S. 1927 (109th): Fair Flat Tax Act of 2005

109th Congress, 2005–2006. Text as of Oct 27, 2005 (Introduced).

Status & Summary | PDF | Source: GPO

S 1927 IS

109th CONGRESS

1st Session

S. 1927

To amend the Internal Revenue Code of 1986 to make the Federal income tax system simpler, fairer, and more fiscally responsible, and for other purposes.

IN THE SENATE OF THE UNITED STATES

October 27, 2005

Mr. WYDEN 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 make the Federal income tax system simpler, fairer, and more fiscally responsible, 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; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title- This Act may be cited as the `Fair Flat Tax Act of 2005'.

    (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) Table of Contents- The table of contents for this Act is as follows:

      Sec. 1. Short title; amendment of 1986 Code; table of contents.

      Sec. 2. Purpose.

TITLE I--INDIVIDUAL INCOME TAX REFORMS

      Sec. 101. 3 progressive individual income tax rates for all forms of income.

      Sec. 102. Increase in basic standard deduction.

      Sec. 103. Refundable credit for State and local income, sales, and real and personal property taxes.

      Sec. 104. Earned income child credit and earned income credit for childless taxpayers.

      Sec. 105. Repeal of individual alternative minimum tax.

      Sec. 106. Termination of various exclusions, exemptions, deductions, and credits.

TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

      Sec. 201. Corporate flat tax.

      Sec. 202. Treatment of travel on corporate aircraft.

      Sec. 203. Termination of various preferential treatments.

      Sec. 204. Elimination of tax expenditures that subsidize inefficiencies in the health care system.

      Sec. 205. Pass-through business entity transparency.

TITLE III--TECHNICAL AND CONFORMING AMENDMENTS; SUNSET

      Sec. 301. Technical and conforming amendments.

      Sec. 302. Sunset.

SEC. 2. PURPOSE.

    The purpose of this Act is to amend the Internal Revenue Code of 1986--

      (1) to make the Federal individual income tax system simpler, fairer, and more transparent by--

        (A) recognizing the overall Federal, State, and local tax burden on individual Americans, especially the regressive nature of State and local taxes, and providing a Federal income tax credit for State and local income, sales, and property taxes,

        (B) providing for an earned income tax credit for childless taxpayers and a new earned income child credit,

        (C) repealing the individual alternative minimum tax,

        (D) increasing the basic standard deduction and maintaining itemized deductions for principal residence mortgage interest and charitable contributions,

        (E) reducing the number of exclusions, exemptions, deductions, and credits, and

        (F) treating all income equally,

      (2) to make the Federal corporate income tax rate a flat 35 percent and eliminate special tax preferences that favor particular types of businesses or activities, and

      (3) to partially offset the Federal budget deficit through the increased revenues resulting from these reforms.

TITLE I--INDIVIDUAL INCOME TAX REFORMS

SEC. 101. 3 PROGRESSIVE INDIVIDUAL INCOME TAX RATES FOR ALL FORMS OF INCOME.

    (a) Married Individuals Filing Joint Returns and Surviving Spouses- The table contained in section 1(a) is amended to read as follows:

`If taxable income is:

The tax is:

Not over $25,000


15% of taxable income.

Over $25,000 but not over $120,000


$3,750, plus 25% of the excess over $25,000

Over $120,000


$27,500, plus 35% of the excess over $120,000'.

    (b) Heads of Households- The table contained in section 1(b) is amended to read as follows:

`If taxable income is:

The tax is:

Not over $16,000


15% of taxable income.

Over $16,000 but not over $105,000


$2,400, plus 25% of the excess over $16,000

Over $105,000


$24,650, plus 35% of the excess over $105,000'.

    (c) Unmarried Individuals (Other Than Surviving Spouses and Heads of Households)- The table contained in section 1(c) is amended to read as follows:

`If taxable income is:

The tax is:

Not over $15,000


15% of taxable income.

Over $15,000 but not over $70,000


$2,250, plus 25% of the excess over $15,000

Over $70,000


$16,000, plus 35% of the excess over $70,000'.

    (d) Married Individuals Filing Separate Returns- The table contained in section 1(d) is amended to read as follows:

`If taxable income is:

The tax is:

Not over $12,500


15% of taxable income.

Over $12,500 but not over $60,000


$1,875, plus 25% of the excess over $12,500

Over $60,000


$13,750, plus 35% of the excess over $60,000'.

    (e) Conforming Amendments to Inflation Adjustment- Section 1(f) is amended--

      (1) by striking `1993'in paragraph (1) and inserting `2006',

      (2) by striking `except as provided in paragraph (8)' in paragraph (2)(A),

      (3) by striking `1992' in paragraph (3)(B) and inserting `2005',

      (4) by striking paragraphs (7) and (8), and

      (5) by striking `Phaseout of Marriage Penalty in 15-Percent Bracket;' in the heading thereof.

    (f) Repeal of Rate Differential for Capital Gains and Dividends-

      (1) REPEAL OF 2003 RATE REDUCTION- Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended by striking `December 3, 2008' and inserting `December 31, 2005'.

      (2) TERMINATION OF PRE-2003 CAPITAL GAIN RATE DIFFERENTIAL- Section 1(h) is amended (after the application of paragraph (1)) by adding at the end the following new paragraph:

      `(13) TERMINATION- This section shall not apply to taxable years beginning after December 31, 2005.'.

    (g) Additional Conforming Amendments-

      (1) Section 1 is amended by striking subsection (i).

      (2) The Internal Revenue Code of 1986 is amended by striking `calendar year 1992' each place it appears and inserting `calendar year 2005'.

      (3) Section 1445(e)(1) (after the application of subsection (g)(1)) is amended by striking `(or, to the extent provided in regulations, 20 percent)'.

    (h) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 102. INCREASE IN BASIC STANDARD DEDUCTION.

    (a) In General- Paragraph (2) of section 63(c) (defining standard deduction) is amended to read as follows:

      `(2) BASIC STANDARD DEDUCTION- For purposes of paragraph (1), the basic standard deduction is--

        `(A) 200 percent of the dollar amount in effect under subparagraph (C) for the taxable year in the case of--

          `(i) a joint return, or

          `(ii) a surviving spouse (as defined in section 2(a)),

        `(B) $26,250 in the case of a head of household (as defined in section 2(b)), or

        `(C) $15,000 in any other case.'.

    (b) Conforming Amendment to Inflation Adjustment- Section 63(c)(4)(B)(i) is amended by striking `(2)(B), (2)(C), or'.

    (c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 103. REFUNDABLE CREDIT FOR STATE AND LOCAL INCOME, SALES, AND REAL AND PERSONAL PROPERTY TAXES.

    (a) General Rule- Subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits) is amended by redesignating section 36 as section 37 and by inserting after section 35 the following new section:

`SEC. 36. CREDIT FOR STATE AND LOCAL INCOME, SALES, AND REAL AND PERSONAL PROPERTY TAXES.

    `(a) Allowance of Credit- In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to 10 percent of the qualified State and local taxes paid by the taxpayer for such year.

    `(b) Qualified State and Local Taxes- For purposes of this section, the term `qualified State and local taxes' means--

      `(1) State and local income taxes,

      `(2) State and local general sales taxes,

      `(3) State and local real property taxes, and

      `(4) State and local personal property taxes.

    `(c) Definitions and Special Rules- For purposes of this section--

      `(1) STATE OR LOCAL TAXES- A State or local tax includes only a tax imposed by a State, a possession of the United States, or a political subdivision of any of the foregoing, or by the District of Columbia.

      `(2) GENERAL SALES TAXES-

        `(A) IN GENERAL- The term `general sales tax' means a tax imposed at one rate with respect to the sale at retail of a broad range of classes of items.

        `(B) APPLICATION OF RULES- Rules similar to the rules under subparagraphs (C), (D), (E), (F), (G), and (H) of section 164(b)(5) shall apply.

      `(3) PERSONAL PROPERTY TAXES- The term `personal property tax' means an ad valorem tax which is imposed on an annual basis in respect of personal property.

      `(4) APPLICATION OF RULES TO PROPERTY TAXES- Rules similar to the rules of subsections (c) and (d) of section 164 shall apply.

      `(5) NO CREDIT FOR MARRIED INDIVIDUALS FILING SEPARATE RETURNS- If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.

      `(6) DENIAL OF CREDIT TO DEPENDENTS- No credit shall be allowed under this section to any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins.

      `(7) DENIAL OF DOUBLE BENEFIT- Any amount taken into account in determining the credit allowable under this section may not be taken into account in determining any credit or deduction under any other provision of this chapter.'.

    (b) Technical Amendments-

      (1) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting `or from section 36 of such Code' before the period at the end.

      (2) The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 36 and inserting the following:

      `Sec. 36. Credit for state and local income, sales, and real and personal property taxes.

      `Sec. 37. Overpayments of tax.'.

    (c) Report Regarding Use of Credit by Renters- Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury shall report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives recommendations regarding the treatment of a portion of rental payments in a manner similar to real property taxes under section 36 of the Internal Revenue Code of 1986 (as added by this section).

    (d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 104. EARNED INCOME CHILD CREDIT AND EARNED INCOME CREDIT FOR CHILDLESS TAXPAYERS.

    (a) In General- Subsection (a) of section 32 (relating to earned income) is amended to read as follows:

    `(a) Allowance of Earned Income Child Credit and Earned Income Credit-

      `(1) IN GENERAL- There shall be allowed as a credit against the tax imposed by this subtitle for the taxable year--

        `(A) in the case of any eligible individual with 1 or more qualifying children, an amount equal to the earned income child credit amount, and

        `(B) in the case of any eligible individual with no qualifying children, an amount equal to the earned income credit amount.

      `(2) EARNED INCOME CHILD CREDIT AMOUNT- For purposes of this section, the earned income child credit amount is equal to the sum of--

        `(A) the credit percentage of so much of the taxpayer's earned income for the taxable year as does not exceed the earned income limit amount, plus

        `(B) the supplemental child credit amount determined under subsection (n) for such taxable year.

      `(3) EARNED INCOME CREDIT AMOUNT- For purposes of this section, the earned income credit amount is equal to the credit percentage of so much of the taxpayer's earned income for the taxable year as does not exceed the earned income limit amount.

      `(4) LIMITATION- The amount of the credit allowable to a taxpayer under paragraph (2)(A) or (3) for any taxable year shall not exceed the excess (if any) of--

        `(A) the credit percentage of the earned income amount, over

        `(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.'.

    (b) Supplemental Child Credit Amount- Section 32 is amended by adding at the end the following new subsection:

    `(n) Supplemental Child Credit Amount-

      `(1) IN GENERAL- For purposes of subsection (a)(2)(B), the supplemental child credit amount for any taxable year is equal to the lesser of--

        `(A) the credit which would be allowed under section 24 for such taxable year without regard to the limitation under section 24(b)(3) with respect to any qualifying child as defined under subsection (c)(3), or

        `(B) the amount by which the aggregate amount of credits allowed by subpart A for such taxable year would increase if the limitation imposed by section 24(b)(3) were increased by the excess (if any) of--

          `(i) 15 percent of so much of the taxpayer's earned income which is taken into account in computing taxable income for the taxable year as exceeds $10,000, or

          `(ii) in the case of a taxpayer with 3 or more qualifying children (as so defined), the excess (if any) of--

            `(I) the taxpayer's social security taxes for the taxable year, over

            `(II) the credit allowed under this section for the taxable year.

      The amount of the credit allowed under this subsection shall not be treated as a credit allowed under subpart A and shall reduce the amount of credit otherwise allowable under section 24(a) without regard to section 24(b)(3).

      `(2) SOCIAL SECURITY TAXES- For purposes of paragraph (1)--

        `(A) IN GENERAL- The term `social security taxes' means, with respect to any taxpayer for any taxable year--

          `(i) the amount of the taxes imposed by section 3101 and 3201(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins,

          `(ii) 50 percent of the taxes imposed by section 1401 on the self-employment income of the taxpayer for the taxable year, and

          `(iii) 50 percent of the taxes imposed by section 3211(a)(1) on amounts received by the taxpayer during the calendar year in which the taxable year begins.

        `(B) COORDINATION WITH SPECIAL REFUND OF SOCIAL SECURITY TAXES- The term `social security taxes' shall not include any taxes to the extent the taxpayer is entitled to a special refund of such taxes under section 6413(c).

        `(C) SPECIAL RULE- Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A)(i) shall be treated as taxes referred to in such paragraph.

      `(3) INFLATION ADJUSTMENT- In the case of any taxable year beginning in a calendar year after 2005, the $10,000 amount contained in paragraph (1)(B) 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, determined by substituting `calendar year 2000' for `calendar year 1992' in subparagraph (B) thereof.

      Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.'.

    (c) Conforming Amendment- Section 24(d) is amended by adding at the end the following new paragraph:

      `(4) TERMINATION- This subsection shall not apply with respect to any taxable year beginning after December 31, 2005.'.

    (d) Certain Treatment of Earned Income Made Permanent- Clause (vi) of section 32(c)(2)(B) is amended to read as follows:

          `(vi) a taxpayer may elect to treat amounts excluded from gross income by reason of section 112 as earned income.'.

    (e) Repeal of Disqualified Investment Income Test- Subsection (i) of section 32 is repealed.

    (f) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 105. REPEAL OF INDIVIDUAL ALTERNATIVE MINIMUM TAX.

    (a) In General- Section 55(a) (relating to alternative minimum tax imposed) is amended by adding at the end the following new flush sentence:

    `For purposes of this title, the tentative minimum tax on any taxpayer other than a corporation for any taxable year beginning after December 31, 2005, shall be zero.'.

    (b) Modification of Limitation on Use of Credit for Prior Year Minimum Tax Liability- Subsection (c) of section 53 (relating to credit for prior year minimum tax liability) is amended to read as follows:

    `(c) Limitation-

      `(1) IN GENERAL- Except as provided in paragraph (2), the credit allowable under subsection (a) for any taxable year shall not exceed the excess (if any) of--

        `(A) the regular tax liability of the taxpayer for such taxable year reduced by the sum of the credits allowable under subparts A, B, D, E, and F of this part, over

        `(B) the tentative minimum tax for the taxable year.

      `(2) TAXABLE YEARS BEGINNING AFTER 2005- In the case of any taxable year beginning after 2005, the credit allowable under subsection (a) to a taxpayer other than a corporation for any taxable year shall not exceed 90 percent of the regular tax liability of the taxpayer for such taxable year reduced by the sum of the credits allowable under subparts A, B, D, E, and F of this part.'.

    (c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 106. TERMINATION OF VARIOUS EXCLUSIONS, EXEMPTIONS, DEDUCTIONS, AND CREDITS.

    (a) In General- Subchapter C of chapter 90 (relating to provisions affecting more than one subtitle) is amended by adding at the end the following new section:

`SEC. 7875. TERMINATION OF CERTAIN PROVISIONS.

    `The following provisions shall not apply to taxable years beginning after December 31, 2005:

      `(1) Section 44 (relating to credit for expenditures to provide access to disabled individuals).

      `(2) Section 62(a)(2)(D) (relating to deduction for certain expenses of elementary and secondary school teachers).

      `(3) Section 67 (relating to 2-percent floor on miscellaneous itemized deductions).

      `(4) Section 74(c) (relating to exclusion of certain employee achievement awards).

      `(5) Section 79 (relating to exclusion of group-term life insurance purchased for employees).

      `(6) Section 104(a)(1) (relating to exclusion of workmen's compensation).

      `(7) Section 104(a)(2) (relating to exclusion of damages for physical injuries and sickness).

      `(8) Section 107 (relating to exclusion of rental value of parsonages).

      `(9) Section 119 (relating to exclusion of meals or lodging furnished for the convenience of the employer).

      `(10) Section 125 (relating to exclusion of cafeteria plan benefits).

      `(11) Section 132 (relating to certain fringe benefits), except with respect to subsection (a)(5) thereof (relating to exclusion of qualified transportation fringe).

      `(12) Section 163(h)(4)(A)(i)(II) (relating to definition of qualified residence).

      `(13) Section 165(d) (relating to deduction for wagering losses).

      `(14) Section 217 (relating to deduction for moving expenses).

      `(15) Section 454 (relating to deferral of tax on obligations issued at discount).

      `(16) Section 501(c)(9) (relating to tax-exempt status of voluntary employees' beneficiary associations).

      `(17) Section 911 (relating to exclusion of earned income of citizens or residents of the United States living abroad).

      `(18) Section 912 (relating to exemption for certain allowances).'.

    (b) Conforming Amendment- The table of sections for subchapter C of chapter 90 is amended by adding at the end the following new item:

`Sec. 7875. Termination of certain provisions.'.

TITLE II--CORPORATE AND BUSINESS INCOME TAX REFORMS

SEC. 201. CORPORATE FLAT TAX.

    (a) In General- Subsection (b) of section 11 (relating to tax imposed) is amended to read as follows:

    `(b) Amount of Tax- The amount of tax imposed by subsection (a) shall be equal to 35 percent of the taxable income.'.

    (b) Conforming Amendments-

      (1) Section 280C(c)(3)(B)(ii)(II) is amended by striking `maximum rate of tax under section 11(b)(1)' and inserting `rate of tax under section 11(b)'.

      (2) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 1446(b)(2)(B), and 7874(e)(1)(B) are each amended by striking `highest rate of tax specified in section 11(b)(1)' and inserting `rate of tax specified in section 11(b)'.

      (3) Section 904(b)(3)(D)(ii) is amended by striking `(determined without regard to the last sentence of section 11(b)(1))'.

      (4) Section 962 is amended by striking subsection (c) and by redesignating subsection (d) as subsection (c).

      (5) Section 1201(a) is amended by striking `(determined without regard to the last 2 sentences of section 11(b)(1))'.

      (6) Section 1561(a) is amended--

        (A) by striking paragraph (1) and by redesignating paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3), respectively,

        (B) by striking `The amounts specified in paragraph (1), the' and inserting `The',

        (C) by striking `paragraph (2)' and inserting `paragraph (1)',

        (D) by striking `paragraph (3)' both places it appears and inserting `paragraph (2)',

        (E) by striking `paragraph (4)' and inserting `paragraph (3)', and

        (F) by striking the fourth sentence.

      (7) Subsection (b) of section 1561 is amended to read as follows:

    `(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, 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) 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.'.

    (c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 202. TREATMENT OF TRAVEL ON CORPORATE AIRCRAFT.

    (a) In General- Section 162 (relating to trade or business expenses) is amended by redesignating subsection (q) as subsection (r) and b inserting after subsection (p) the following new subsection:

    `(q) Treatment of Travel on Corporate Aircraft- The rate at which an amount allowable as a deduction under this chapter for the use of an aircraft owned by the taxpayer is determined shall not exceed the rate at which an amount paid or included in income by an employee of such taxpayer for the personal use of such aircraft is determined.'.

    (b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2005.

SEC. 203. TERMINATION OF VARIOUS PREFERENTIAL TREATMENTS.

    (a) In General- Section 7875, as added by section 106, is amended--

      (1) by inserting `(or transactions in the case of sections referred to in paragraphs (21), (22), (23), (24), and (27))' after `taxable years beginning', and

      (2) by adding at the end the following new paragraphs:

      `(19) Section 43 (relating to enhanced oil recovery credit).

      `(20) Section 263(c) (relating to intangible drilling and development costs in the case of oil and gas wells and geothermal wells).

      `(21) Section 382(l)(5) (relating to exception from net operating loss limitations for corporations in bankruptcy proceeding).

      `(22) Section 451(i) (relating to special rules for sales or dispositions to implement Federal Energy Regulatory Commission or State electric restructuring policy).

      `(23) Section 453A (relating to special rules for nondealers), but only with respect to the dollar limitation under subsection (b)(1) thereof and subsection (b)(3) thereof (relating to exception for personal use and farm property).

      `(24) Section 460(e)(1) (relating to special rules for long-term home construction contracts or other short-term construction contracts).

      `(25) Section 613A (relating to percentage depletion in case of oil and gas wells).

      `(26) Section 616 (relating to development costs).

      `(27) Sections 861(a)(6), 862(a)(6), 863(b)(2), 863(b)(3), and 865(b) (relating to inventory property sales source rule exception).'.

    (b) Full Tax Rate on Nuclear Decommissioning Reserve Fund- Subparagraph (B) of section 468A(e)(2) is amended to read as follows:

        `(B) RATE OF TAX- For purposes of subparagraph (A), the rate set forth in this subparagraph is 35 percent.'.

    (c) Deferral of Active Income of Controlled Foreign Corporations- Section 952 (relating to subpart F income defined) is amended by adding at the end the following new subsection:

    `(e) Special Application of Subpart-

      `(1) IN GENERAL- For taxable years beginning after December 31, 2005, notwithstanding any other provision of this subpart, the term `subpart F income' means, in the case of any controlled foreign corporation, the income of such corporation derived from any foreign country.

      `(2) APPLICABLE RULES- Rules similar to the rules under the last sentence of subsection (a) and subsection (d) shall apply to this subsection.'.

    (d) Deferral of Active Financing Income- Section 953(e)(10) is amended--

      (1) by striking `2006' and inserting `2005', and

      (2) by striking `2007' and inserting `2006'.

    (e) Depreciation on Equipment in Excess of Alternative Depreciation System- Section 168(g)(1) (relating to alternative depreciation system) is amended by striking `and' at the end of subparagraph (D), by adding `and' at the end of subparagraph (E), and by inserting after subparagraph (E) the following new subparagraph:

        `(F) notwithstanding subsection (a), any tangible property placed in service after December 31, 2005,'.

    (f) Effective Date- The amendments made by subsections (b), (c), and (d) shall apply to taxable years beginning after December 31, 2005.

SEC. 204. ELIMINATION OF TAX EXPENDITURES THAT SUBSIDIZE INEFFICIENCIES IN THE HEALTH CARE SYSTEM.

    Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury shall report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives recommendations regarding the elimination of Federal tax incentives which subsidize inefficiencies in the health care system and if eliminated would result in Federal budget savings of not less than $10,000,000,000 annually.

SEC. 205. PASS-THROUGH BUSINESS ENTITY TRANSPARENCY.

    Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives regarding the implementation of additional reporting requirements with respect to any pass-through entity with the goal of the reduction of tax avoidance through the use of such entities, In addition, the Secretary shall develop procedures to share such report data with State revenue agencies under the disclosure requirements of section 6103(d) of the Internal Revenue Code of 1986.

TITLE III--TECHNICAL AND CONFORMING AMENDMENTS; SUNSET

SEC. 301. TECHNICAL AND CONFORMING AMENDMENTS.

    The Secretary of the Treasury or the Secretary's delegate shall not later than 90 days after the date of the enactment of this Act, submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a draft of any technical and conforming changes in the Internal Revenue Code of 1986 which are necessary to reflect throughout such Code the purposes of the provisions of, and amendments made by, this Act.

SEC. 302. SUNSET.

    (a) In General- All provisions of, and amendments made by, this Act shall not apply to taxable years beginning after December 31, 2010.

    (b) Application of Code- The Internal Revenue Code of 1986 shall be applied and administered to taxable years described in subsection (a) as if the provisions of, and amendments made by, this Act had never been enacted.