[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 772 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 772

To amend the Internal Revenue Code of 1986 to provide a simplified tax 
                 on all income, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                April 2 (legislative day, March 3), 1993

 Mr. DeConcini 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 provide a simplified tax 
                 on all income, 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. SIMPLIFIED TAX.

    (a) In General.--Subtitle A of the Internal Revenue Code of 1986 is 
amended to read as follows:

                       ``Subtitle A--Income Taxes

``Chapter 1. Computation of taxable income.
``Chapter 2. Determination of tax liability.
``Chapter 3. Exempt organizations.
``Chapter 4. Withholding.
               ``CHAPTER 1--COMPUTATION OF TAXABLE INCOME

``Sec. 101. Nonbusiness taxable income defined.
``Sec. 102. Business receipts defined.
``Sec. 103. Cost of business inputs defined.
``Sec. 104. Cost of capital equipment, structures, and land defined.
``Sec. 105. Business taxable income defined.

``SEC. 101. NONBUSINESS TAXABLE INCOME DEFINED.

    ``(a) In General.--For purposes of this title, the term 
`nonbusiness taxable income' means--
            ``(1) all compensation, and
            ``(2) any income other than compensation from whatever 
        source derived.
    ``(b) Compensation.--Compensation means all cash amounts paid by an 
employer or received by an employee, including wages, salaries, 
pensions, bonuses, prizes, and awards.
    ``(c) Certain Items Included.--Compensation includes--
            ``(1) the cash equivalent of any financial instrument 
        conveyed to an employee, measured as market value at the time 
        of conveyance; and
            ``(2) workman's compensation and other payments for 
        injuries or other compensation for damages.
    ``(d) Certain Items Excluded.--
            ``(1) Compensation.--Compensation excludes--
                    ``(A) reimbursements to a taxpayer by an employer 
                for business expenses paid by the taxpayer in 
                connection with performance of services as an employee;
                    ``(B) goods and services provided to employees by 
                employers, including but not limited to medical 
                benefits, insurance, meals, housing, recreational 
                facilities, and other fringe benefits; and
                    ``(C) wages, salaries, and other payments for 
                services performed outside the United States.
            ``(2) Other income.--No gain from the sale or exchange of 
        the principal residence of a taxpayer shall be included in 
        income described in subsection (a)(2).

``SEC. 102. BUSINESS RECEIPTS DEFINED.

    ``Business receipts are the receipts of a business from the sale or 
exchange of products or services produced in or passing through the 
United States. Business receipts include--
            ``(1) gross revenue, excluding sales and excise taxes, from 
        the sale or exchange of goods and services;
            ``(2) fees, commissions, and similar receipts, if not 
        reported as compensation;
            ``(3) gross rents;
            ``(4) royalties;
            ``(5) gross receipts from the sale of plant, equipment, and 
        land;
            ``(6) the market value of goods, services, plant, 
        equipment, or land provided to its owners or employees;
            ``(7) the market value of goods, services, and equipment 
        delivered from the United States to points outside the United 
        States, if not included in sales; and
            ``(8) the market value of goods and services provided to 
        depositors, insurance policyholders, and others with a 
        financial claim upon the business, if not included in sales.

``SEC. 103. COST OF BUSINESS INPUTS DEFINED.

    ``(a) In General.--The cost of business inputs is the cost of 
purchases of goods, services, and materials required for business 
purposes.
    ``(b) Certain Items Included.--The cost of business inputs 
includes--
            ``(1) the actual amount paid for goods, services, and 
        materials, whether or not resold during the year;
            ``(2) the market value of business inputs brought into the 
        United States; and
            ``(3) the actual cost, if reasonable, of travel and 
        entertainment expenses for business purposes.
    ``(c) Certain Items Excluded.--The cost of business inputs excludes 
purchases of goods and services provided to employees or owners, unless 
these are included in business receipts.

``SEC. 104. COST OF CAPITAL EQUIPMENT, STRUCTURES, AND LAND DEFINED.

    ``The cost of capital equipment, structures, and land includes any 
purchases of these items for business purposes. In the case of 
equipment brought into the United States, the cost is the market value 
at time of entry into the United States.

``SEC. 105. BUSINESS TAXABLE INCOME DEFINED.

    ``Business taxable income is business receipts less the cost of 
business inputs, less compensation paid to employees, and less the cost 
of capital equipment, structures, and land.

              ``CHAPTER 2--DETERMINATION OF TAX LIABILITY

``Sec. 201. Personal allowance.
``Sec. 202. Nonbusiness tax.
``Sec. 203. Business tax.

``SEC. 201. PERSONAL ALLOWANCE.

    ``(a) In General.--The personal allowance of a taxpayer for any 
taxable year is an amount equal to the sum of the allowance amounts for 
the taxpayer, the spouse of the taxpayer if filing jointly, and each 
dependent of the taxpayer.
    ``(b) Allowance Amount.--The allowance amount for any individual is 
$4,000. Each year the allowance amount for taxable years beginning in 
such year shall be the amount in effect for the preceding year, 
increased by the proportional increase during the preceding year in the 
Consumer Price Index.
    ``(c) Special Rules.--For purposes of this chapter--
            ``(1) a taxpayer is considered married if he was married at 
        the end of the year or if the taxpayer's spouse died during the 
        year,
            ``(2) a taxpayer is a head of a household if the taxpayer 
        is not married at the end of the year, and maintains as the 
        taxpayer's home a household which is the principal home of a 
        dependent of the taxpayer, and
            ``(3) a dependent is a son, stepson, daughter, 
        stepdaughter, mother, or father of the taxpayer, for whom the 
        taxpayer provides more than half support for a taxable year.

``SEC. 202. NONBUSINESS TAX.

    ``(a) In General.--There is hereby imposed a tax on the nonbusiness 
taxable income of every person for each taxable year (reduced by the 
amount of the personal allowance under section 201) a tax equal to--
            ``(1) 15 percent of so much of such income as does not 
        exceed the limit, plus
            ``(2) 25 percent of so much of such income as exceeds the 
        limit.
    ``(b) Limit.--For purposes of subsection (a)--
            ``(1) the limit for married taxpayers filing jointly, heads 
        of household, and surviving spouses is $100,000, and
            ``(2) the limit for any other taxpayer is $50,000.

``SEC. 203. BUSINESS TAX.

    ``(a) Business Defined.--Each sole proprietorship, partnership, and 
corporation constitutes a business. Any organization or individual not 
specifically exempt under chapter 3, with business receipts, is a 
business.
    ``(b) Computation of Tax.--Each business will pay a tax of 19 
percent of its business taxable income, or zero if business taxable 
income is negative.
    ``(c) Filing Units.--A business may file any number of business tax 
returns for its various subsidiaries or other units, provided that all 
business receipts are reported in the aggregate, and provided that each 
expenditure for business inputs is reported on no more than one return.
    ``(d) Carryforward of Losses.--When business taxable income is 
negative, the negative amount may be used to offset positive taxes in 
future years. The amount carried forward from one year to the next is 
augmented according to an interest rate equal to the average daily 
yield on 3-month Treasury Bills during the first year. There is no 
limit to the amount or the duration of the carryforward.

                   ``CHAPTER 3--EXEMPT ORGANIZATIONS

                              ``Sec. 301. Exempt organizations.

``SEC. 301. EXEMPT ORGANIZATIONS.

    ``Organizations exempt from the business tax are--
            ``(1) State and local governments, and their subsidiary 
        units; and
            ``(2) educational, religious, charitable, philanthropic, 
        cultural, and community service organizations that do not 
        return income to individual or corporate owners.

                        ``CHAPTER 4--WITHHOLDING

                              ``Sec. 401. Withholding.

``SEC. 401. WITHHOLDING.

    ``Each employer, including exempt organizations, will withhold from 
the wages, salaries, and pensions of its employees, and remit to the 
Internal Revenue Service, an amount computed in the manner prescribed 
in tables published by the Secretary. Every employee will receive a 
credit against tax for the amount withheld.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1993.

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