of an estate or trust, adjusted gross income shall be 
determined as provided in section 67(e), and reduced by the amount 
allowed as a deduction under section 642(c).
    ``(c) Special Rules.--
            ``(1) Nonresident aliens and foreign trusts.--In the case 
        of a nonresident alien individual (other than an individual 
        described in section 876(a) or 877(a)) or a foreign trust, only 
        amounts taken into account in connection with the tax imposed 
        under section 871(b) shall be taken into account under this 
        section.
            ``(2) Citizens and residents living abroad and certain bona 
        fide residents of possessions.--Each dollar amount which is 
        applicable to any taxpayer under subsection (a) shall be 
        decreased (but not below zero) by the excess (if any) of--
                    ``(A) the sum of--
                            ``(i) amounts excluded from the taxpayer's 
                        gross income under section 911,
                            ``(ii) amounts excluded from the taxpayer's 
                        gross income under section 931, and
                            ``(iii) amounts excluded from the 
                        taxpayer's gross income under section 933, over
                    ``(B) the sum of--
                            ``(i) amounts of any deductions or 
                        exclusions disallowed under section 911(d)(6) 
                        with respect to the amounts described in 
                        subparagraph (A)(i),
                            ``(ii) amounts of any deductions or 
                        exclusions disallowed under section 931(b) with 
                        respect to the amounts described in 
                        subparagraph (A)(ii), and
                            ``(iii) amounts of any deductions or 
                        exclusions disallowed under section 933 with 
                        respect to the amounts described in 
                        subparagraph (A)(iii).
            ``(3) Certain trusts.--Subsection (a) shall not apply to--
                    ``(A) a trust all the unexpired interests in which 
                are devoted to one or more of the purposes described in 
                section 170(c)(2)(B),
                    ``(B) an electing settlement trust (as defined in 
                section 646(h)), or
                    ``(C) a cemetery perpetual care fund described in 
                section 642(i).
            ``(4) Not treated as tax imposed by this chapter for 
        certain purposes.--The tax imposed under this section shall not 
        be treated as tax imposed by this chapter for purposes of 
        determining the amount of any credit under this chapter (other 
        than sections 27 and 901).
            ``(5) Electing small business trusts.--For purposes of the 
        determination of adjusted gross income, section 641(c)(1)(A) 
        shall not apply and all portions of any electing small business 
        trust shall be treated as a single trust.
    ``(d) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary or appropriate to carry out the 
purposes of this section, including regulations or other guidance to 
prevent the avoidance of the purposes of this section.''.
    (b) Coordination With Certain Provisions.--
            (1) Interest on certain deferred tax liability.--Section 
        453A(c) of the Internal Revenue Code of 1986 is amended by 
        redesignating paragraph (6) as paragraph (7) and by inserting 
        after paragraph (5) the following new paragraph:
            ``(6) Surcharge on high income individuals taken into 
        account in determining maximum rate of tax.--For purposes of 
        paragraph (3)(B), the maximum rate of tax in effect under 
        section 1 shall be treated as being equal to the sum of such 
        rate and the rates in effect under paragraphs (1) and (2) of 
        section 1A(a).''.
            (2) Alien residents of puerto rico, guam, american samoa, 
        or the northern mariana islands.--Section 876(a) of such Code 
        is amended by striking section 1 and inserting ``sections 1 and 
        1A''.
            (3) Expatriation to avoid tax.--Section 877(b) of such Code 
        is amended by inserting ``and section 1A'' after ``section 1 or 
        55''.
            (4) Limitation on foreign tax credit.--Section 904(b)(3)(E) 
        of such Code is amended--
                    (A) in clause (i)(I), by inserting ``increased by 
                the sum of the rates set forth in paragraphs (1) and 
                (2) of section 1A(a)'' after ``(whichever applies)'',
                    (B) in clause (i)(II) by inserting ``increased by 
                the sum of the rates set forth in paragraphs (1) and 
                (2) of section 1A(a)'' after ``section 1(h)'', and
                    (C) in clause (ii), by striking ``referred to in'' 
                and inserting ``determined under''.
            (5) Election by individuals to be subject to tax at 
        corporate rates.--Section 962(a)(1) of such Code is amended by 
        inserting ``, 1A,'' after ``sections 1''.
            (6) Interest on certain tax deferral.--Section 1291(c)(2) 
        of such Code is amended by adding at the end the following: 
        ``For purposes of the preceding sentence, the highest rate of 
        tax in effect under section 1 shall be treated as being equal 
        to the sum of such rate and the rates in effect under 
        paragraphs (1) and (2) of section 1A(a).''.
            (7) Averaging of farm income.--Section 1301(a) of such Code 
        is amended by striking ``section 1'' both places it appears and 
        inserting ``sections 1 and 1A''.
            (8) Title 11 cases.--Section 1398(c)(2) of such Code is 
        amended by inserting ``and tax shall be imposed under section 
        1A by treating the estate as a married individual filing a 
        separate return'' before the period at the end.
            (9) Withholding of tax on foreign partners' share of 
        effectively connected income.--Section 1446(b)(2) of such Code 
        is amended by adding at the end the following flush sentence:
        ``For purposes of subparagraph (A), the highest rate of tax in 
        effect under section 1 shall be treated as being equal to the 
        sum of such rate and the rates in effect under paragraphs (1) 
        and (2) of section 1A(a).''.
            (10) Relief from joint and several liability on joint 
        return.--Section 6015(d)(2)(B) of such Code is amended by 
        inserting ``, 1A,'' after ``section 1''.
            (11) Partnership adjustments.--
                    (A) Section 6225(b)(1) of such Code is amended by 
                adding at the end the following flush sentence:
        ``For purposes of subparagraph (B), the highest rate of tax in 
        effect under section 1 shall be treated as being equal to the 
        sum of such rate and the rates in effect under paragraphs (1) 
        and (2) of section 1A(a).''.
                    (B) Section 6225(c)(4)(A) of such Code is amended--
                            (i) by striking ``subsection (b)(1)(A)'' 
                        and inserting ``subsection (b)(1)(B)'', and
                            (ii) by striking ``or'' at the end of 
                        clause (i), by adding ``or'' at the end of 
                        clause (ii), and by inserting after clause (ii) 
                        the following new clause:
                            ``(iii) is not an individual subject to one 
                        or both of the rates of tax in effect under 
                        paragraphs (1) and (2) of section 1A(a),''.
            (12) Required payments for entities electing not to have 
        required taxable year.--Section 7519(b) of such Code is amended 
        by inserting ``and increased by the sum of the rates in effect 
        under paragraphs (1) and (2) of section 1A(a)'' before the 
        period at the end.
    (c) Clerical Amendment.--The table of sections for part I of 
subchapter A of chapter 1 of such Code is amended by inserting after 
the item relating to section 1 the following new item:

``Sec. 1A. Surcharge on high income individuals.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2021.

SEC. 4. MODIFICATION OF CORPORATE TAX RATE.

    (a) In General.--Section 11(b) of the Internal Revenue Code of 1986 
is amended to read as follows:
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) shall be the sum of--
                    ``(A) 18 percent of so much of the taxable income 
                as does not exceed $400,000,
                    ``(B) 21 percent of so much of the taxable income 
                as exceeds $400,000 but does not exceed $5,000,000, and
                    ``(C) 26.5 percent of so much of the taxable income 
                as exceeds $5,000,000.
        In the case of a corporation which has taxable income in excess 
        of $10,000,000 for any taxable year, the amount of tax 
        determined under the preceding sentence for such taxable year 
        shall be increased by the lesser of (i) 3 percent of such 
        excess, or (ii) $287,000.
            ``(2) Certain personal service corporation not eligible for 
        graduated rates.--Notwithstanding paragraph (1), the amount of 
        the tax imposed by subsection (a) on the taxable income of a 
        qualified personal service corporation (as defined in section 
        448(d)(2)) shall be equal to 26.5 percent of the taxable 
        income.''.
    (b) Conforming Amendments.--
            (1) Section 1561 of the Internal Revenue Code of 1986 is 
        amended to read as follows:

``SEC. 1561. LIMITATION ON CERTAIN MULTIPLE TAX BENEFITS IN THE CASE OF 
              CERTAIN CONTROLLED CORPORATIONS.

    ``(a) In General.--The component members of a controlled group of 
corporations on a December 31 shall, for their taxable years which 
include such December 31, be limited for purposes of this subtitle to--
            ``(1) amounts in each taxable income bracket in the 
        subparagraphs of section 11(b)(1) which do not aggregate more 
        than the maximum amount in each such bracket to which a 
        corporation which is not a component member of a controlled 
        group is entitled, and
            ``(2) one $250,000 ($150,000 if any component member is a 
        corporation described in section 535(c)(2)(B)) amount for 
        purposes of computing the accumulated earnings credit under 
        section 535(c)(2) and (3).
The amounts specified in paragraph (1) shall be divided equally among 
the component members of such group on such December 31 unless all of 
such component members consent (at such time and in such manner as the 
Secretary shall by regulations prescribe) to an apportionment plan 
providing for an unequal allocation of such amounts. The amounts 
specified in paragraph (2) shall be divided equally among the component 
members of such group on such December 31 unless the Secretary 
prescribes regulations permitting an unequal allocation of such 
amounts. Notwithstanding paragraph (1), in applying the last sentence 
of section 11(b)(1) to such component members, the taxable income of 
all such component members shall be taken into account and any increase 
in tax under such last sentence shall be divided among such component 
members in the same manner as amounts under paragraph (1).
    ``(b) Certain Short Taxable Years.--If a corporation has a short 
taxable year which does not include a December 31 and is a component 
member of a controlled group of corporations with respect to such 
taxable year, then for purposes of this subtitle--
            ``(1) the amount in each taxable income bracket in the tax 
        table in section 11(b) of such corporation for such taxable 
        year, and
            ``(2) the amount to be used in computing the accumulated 
        earnings credit under section 535(c)(2) and (3) of such 
        corporation for such taxable year,
shall be the amount specified in subsection (a)(1) or (2), as the case 
may be, divided by the number of corporations which are component 
members of such group on the last day of such taxable year. For 
purposes of the preceding sentence, section 1563(b) shall be applied as 
if such last day were substituted for `December 31'.''.
            (2) The table of sections for part II of subchapter B of 
        chapter 6 of such Code is amended by striking the item relating 
        to section 1561 and inserting the following:

``Sec. 1561. Limitation on certain multiple tax benefits in the case of 
                            certain controlled corporations.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2021.
    (d) Normalization Requirements.--
            (1) In general.--A normalization method of accounting shall 
        not be treated as being used with respect to any public utility 
        property for purposes of section 167 or 168 of the Internal 
        Revenue Code of 1986 if the taxpayer, in computing its cost of 
        service for ratemaking purposes and reflecting operating 
        results in its regulated books of account, reduces the tax 
        reserve deficit less rapidly or to a lesser extent than such 
        reserve would be reduced under the average rate assumption 
        method.
            (2) Alternative method for certain taxpayers.--If, as of 
        the first day of the taxable year that includes the date of 
        enactment of this Act--
                    (A) the taxpayer was required by a regulatory 
                agency to compute depreciation for public utility 
                property on the basis of an average life or composite 
                rate method, and
                    (B) the taxpayer's books and underlying records did 
                not contain the vintage account data necessary to apply 
                the average rate assumption method,
        the taxpayer will be treated as using a normalization method of 
        accounting if, with respect to such jurisdiction, the taxpayer 
        uses the alternative method for public utility property that is 
        subject to the regulatory authority of that jurisdiction.
            (3) Definitions.--For purposes of this subsection--
                    (A) Tax reserve deficit.--The term ``tax reserve 
                deficit'' means the excess of--
                            (i) the amount which would be the balance 
                        in the reserve for deferred taxes (as described 
                        in section 168(i)(9)(A)(ii) of the Internal 
                        Revenue Code of 1986, or section 
                        167(l)(3)(G)(ii) or 168(3)(3)(B)(ii) of such 
                        Code as in effect on the day before the date of 
                        the enactment of the Tax Reform Act of 1986) if 
                        the amount of such reserve were determined by 
                        assuming that the corporate rate increases 
                        provided in the amendments made by this section 
                        were in effect for all prior periods, over
                            (ii) the balance in such reserve as of the 
                        day before such corporate rate increases take 
                        effect.
                    (B) Average rate assumption method.--The average 
                rate assumption method is the method under which the 
                tax reserve deficit is reduced over the remaining lives 
                of the property as used in its regulated books of 
                account which gave rise to the reserve for deferred 
                taxes. Under such method, if timing differences for the 
                property reverse, the amount of the adjustment to the 
                reserve for the deferred taxes is calculated by 
                multiplying--
                            (i) the ratio of the aggregate deferred 
                        taxes for the property to the aggregate timing 
                        differences for the property as of the 
                        beginning of the period in question, by
                            (ii) the amount of the timing differences 
                        which reverse during such period.
                    (C) Alternative method.--The ``alternative method'' 
                is the method in which the taxpayer--
                            (i) computes the tax reserve deficit on all 
                        public utility property included in the plant 
                        account on the basis of the weighted average 
                        life or composite rate used to compute 
                        depreciation for regulatory purposes, and
                            (ii) reduces the tax reserve deficit 
                        ratably over the remaining regulatory life of 
                        the property.
            (4) Treatment of normalization violation.--If, for any 
        taxable year ending after the date of the enactment of this 
        Act, the taxpayer does not use a normalization method of 
        accounting for the corporate rate increases provided in the 
        amendments made by this section , such taxpayer shall not be 
        treated as using a normalization method of accounting for 
        purposes of subsections (f)(2) and (i)(9)(C) of section 168 of 
        the Internal Revenue Code of 1986.
            (5) Regulations.--The Secretary of the Treasury, or the 
        Secretary's designee, shall issue such regulations or other 
        guidance as may be necessary or appropriate to carry out the 
        purposes of this subsection, including regulations or other 
        guidance to provide appropriate coordination between this 
        subsection, section 13001(d) of Public Law 115-97, and section 
        203(e) of the Tax Reform Act of 1986.
                                 <all>