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Text of the Paying a Fair Share Act of 2012

This bill was introduced in a previous session of Congress but was killed due to a failed vote for cloture, under a fast-track vote called "suspension", or while resolving differences on April 16, 2012. The text of the bill below is as of Mar 26, 2012 (Placed on Calendar in the Senate).

Source: GPO

II

Calendar No. 339

112th CONGRESS

2d Session

S. 2230

IN THE SENATE OF THE UNITED STATES

March 22, 2012

(for himself, Mr. Akaka, Mr. Begich, Mr. Leahy, Mr. Harkin, Mr. Blumenthal, Mr. Sanders, Mr. Schumer, Mr. Reed, Mr. Rockefeller, Mr. Franken, Mrs. Boxer, Mr. Durbin, and Mr. Levin) introduced the following bill; which was read the first time

March 26, 2012

Read the second time and placed on the calendar

A BILL

To reduce the deficit by imposing a minimum effective tax rate for high-income taxpayers.

1.

Short title

This Act may be cited as the Paying a Fair Share Act of 2012.

2.

Fair share tax on high-income taxpayers

(a)

In general

Subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:

VII

Fair share tax on high-income taxpayers

Sec. 59B. Fair share tax.

59B.

Fair share tax

(a)

General rule

(1)

Phase-in of tax

In the case of any high-income taxpayer, there is hereby imposed for a taxable year (in addition to any other tax imposed by this subtitle) a tax equal to the product of—

(A)

the amount determined under paragraph (2), and

(B)

a fraction (not to exceed 1)—

(i)

the numerator of which is the excess of—

(I)

the taxpayer's adjusted gross income, over

(II)

the dollar amount in effect under subsection (c)(1), and

(ii)

the denominator of which is the dollar amount in effect under subsection (c)(1).

(2)

Amount of tax

The amount of tax determined under this paragraph is an amount equal to the excess (if any) of—

(A)

the tentative fair share tax for the taxable year, over

(B)

the excess of—

(i)

the sum of—

(I)

the regular tax liability (as defined in section 26(b)) for the taxable year,

(II)

the tax imposed by section 55 for the taxable year, plus

(III)

the payroll tax for the taxable year, over

(ii)

the credits allowable under part IV of subchapter A (other than sections 27(a), 31, and 34).

(b)

Tentative fair share tax

For purposes of this section—

(1)

In general

The tentative fair share tax for the taxable year is 30 percent of the excess of—

(A)

the adjusted gross income of the taxpayer, over

(B)

the modified charitable contribution deduction for the taxable year.

(2)

Modified charitable contribution deduction

For purposes of paragraph (1)—

(A)

In general

The modified charitable contribution deduction for any taxable year is an amount equal to the amount which bears the same ratio to the deduction allowable under section 170 (section 642(c) in the case of a trust or estate) for such taxable year as—

(i)

the amount of itemized deductions allowable under the regular tax (as defined in section 55) for such taxable year, determined after the application of section 68, bears to

(ii)

such amount, determined before the application of section 68.

(B)

Taxpayer must itemize

In the case of any individual who does not elect to itemize deductions for the taxable year, the modified charitable contribution deduction shall be zero.

(c)

High-Income taxpayer

For purposes of this section—

(1)

In general

The term high-income taxpayer means, with respect to any taxable year, any taxpayer (other than a corporation) with an adjusted gross income for such taxable year in excess of $1,000,000 (50 percent of such amount in the case of a married individual who files a separate return).

(2)

Inflation adjustment

(A)

In general

In the case of a taxable year beginning after 2013, the $1,000,000 amount under paragraph (1) shall be increased by an amount equal to—

(i)

such dollar amount, multiplied by

(ii)

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 2012 for calendar year 1992 in subparagraph (B) thereof.

(B)

Rounding

If any amount as adjusted under subparagraph (A) is not a multiple of $10,000, such amount shall be rounded to the next lowest multiple of $10,000.

(d)

Payroll tax

For purposes of this section, the payroll tax for any taxable year is an amount equal to the excess of—

(1)

the taxes imposed on the taxpayer under sections 1401, 1411, 3101, 3201, and 3211(a) (to the extent such taxes are attributable to the rate of tax in effect under section 3101) with respect to such taxable year or wages or compensation received during the taxable year, over

(2)

the deduction allowable under section 164(f) for such taxable year.

(e)

Special rule for estates and trusts

For purposes of this section, in the case of an estate or trust, adjusted gross income shall be computed in the manner described in section 67(e).

(f)

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 the credit allowed under section 27(a)) or for purposes of section 55.

.

(b)

Conforming amendment

Section 26(b)(2) of the Internal Revenue Code of 1986 is amended by redesignating subparagraphs (C) through (X) as subparagraphs (D) through (Y), respectively, and by inserting after subparagraph (B) the following new subparagraph:

(C)

section 59B (relating to fair share tax),

.

(c)

Clerical amendment

The table of parts for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

Part VII—Fair share tax on high-Income taxpayers

.

(d)

Effective date

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

3.

Sense of the Senate regarding tax reform

It is the sense of the Senate that—

(1)

Congress should enact tax reform that repeals unfair and unnecessary tax loopholes and expenditures, simplifies the system for millions of taxpayers and businesses (including by eliminating the alternative minimum tax for middle-class Americans), and makes sure that the wealthiest taxpayers pay a fair share; and

(2)

this Act is an interim step that can be done quickly and serve as a floor on taxes for the highest-income taxpayers, cut the deficit by billions of dollars a year, and help encourage more fundamental reform of the tax system.

March 26, 2012

Read the second time and placed on the calendar