H.R. 6104 (112th): Working Families Tax Protection Act of 2012

112th Congress, 2011–2013. Text as of Jul 11, 2012 (Introduced).

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I

112th CONGRESS

2d Session

H. R. 6104

IN THE HOUSE OF REPRESENTATIVES

July 11, 2012

introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To provide a temporary extension for the middle class of certain tax relief enacted in 2001, 2003, and 2009.

1.

Short title

This Act may be cited as the Working Families Tax Protection Act of 2012.

2.

Extension of 2001 tax relief for the middle class

(a)

In general

In the case of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 which are specified in subsection (b) (and the amendments made by such provisions), section 901 of such Act shall be applied by substituting December 31, 2013 for December 31, 2012 the first place it appears.

(b)

Specified EGTRRA provisions

The following provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 are specified in this subsection:

(1)

Title I (relating to individual income tax rate reductions).

(2)

Title II (relating to tax benefits related to children).

(3)

Title III (relating to marriage penalty relief).

(4)

Title IV (relating to affordable education provisions).

(c)

Certain provisions not applicable to high-Income individuals

(1)

Individual income tax rates

Subsection (i) of section 1 of the Internal Revenue Code of 1986 is amended by striking paragraph (2), by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (1) the following new paragraphs:

(2)

25- and 28-Percent rate brackets

The tables under subsections (a), (b), (c), (d), and (e) shall be applied—

(A)

by substituting 25% for 28% each place it appears (before the application of subparagraph (B)),

(B)

by substituting 28% for 31% each place it appears, and

(C)

by substituting 33% for 36% each place it appears.

(3)

35-Percent rate bracket

(A)

In general

In the case of taxable years beginning after December 31, 2012—

(i)

the rate of tax under subsections (a), (b), (c), and (d) on a taxpayer’s taxable income in the highest rate bracket shall be 35 percent to the extent such income does not exceed an amount equal to the excess of—

(I)

the applicable threshold, over

(II)

the dollar amount at which such bracket begins, and

(ii)

the 39.6 percent rate of tax under such subsections shall apply only to the taxpayer’s taxable income in such bracket in excess of the amount to which clause (i) applies.

(B)

Applicable threshold

For purposes of this paragraph, the term applicable threshold means—

(i)

$500,000 in the case of subsection (a), and

(ii)

1/2 the amount applicable under clause (i) in the case of subsections (b), (c), and (d).

(C)

Highest rate bracket

For purposes of this paragraph, the term highest rate bracket means the bracket which would (determined without regard to this paragraph) be the 39.6-percent rate bracket.

.

(2)

Phaseout of personal exemptions and itemized deductions

(A)

Overall limitation on itemized deductions

Section 68 of such Code is amended—

(i)

by striking the applicable amount the first place it appears in subsection (a) and inserting the applicable threshold in effect under section 1(i)(3),

(ii)

by striking the applicable amount in subsection (a)(1) and inserting such applicable threshold,

(iii)

by striking subsection (b) and redesignating subsections (c), (d), and (e) as subsections (b), (c), and (d), respectively, and

(iv)

by striking subsections (f) and (g).

(B)

Phaseout of deductions for personal exemptions

(i)

In general

Paragraph (3) of section 151(d) of such Code is amended—

(I)

by striking the threshold amount in subparagraphs (A) and (B) and inserting the applicable threshold in effect under section 1(i)(3),

(II)

by striking subparagraph (C) and redesignating subparagraph (D) as subparagraph (C), and

(III)

by striking subparagraphs (E) and (F).

(ii)

Conforming amendment

Paragraph (4) of section 151(d) of such Code is amended—

(I)

by striking subparagraph (B),

(II)

by redesignating clauses (i) and (ii) of subparagraph (A) as subparagraphs (A) and (B), respectively, and by indenting such subparagraphs (as so redesignated) accordingly, and

(III)

by striking all that precedes in a calendar year after 1989, and inserting the following:

(4)

Inflation adjustment

In the case of any taxable year beginning

.

(3)

Application of sunsets

(A)

Individual income tax rates

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall apply to the amendments made by paragraph (1) to the same extent and in the same manner as such section applies to the amendments made by section 101 of such Act.

(B)

Phaseout of personal exemptions and itemized deductions

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall apply to the amendments made by paragraph (2) to the same extent and in the same manner as such section applies to the amendments made by section 102 of such Act.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

3.

Extension of 2003 tax relief for the middle class

(a)

In general

Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended by striking December 31, 2012 and inserting December 31, 2013.

(b)

Certain provisions not applicable to high-Income individuals

(1)

In general

Paragraph (1) of section (1)(h) of the Internal Revenue Code of 1986 is amended by striking subparagraph (C), by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F) and by inserting after subparagraph (B) the following new subparagraphs:

(C)

15 percent of the lesser of—

(i)

so much of the adjusted net capital gain (or, if less, taxable income) as exceeds the amount on which a tax is determined under subparagraph (B), or

(ii)

the excess (if any) of—

(I)

the amount of taxable income which would (without regard to this subsection) be taxed at a rate below 39.6 percent, over

(II)

the sum of the amounts on which tax is determined under subparagraphs (A) and (B),

(D)

20 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the sum of the amounts on which tax is determined under subparagraphs (B) and (C),

.

(2)

Dividends

Subparagraph (A) of section 1(h)(11) of such Code is amended by striking qualified dividend income and inserting

so much of the qualified dividend income as does not exceed the excess (if any) of—

(i)

the amount of taxable income which would (without regard to this subsection) be taxed at a rate below 39.6 percent, over

(ii)

taxable income reduced by qualified dividend income.

.

(3)

Minimum tax

Section 55 of such Code is amended by adding at the end the following new subsection:

(f)

Application of maximum rate of tax on net capital gain of noncorporate taxpayers

In the case of taxable years beginning after December 31, 2012, the amount determined under subparagraph (C) of subsection (b)(3) shall be the sum of—

(1)

15 percent of the lesser of—

(A)

so much of the adjusted net capital gain (or, if less, taxable excess) as exceeds the amount on which tax is determined under subparagraph (B) of subsection (b)(3), or

(B)

the excess described in section 1(h)(1)(C)(ii), plus

(2)

20 percent of the adjusted net capital gain (or, if less, taxable excess) in excess of the sum of the amounts on which tax is determined under subsection (b)(3)(B) and paragraph (1).

.

(4)

Conforming amendments

(A)

The following provisions are amended by striking 15 percent and inserting 20 percent:

(i)

Section 1445(e)(1) of the Internal Revenue Code of 1986.

(ii)

The second sentence of section 7518(g)(6)(A) of such Code.

(iii)

Section 53511(f)(2) of title 46, United States Code.

(B)

Sections 531 and 541 of the Internal Revenue Code of 1986 are each amended by striking 15 percent of and inserting the product of the highest rate of tax under section 1(c) and.

(C)

Section 1445(e)(6) of such Code is amended by striking 15 percent (20 percent in the case of taxable years beginning after December 31, 2010) and inserting 20 percent.

(5)

Application of sunset

Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 shall apply to the amendments made by this subsection to the same extent and in the same manner as such section applies to the amendments made by title III of such Act.

(c)

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, 2012.

(2)

Withholding

The amendments made by subparagraphs (A)(i) and (C) of subsection (b)(4) shall apply to amounts paid on or after January 1, 2013.

4.

Extension of 2009 tax relief

(a)

American Opportunity Tax Credit

(1)

In general

Section 25A(i) of the Internal Revenue Code of 1986 is amended by striking or 2012 and inserting 2012, or 2013.

(2)

Treatment of possessions

Section 1004(c)(1) of the American Recovery and Reinvestment Tax Act of 2009 is amended by striking and 2012 each place it appears and inserting 2012, and 2013.

(b)

Child tax credit

Section 24(d)(4) of the Internal Revenue Code of 1986 is amended—

(1)

by striking and 2012 in the heading and inserting 2012, and 2013, and

(2)

by striking or 2012 and inserting 2012, or 2013.

(c)

Earned income tax credit

Section 32(b)(3) of the Internal Revenue Code of 1986 is amended—

(1)

by striking and 2012 in the heading and inserting 2012, and 2013, and

(2)

by striking or 2012 and inserting 2012, or 2013.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2012.