Debt Buy-Down Act

Bill: 115-s-1552
Sponsor: full_name: Sen. Flake, Jeff [R-AZ]
Introduced: 2017-07-13
Policy area: Economics and Public Finance
Subjects: Budget deficits and national debt

Budget process

Government trust funds

Tax administration and collection, taxpayers
Latest action: action_date: 2017-07-13
text: Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S3999)

Summaries:
action_date: 2017-07-13
action_desc: Introduced in Senate
text: <p><b>Debt Buy-Down Act</b></p> <p> This bill amends the Internal Revenue Code to allow individual taxpayers to designate up to 10% of their adjusted income tax liability for the reduction of the public debt. </p> <p>The bill also establishes in the Treasury a Public Debt Reduction Trust Fund to hold tax revenues generated by this bill for the reduction of the public debt.</p> <p>The bill amends the Balanced Budget and Emergency Deficit Control Act of 1985 to: (1) require spending to be reduced annually by an amount equivalent to the revenue generated by this bill, and (2) enforce the requirement for spending reductions using a sequestration, with exemptions for Social Security retirement benefits, veterans benefits, and net interest payments on the debt. </p> <p>(Sequestration is a process of automatic, usually across-the-board spending reductions under which budgetary resources are permanently cancelled to enforce specific budget policy goals.) </p>

tv_txt: II 115th CONGRESS 1st Session S. 1552 IN THE SENATE OF THE UNITED STATES July 13, 2017 Mr. Flake introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to allow individuals to designate that up to 10 percent of their income tax liability be used to reduce the national debt, and to require spending reductions equal to the amounts so designated.

1. Short title This Act may be cited as the Debt Buy-Down Act . 2. Designation of amounts for reduction of public debt (a) In general Subchapter A of chapter 61 of the Internal Revenue Code of 1986 (relating to returns and records) is amended by adding at the end the following new part: IX Designation for reduction of public debt Sec. 6097. Designation. 6097. Designation (a) In general Every individual with adjusted income tax liability for any taxable year may designate that a portion of such liability (not to exceed 10 percent thereof) shall be used to reduce the public debt. (b) Manner and time of designation A designation under subsection (a) may be made with respect to any taxable year only at the time of filing the return of tax imposed by chapter 1 for the taxable year. The designation shall be made on the first page of the return or on the page bearing the taxpayer’s signature. (c) Adjusted income tax liability For purposes of this section, the adjusted income tax liability of an individual for any taxable year is the income tax liability of the individual for the taxable year determined under section 6096(b), reduced by any amount designated under section 6096(a). . (b) Clerical amendment The table of parts for such subchapter A is amended by adding at the end the following new item: Part IX. Designation for reduction of public debt . (c) Effective date The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. 3. Public debt reduction trust fund (a) In general Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to trust fund code) is amended by adding at the end the following section: 9512. Public debt reduction trust fund (a) Creation of trust fund There is established in the Treasury of the United States a trust fund to be known as the Public Debt Reduction Trust Fund , consisting of any amount appropriated or credited to the Trust Fund as provided in this section or section 9602(b). (b) Transfers to trust fund There are hereby appropriated to the Public Debt Reduction Trust Fund amounts equivalent to the amounts designated under section 6097 (relating to designation for public debt reduction). (c) Expenditures Amounts in the Public Debt Reduction Trust Fund shall be used by the Secretary for purposes of paying at maturity, or to redeem or buy before maturity, any obligation of the Federal Government included in the public debt (other than an obligation held by the Federal Old-Age and Survivors Insurance Trust Fund, or the Department of Defense Military Retirement Fund). Any obligation which is paid, redeemed, or bought with amounts from the Public Debt Reduction Trust Fund shall be canceled and retired and may not be reissued. . (b) Clerical amendment The table of sections for such subchapter is amended by adding at the end the following new item: Sec. 9512. Public Debt Reduction Trust Fund. . (c) Effective date The amendments made by this section shall apply to amounts received after the date of the enactment of this Act. 4. Taxpayer-generated sequestration of Federal spending To reduce the public debt (a) Sequestration To reduce the public debt Part C of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by inserting after section 253 the following new section: 253A. Sequestration to reduce the public debt (a) Sequestration Within 15 days after Congress adjourns to end a session, and on the same day as sequestration (if any) under sections 251, 252, and 253, and under section 5(b) of the Statutory Pay-As-You-Go Act of 2010, but after any sequestration required by those sections, there shall be a sequestration equivalent to the estimated aggregate amount designated under section 6097 of the Internal Revenue Code of 1986 for the last taxable year ending 1 year before the beginning of that session of Congress, as estimated by the Department of the Treasury on October 1 and as modified by the total of— (1) any amounts by which net discretionary spending is reduced by an Act of Congress to be below the discretionary spending limits that is enacted after the date of enactment of this section and relate to the fiscal year subject to the sequestration (or, in the absence of such limits, any net deficit change from the baseline amount calculated under section 257); and (2) the net deficit change that has resulted from all direct spending legislation enacted after the date of enactment of this section that relate to the fiscal year subject to the sequestration, as estimated by the Office of Management and Budget. If the reduction in spending under paragraphs (1) and (2) for a fiscal year is greater than the estimated aggregate amount designated under section 6097 of the Internal Revenue Code of 1986 for that fiscal year, then there shall be no sequestration under this section. (b) Applicability (1) In general Notwithstanding sections 255 and 256, and except as provided by paragraph (2), each account of the United States shall be reduced by a dollar amount calculated by multiplying the level of budgetary resources in that account at that time by the uniform percentage necessary to carry out subsection (a). All obligational authority reduced under this section shall be done in a manner that makes such reductions permanent. (2) Exempt accounts No order issued under this section may— (A) reduce benefits payable to the old-age and survivors insurance program established under title II of the Social Security Act; (B) reduce retired or retainer pay payable to a member or former member of the uniformed services; or (C) reduce payments for net interest (all of major functional category 900). . (b) Reports Section 254 of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended— (1) in subsection (a), by adding at the end of the table the following new item: October 1 Department of the Treasury report to Congress estimating amount of income tax designated pursuant to section 6097 of the Internal Revenue Code of 1986. ; (2) in subsection (c)— (A) in paragraph (1), by inserting , and sequestration to reduce the public debt, after sequestration ; (B) by redesignating paragraph (5) as paragraph (6); and (C) by inserting after paragraph (4) the following: (5) Reports on sequestration to reduce the public debt The preview reports shall set forth for the budget year estimates for each of the following: (A) The aggregate amount designated under section 6097 of the Internal Revenue Code of 1986 for the last taxable year ending before the budget year. (B) The amount of reductions required under section 253A and the deficit remaining after those reductions have been made. (C) The sequestration percentage necessary to achieve the required reduction in accounts under section 253A(b). ; and (3) in subsection (f)— (A) by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively; and (B) by inserting after paragraph (3) the following: (4) Reports on sequestration to reduce the public debt The final reports shall contain all of the information contained in the public debt taxation designation report required on October 1. . (c) Conforming amendment The table of contents in section 250(a) of the Balanced Budget and Emergency Deficit Control Act of 1985 is amended by inserting after the item relating to section 253 the following: Sec. 253A. Sequestration to reduce the public debt. . (d) Sunset The amendments made by this section shall cease to have force or effect after the first fiscal year during which there is no public debt.