H.R. 874 (107th): Hidden Rate Elimination Act of 2001

107th Congress, 2001–2002. Text as of Mar 06, 2001 (Introduced).

Status & Summary | PDF | Source: GPO

HR 874 IH

107th CONGRESS

1st Session

H. R. 874

To amend the Internal Revenue Code of 1986 to provide individual income tax rate reductions and to repeal the phaseouts of the deduction for personal exemptions and of itemized deductions.

IN THE HOUSE OF REPRESENTATIVES

March 6, 2001

Mr. CRANE 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 provide individual income tax rate reductions and to repeal the phaseouts of the deduction for personal exemptions and of itemized deductions.

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

SECTION 1. SHORT TITLE; ETC.

    (a) SHORT TITLE- This Act may be cited as the ‘Hidden Rate Elimination 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 considered to be made to a section or other provision of the Internal Revenue Code of 1986.

    (c) SECTION 15 NOT TO APPLY- No amendment made by this Act 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 MARGINAL INCOME TAX RATES FOR INDIVIDUALS.

    (a) RATES FOR 2002- Section 1 (relating to tax imposed) is amended by striking subsections (a) through (d) and inserting the following:

    ‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES- There is hereby imposed on the taxable income of--

      ‘(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and

      ‘(2) every surviving spouse (as defined in section 2(a)),

    a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $12,000


14% of taxable income.

Over $12,000 but not over $45,200


$1,680, plus 15% of the excess over $12,000.

Over $45,200 but not over $109,250


$6,660, plus 27% of the excess over $45,200.

Over $109,250 but not over $166,450


$23,953.50, plus 30% of the excess over $109,250.

Over $166,450 but not over $297,300


$41,113.50, plus 35% of the excess over $166,450.

Over $297,300


$86,911, plus 38% of the excess over $297,300.

    ‘(b) HEADS OF HOUSEHOLDS- There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $10,000


14% of taxable income.

Over $10,000 but not over $36,250


$1,400, plus 15% of the excess over $10,000.

Over $36,250 but not over $93,600


$5,337.50, plus 27% of the excess over $36,250.

Over $93,600 but not over $151,600


$20,822, plus 30% of the excess over $93,600.

Over $151,600 but not over $297,300


$38,222, plus 35% of the excess over $151,600.

Over $297,300


$89,217, plus 38% of the excess over $297,300.

    ‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS)- There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $6,000


14% of taxable income.

Over $6,000 but not over $27,050


$840, plus 15% of the excess over $6,000.

Over $27,050 but not over $65,550


$3,997.50, plus 27% of the excess over $27,050.

Over $65,550 but not over $136,750


$14,362.50, plus 30% of the excess over $65,550.

Over $136,750 but not over $297,300


$35,752.50, plus 35% of the excess over $136,750.

Over $297,300


$91,945, plus 38% of the excess over $297,300.

    ‘(d) MARRIED INDIVIDUALS FILING SEPARATE RETURNS- There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse

under section 6013, a tax determined in accordance with the following table:

‘If taxable income is:

The tax is:

Not over $6,000


14% of taxable income.

Over $6,000 but not over $22,600


$840, plus 15% of the excess over $6,000.

Over $22,600 but not over $54,625


$3,330, plus 27% of the excess over $22,600.

Over $54,625 but not over $83,225


$11,976.75, plus 30% of the excess over $54,625.

Over $83,225 but not over $148,650


$20,556.75, plus 35% of the excess over $83,225.

Over $148,650


$43,455.50, plus 38% of the excess over $148,650.’.

    (b) PHASEIN OF RATE REDUCTIONS- Section 1 is amended by adding at the end the following new subsection:

    ‘(i) PHASEIN OF 2006 RATES OF 10, 15, 25, AND 33 PERCENT-

      ‘(1) IN GENERAL- In the case of taxable years beginning in a calendar year after 2002, the tax rates determined under subsection (a), (b), (c), or (d) shall be the tax rates imposed by such subsection in taxable years beginning in calendar year 2002, reduced--

        ‘(A) in the case of the 14 percent rate, by 1 percentage point in each taxable year beginning in a calendar year after 2002 and before 2007,

        ‘(B) in the case of the 27 and 35 percent rates, by 1 percentage point in taxable years beginning in calendar year 2004, and by an additional 1 percentage point in taxable years beginning in calendar year 2006, and

        ‘(C) in the case of the 30 and 38 percent rate, by 1 percentage point in each taxable year beginning in a calendar year after 2002 and before 2006, and by an additional 2 percentage points in taxable years beginning in calendar year 2006.

      ‘(2) ADJUSTMENT OF TABLES- The Secretary shall adjust the tables prescribed under subsection (f) to carry out the reductions under this subsection.’.

    (c) INFLATION ADJUSTMENT TO APPLY IN DETERMINING RATES FOR 2002- Subsection (f) of section 1 is amended--

      (1) by striking ‘1993’ in paragraph (1) and inserting ‘2001’,

      (2) by striking ‘1992’ in paragraph (3)(B) and inserting ‘2000’, and

      (3) by striking paragraph (7) and inserting the following new paragraph:

      ‘(7) SPECIAL RULE FOR CERTAIN BRACKETS-

        ‘(A) CALENDAR YEARS 2002 THROUGH 2006- In prescribing the tables under paragraph (1) which apply with respect to taxable years beginning in calendar years after 2001 and before 2007, the Secretary shall make no adjustment to the dollar amounts at which the first rate bracket begins or at which the second rate bracket begins under any table contained in subsection (a), (b), (c), or (d).

        ‘(B) LATER CALENDAR YEARS- In prescribing the tables under paragraph (1) which apply with respect to taxable years beginning in a calendar year after 2006, the cost-of-living adjustment used in making adjustments to the dollar amounts referred to in subparagraph (A) shall be determined under paragraph (3) by substituting ‘2005’ for ‘2000’.’.

    (d) CONFORMING AMENDMENTS-

      (1) The following provisions are each amended by striking ‘1992’ and inserting ‘2000’ each place it appears:

        (A) Section 32(j)(1)(B).

        (B) Section 41(e)(5)(C).

        (C) Section 42(h)(3)(H)(i)(II).

        (D) Section 59(j)(2)(B).

        (E) Section 63(c)(4)(B).

        (F) Section 68(b)(2)(B).

        (G) Section 132(f)(6)(A)(ii).

        (H) Section 135(b)(2)(B)(ii).

        (I) Section 146(d)(2)(B).

        (J) Section 151(d)(4).

        (K) Section 220(g)(2).

        (L) Section 221(g)(1)(B).

        (M) Section 512(d)(2)(B).

        (N) Section 513(h)(2)(C)(ii).

        (O) Section 685(c)(3)(B).

        (P) Section 877(a)(2).

        (Q) Section 911(b)(2)(D)(ii)(II).

        (R) Section 2032A(a)(3)(B).

        (S) Section 2503(b)(2)(B).

        (T) Section 2631(c)(2).

        (U) Section 4001(e)(1)(B).

        (V) Section 4261(e)(4)(A)(ii).

        (W) Section 6039F(d).

        (X) Section 6323(i)(4)(B).

        (Y) Section 6334(g)(1)(B).

        (Z) Section 6601(j)(3)(B).

        (AA) Section 7430(c)(1).

      (2) Sections 25A(h)(1)(A)(ii) and 25A(h)(2)(A)(ii) are each amended by striking ‘begins,’ and all that follows through ‘thereof’.

      (3) Subclause (II) of section 42(h)(6)(G)(i) is amended by striking ‘1987’ and inserting ‘2000’.

    (e) ADDITIONAL CONFORMING AMENDMENTS-

      (1) Section 1(g)(7)(B)(ii)(II) is amended by striking ‘15 percent’ and inserting ‘10 percent’.

      (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 ‘15 percent’, and

        (B) by striking paragraph (13).

      (3) Section 531 is amended by striking ‘39.6 percent’ and inserting ‘33 percent’.

      (4) Section 541 of such Code is amended by striking ‘39.6 percent’ and inserting ‘33 percent’.

      (5) Section 3402(p)(1)(B) is amended by striking ‘7, 15, 28, or 31 percent’ and inserting ‘5, 10, 15, or 25 percent’.

      (6) Section 3402(p)(2) is amended by striking ‘15 percent’ and inserting ‘10 percent’.

      (7) Section 3402(q)(1) is amended by striking ‘28 percent’ and inserting ‘15 percent’.

      (8) Section 3402(r)(3) is amended by striking ‘31 percent’ and inserting ‘25 percent’.

      (9) Section 3406(a)(1) is amended by striking ‘31 percent’ and inserting ‘25 percent’.

      (10) The Secretary of the Treasury may prescribe percentages which shall apply in lieu of the

percentages specified in the amendments made by this subsection in order to coordinate those percentages with the percentages specified in the tables prescribed under the last sentence of section 1(i)(1) of the Internal Revenue Code of 1986, as added by this section.

    (f) EFFECTIVE DATES-

      (1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2001.

      (2) AMENDMENTS TO WITHHOLDING PROVISIONS- The amendments made by paragraphs (5), (6), (7), (8), and (9) of subsection (e) shall apply to amounts paid after December 31, 2001.

SEC. 3. REPEAL OF PHASEOUTS OF DEDUCTION FOR PERSONAL EXEMPTIONS AND OF ITEMIZED DEDUCTIONS.

    (a) REPEAL OF PHASEOUT OF PERSONAL EXEMPTIONS-

      (1) IN GENERAL- Subsection (d) of section 151 (relating to exemption amount) is amended by striking paragraph (3).

      (2) TECHNICAL AMENDMENTS-

        (A) Paragraph (6) of section 1(f) is amended--

          (i) by striking ‘section 151(d)(4)’ in subparagraph (A) and inserting ‘section 151(d)(3)’, and

          (ii) by striking ‘section 151(d)(4)(A)’ in subparagraph (B) and inserting ‘section 151(d)(3)’.

        (B) Paragraph (4) of section 151(d) is amended to read as follows:

      ‘(3) INFLATION ADJUSTMENT- In the case of any taxable year beginning in a calendar year after 1989, the dollar amount contained in paragraph (1) shall be increased by an amount equal to--

        ‘(A) such dollar amount, multiplied by

        ‘(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1988’ for ‘calendar year 2000’ in subparagraph (B) thereof.’

    (b) REPEAL OF OVERALL LIMITATION ON ITEMIZED DEDUCTIONS-

      (1) IN GENERAL- Section 68 is hereby repealed.

      (2) TECHNICAL AMENDMENTS-

        (A) Subparagraph (A) of section 1(f)(6) is amended by striking ‘section 68(b)(2)’.

        (B) Paragraph (1) of section 56(b) is amended by striking subparagraph (F).

        (C) Subparagraph (B) of section 773(a)(3) is amended by striking clause (i) and by redesignating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively.

        (D) The table of sections for part I of subchapter B of chapter 1 is amended by striking the item relating to section 68.

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.