[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 188 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 188

    To amend the Internal Revenue Code of 1986 to repeal the income 
  taxation of corporations, to impose a 10 percent tax on the earned 
   income (and only the earned income) of individuals, to repeal the 
             estate and gift taxes, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 26 (legislative day, January 5), 1993

 Mr. Helms introduced the following bill; which was read the first time

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to repeal the income 
  taxation of corporations, to impose a 10 percent tax on the earned 
   income (and only the earned income) of individuals, to repeal the 
             estate and gift taxes, 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.

    This Act may be cited as the ``Flat Tax Act of 1993''.

SEC. 2. REPEAL OF TAXATION OF CORPORATIONS.

    The following provisions of the Internal Revenue Code of 1986 are 
hereby repealed:
            (1) section 11 (relating to corporate income tax),
            (2) section 55 (relating to alternative minimum tax) to the 
        extent it applies to corporations,
            (3) section 511 (relating to unrelated business income 
        tax),
            (4) section 531 (relating to accumulated earnings tax),
            (5) section 541 (relating to personal holding company tax),
            (6) section 594 (relating to alternative tax for certain 
        mutual savings banks),
            (7) section 801 (relating to tax imposed on life insurance 
        companies),
            (8) section 831 (relating to tax on certain other insurance 
        companies),
            (9) section 852 (relating to tax on regulated investment 
        companies),
            (10) section 857 (relating to tax on real estate investment 
        trusts), and
            (11) section 882 (relating to tax on income of foreign 
        corporations connected with United States business).

SEC. 3. 10 PERCENT INCOME TAX RATE FOR INDIVIDUALS.

    Section 1 of the Internal Revenue Code of 1986 (relating to tax 
imposed on individuals) is amended to read as follows:

``SECTION 1. TAX IMPOSED.

    ``(a) In General.--There is hereby imposed on the income of every 
individual a tax equal to 10 percent of the excess of the earned income 
of such individual for the taxable year over the exemption amount for 
such year.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Exemption amount.--
                    ``(A) In general.--The term `exemption amount' 
                means, for any taxable year, $10,000 increased (for 
                taxable years beginning after December 31, 1993) by an 
                amount equal to $10,000 multiplied by the cost-of-
                living adjustment for the calendar year in which the 
                taxable year begins.
                    ``(B) Cost-of-living adjustment.--For purposes of 
                this paragraph--
                            ``(i) In general.--The cost-of-living 
                        adjustment for any calendar year is the 
                        percentage (if any) by which--
                                    ``(I) the CPI for October of the 
                                preceding calendar year, exceeds
                                    ``(II) the CPI for October of 1992.
                            ``(ii) CPI.--The term `CPI' means the last 
                        Consumer Price Index for all-urban consumers 
                        published by the Department of Labor.
                    ``(C) Rounding.--If the increase determined under 
                this paragraph is not a multiple of $10, such increase 
                shall be rounded to the nearest multiple of $10 (or if 
                such increase is a multiple of $5, such increase shall 
                be increased to the next highest multiple of $10).
            ``(2) Earned income.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `earned income' means--
                            ``(i) wages, salaries, and other employee 
                        compensation,
                            ``(ii) the amount of the taxpayer's net 
                        earnings from self-employment for the taxable 
                        year, and
                            ``(iii) the amount of dividends which are 
                        from a personal service corporation or which 
                        are otherwise directly or indirectly 
                        compensation for services.
                    ``(B) Exceptions.--The term `earned income' does 
                not include--
                            ``(i) any amount received as a pension or 
                        annuity, or
                            ``(ii) any tip unless the amount of the tip 
                        is not within the discretion of the service-
                        recipient.
                    ``(C) Fringe benefits valued at employer cost.--The 
                amount of any fringe benefit which is included as 
                earned income shall be the cost to the employer of such 
                benefit.''.

SEC. 4. REPEAL OF SPECIAL DEDUCTIONS, CREDITS, AND EXCLUSIONS FROM 
              INCOME FOR INDIVIDUALS.

    Chapter 1 of the Internal Revenue Code of 1986 is amended by 
striking out all specific exclusions from gross income, all deductions, 
and all credits against income tax to the extent related to the 
computation of individual income tax liability.

SEC. 5. REPEAL OF ESTATE AND GIFT TAXES.

    Subtitle B of the Internal Revenue Code of 1986 (relating to 
estate, gift, and generation-skipping taxes) is hereby repealed.

SEC. 6. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this Act shall apply to taxable years beginning 
after the date of the enactment of this Act.
    (b) Repeal of Estate and Gift Taxes.--The repeal made by section 5 
shall apply to estates of decedents dying, and transfers made, after 
the date of the enactment of this Act.
    (c) Technical and Conforming Changes.--The Secretary of the 
Treasury or his delegate shall, as soon as practicable but in any event 
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 a draft of any technical and conforming changes in the 
Internal Revenue Code of 1986 which are necessary to reflect throughout 
such Code the changes in the substantive provisions of law made by this 
Act.

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