[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3620 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3620

To amend the Internal Revenue Code of 1986 to reduce individual income 
   tax rates, simplify the tax code, eliminate the marriage penalty, 
  provide for return-free filing of income taxes, prohibit income tax 
    rates from increasing without a national referendum, eliminate 
               corporate welfare, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 1, 1998

 Mr. Gephardt introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
  Rules, Government Reform and Oversight, and House Oversight, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to reduce individual income 
   tax rates, simplify the tax code, eliminate the marriage penalty, 
  provide for return-free filing of income taxes, prohibit income tax 
    rates from increasing without a national referendum, eliminate 
               corporate welfare, 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.

    (a) Short Title.--This Act may be cited as the ``Gephardt 10 
Percent Tax Act of 1998''.
    (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) Section 15 Not To Apply.--No amendment made by section 101 
shall be treated as a change in a rate of tax for purposes of section 
15 of the Internal Revenue Code of 1986 .

             TITLE I--REDUCTION IN INDIVIDUAL INCOME TAXES

SEC. 101. REDUCTION IN INDIVIDUAL INCOME TAX RATES; ELIMINATION OF 
              MARRIAGE PENALTY IN RATES.

    (a) General Rule.--Section 1 (relating to tax imposed) is amended 
by striking subsections (a) through (e) and inserting the following:
    ``(a) Married Individuals Filing Joint Returns and Surviving 
Spouses.--There is hereby imposed on the taxable income of--
            ``(1) every married individual (as defined in section 7703) 
        who makes a single return jointly with his spouse under section 
        6013, and
            ``(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table:

``If taxable income is:             The tax is:
    Not over $46,000...............
                                        10% of taxable income
    Over $46,000 but not over 
        $80,000.
                                        $4,600, plus 20% of the excess 
                                                over $46,000
    Over $80,000 but not over 
        $150,000.
                                        $11,400, plus 26% of the excess 
                                                over $80,000
    Over $150,000 but not over 
        $275,000.
                                        $29,600, plus 32% of the excess 
                                                over $150,000
    Over $275,000..................
                                        $69,600, plus 34% of the excess 
                                                over $275,000
    ``(b) Heads of Households.--There is hereby imposed on the taxable 
income of every head of a household (as defined in section 2(b)) a tax 
determined in accordance with the following table:

``If taxable income is:             The tax is:
    Not over $32,000...............
                                        10% of taxable income.
    Over $32,000 but not over 
        $40,000.
                                        $3,200, plus 20% of the excess 
                                                over $32,000
    Over $40,000 but not over 
        $75,000.
                                        $4,800, plus 26% of the excess 
                                                over $40,000
    Over $75,000 but not over 
        $137,500.
                                        $13,900, plus 32% of the excess 
                                                over $75,000
    Over $137,500..................
                                        $33,900, plus 34% of the excess 
                                                over $137,500
    ``(c) Other Individuals.--There is hereby imposed on the taxable 
income of every individual (other than an individual to whom subsection 
(a) or (b) applies) a tax determined in accordance with the following 
table:

``If taxable income is:             The tax is:
    Not over $23,000...............
                                        10% of taxable income.
    Over $23,000 but not over 
        $40,000.
                                        $2,300, plus 20% of the excess 
                                                over $23,000
    Over $40,000 but not over 
        $75,000.
                                        $5,700, plus 26% of the excess 
                                                over $40,000
    Over $75,000 but not over 
        $137,500.
                                        $14,800, plus 32% of the excess 
                                                over $75,000
    Over $137,500..................
                                        $34,800, plus 34% of the excess 
                                                over $137,500
    ``(d) Estates and Trusts.--There is hereby imposed on the taxable 
income of--
            ``(1) every estate, and
            ``(2) every trust,
taxable under this subsection a tax determined in accordance with the 
following table:

``If taxable income is:             The tax is:
    Not over $1,700................
                                        15% of taxable income.
    Over $1,700 but not over $4,000
                                        $255, plus 28% of the excess 
                                                over $1,700.
    Over $4,000 but not over $6,100
                                        $899, plus 31% of the excess 
                                                over $4,000.
    Over $6,100 but not over $8,350
                                        $1,550, plus 36% of the excess 
                                                over $6,100.
    Over $8,350....................
                                        $2,360, plus 39.6% of the 
                                                excess over $8,350.''.
    (b) Reduction in Individual Alternative Minimum Tax Rates.--Clause 
(i) of section 55(b)(1)(A) (defining tentative minimum tax) is 
amended--
            (1) by striking ``26 percent'' and inserting ``19 
        percent'', and
            (2) by striking ``28 percent'' and inserting ``21 
        percent''.
    (c) Conforming Amendments.--
            (1) Subsection (f) of section 1 is amended--
                    (A) by striking ``1993'' in paragraph (1) and 
                inserting ``1999'',
                    (B) by striking ``1992'' in paragraph (3)(B) and 
                inserting ``1998'', and
                    (C) by striking paragraph (7).
            (2) The following provisions are each amended by striking 
        ``1992'' and inserting ``1998'' each place it appears:
                    (A) Section 25A(h).
                    (B) Section 32(j)(1)(B).
                    (C) Section 41(e)(5)(C).
                    (D) Section 59(j)(2)(B).
                    (E) Section 63(c)(4).
                    (F) Section 68(b)(2)(B).
                    (G) Section 135(b)(2)(B)(ii).
                    (H) Section 151(d)(4).
                    (I) Section 220(g)(2).
                    (J) Section 221(g)(1)(B).
                    (K) Section 512(d)(2)(B).
                    (L) Section 513(h)(2)(C)(ii).
                    (M) Section 685(c)(3)(B).
                    (N) Section 877(a)(2).
                    (O) Section 911(b)(2)(D)(ii)(II).
                    (P) Section 2032A(a)(3)(B).
                    (Q) Section 2503(b)(2)(B).
                    (R) Section 2631(c)(2).
                    (S) Section 4001(e)(1)(B).
                    (T) Section 4261(e)(4)(A)(ii).
                    (U) Section 6039F(d).
                    (V) Section 6334(g)(1)(B).
                    (W) Section 6601(j)(3)(B).
                    (X) Section 7430(c)(1).
            (3) Subparagraph (B) of section 1(f)(6) is amended to read 
        as follows:
                    ``(B) Married individuals filing separately.--In 
                the case of a married individual filing a separate 
                return, subparagraph (A) shall be applied by 
                substituting `$25' for `$50' each place it appears for 
                purposes of any increase in the $50,000 amount under 
                section 68(b)(1).''.
            (4) Subclause (II) of section 42(h)(6)(G)(i) is amended by 
        striking ``1987'' and inserting ``1998''.
            (5) Subparagraph (B) of section 132(f)(6) is amended by 
        inserting before the period ``, determined by substituting 
        `calendar year 1992' for `calendar year 1998' in subparagraph 
        (B) thereof''.
            (6) Sections 468B(b)(1), 511(b)(1), 641(a), 641(d)(2)(A), 
        and 685(d) are each amended by striking ``section 1(e)'' each 
        place it appears and inserting ``section 1(d)''.
            (7) Sections 1(f)(2) and 904(b)(3)(E)(ii) are each amended 
        by striking ``(d), or (e)'' and inserting ``or (d)''.
            (8) Paragraph (1) of section 1(f) is amended by striking 
        ``(d), and (e)'' and inserting ``and (d)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 102. INCREASE IN STANDARD DEDUCTION; ELIMINATION OF MARRIAGE 
              PENALTY IN STANDARD DEDUCTION.

    (a) In General.--Paragraph (2) of section 63(c) (relating to 
standard deduction) is amended to read as follows:
            ``(2) Basic standard deduction.--For purposes of paragraph 
        (1), the basic standard deduction is--
                    ``(A) $9,000 in the case of--
                            ``(i) a joint return, or
                            ``(ii) a surviving spouse (as defined in 
                        section 2(a)),
                    ``(B) $6,600 in the case of a head of household (as 
                defined in section 2(b)), or
                    ``(C) $4,500 in any other case.''
    (b) Increase in Additional Standard Deduction for Aged and Blind.--
            (1) In general.--Paragraphs (1) and (2) of section 63(f) 
        are each amended by striking ``$600'' and inserting ``$950''.
            (2) Uniform amount.--Subsection (f) of section 63 is 
        amended by striking paragraph (3) and by redesignating 
        paragraph (4) as paragraph (3).
    (c) Technical Amendments.--
            (1) Paragraph (4) of section 63(c) is amended to read as 
        follows:
            ``(4) Adjustments for inflation.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 1988, each dollar 
                amount contained in paragraph (2) or (5) or subsection 
                (f) 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.
                    ``(B) Base period adjustments.--In the case of the 
                dollar amounts contained in paragraph (5), subparagraph 
                (A) shall be applied by substituting for `calendar year 
                1998' in subparagraph (B) thereof--
                            ``(i) `calendar year 1987' in the case of 
                        the dollar amount contained in paragraph 
                        (5)(A), and
                            ``(ii) `calendar year 1997' in the case of 
                        the dollar amount contained in paragraph 
                        (5)(B).''.
            (2) Subparagraph (B) of section 1(f)(6) is amended by 
        striking ``subsection (c)(4) of section 63 (as it applies to 
        subsections (c)(5)(A) and (f) of such section)'' and inserting 
        ``section 63(c)(4)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 103. INCREASE IN PERSONAL EXEMPTION.

    (a) In General.--Paragraph (1) of section 151(d) (relating to 
exemption amount) is amended by striking ``$2,000'' and inserting 
``$2,900''.
    (b) Repeal of Phaseout.--Subsection (d) of section 151 is amended 
by striking paragraph (3) and by redesignating paragraph (4) as 
paragraph (3).
    (c) Conforming Amendment.--Subparagraph (A) of section 151(d)(3), 
as redesignated by subsection (b), is amended to read as follows:
                    ``(A) Adjustment to basic amount of exemption.--In 
                the case of any taxable year beginning in a calendar 
                year after 1999, the dollar amount contained in 
                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.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

                       TITLE II--BASE BROADENING

SEC. 201. ADDITIONAL ITEMS INCLUDIBLE IN GROSS INCOME.

    (a) Interest on State and Local Bonds.--Section 103 (relating to 
interest on State and local bonds) is amended by adding at the end the 
following new subsection:
    ``(d) Termination.--This section shall not apply to obligations 
issued after December 31, 1998.''
    (b) Employer-Provided Fringe Benefits Other Than Health Benefits.--
The following provisions of the Internal Revenue Code of 1986 are 
hereby repealed:
            (1) Section 117(d) (relating to qualified tuition 
        reduction).
            (2) Section 125 (relating to cafeteria plans).
            (3) Section 127 (relating to education assistance 
        programs).
            (4) Section 129 (relating to dependent care assistance 
        programs).
            (5) Section 132 (relating to certain fringe benefits).
    (c) Employer Contributions to Retirement Plans.--
            (1) In general.--Subsection (a) of section 402 (relating to 
        taxability of beneficiary of employees' trust) is amended to 
        read as follows:
    ``(a) Taxability of Beneficiary of Exempt Trust.--
            ``(1) Contributions.--Contributions to an employees' trust 
        made by an employer to a trust which is exempt from tax under 
        section 501(a) shall be included in the gross income of the 
        employee in accordance with section 83 (relating to property 
        transferred in connection with performance of services), except 
        that the value of the employee's interest in the trust shall be 
        substituted for the fair market value of the property for 
        purposes of applying such section.
            ``(2) Distributions.--The amount actually distributed or 
        made available to any distributee by any trust described in 
        paragraph (1) shall be taxable to the distributee, in the 
        taxable year in which so distributed or made available, under 
        section 72 (relating to annuities), except that distributions 
        of income of such trust before the annuity starting date (as 
        defined in section 72(c)(4)) shall be included in the gross 
        income of the employee without regard to section 72(e)(5) 
        (relating to amounts not received as annuities).
            ``(3) Grantor trusts.--A beneficiary of any trust described 
        in paragraph (1) shall not be considered the owner of any 
        portion of such trust under subpart E of part I of subchapter J 
        (relating to grantors and others treated as substantial 
        owners).''
            (2) Application of section 83.--Subsection (e) of section 
        83 (relating to property transferred in connection with 
        performance of services) is amended by striking paragraph (2).
    (d) Foreign Earned Income.--Section 911 (relating to citizens or 
residents of the United States living abroad) is hereby repealed.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 202. REPEAL OF ALL ITEMIZED DEDUCTIONS OTHER THAN DEDUCTIONS FOR 
              MORTGAGE INTEREST, INVESTMENT INTEREST, AND EMPLOYMENT-
              RELATED EXPENSES.

    (a) In General.--Subsection (b) of section 63 (defining taxable 
income) is amended to read as follows:
    ``(b) Taxable Income of Individuals.--
            ``(1) Individuals who do not itemize their deductions.--In 
        the case of an individual who does not elect to itemize his 
        deductions for the taxable year, for purposes of this subtitle, 
        the term `taxable income' means adjusted gross income minus--
                    ``(A) the standard deduction, and
                    ``(B) the deduction for personal exemptions 
                provided in section 151.
            ``(2) Individuals who itemize their deductions.--In the 
        case of an individual who elects to itemize his deductions for 
        the taxable year, for purposes of this subtitle, the term 
        `taxable income' means adjusted gross income minus--
                    ``(A) the deduction for personal exemptions 
                provided in section 151, and
                    ``(B) the deduction under section 163 for qualified 
                mortgage interest (as defined in subsection (h) 
                thereof).''
    (b) Repeal of Limitations on Itemized Deductions.--Section 67 
(relating to 2-percent floor on miscellaneous itemized deductions) and 
section 68 (relating to overall limitation on itemized deductions) are 
hereby repealed.
    (c) Deductions for Investment Interest and Employee Business 
Expenses Allowed in Determining Adjusted Gross Income.--Subsection (a) 
of section 62 is amended by inserting after paragraph (17) the 
following new paragraphs:
            ``(18) Investment interest.--The deduction under section 
        163 for investment interest (as defined in subsection (d) 
        thereof).
            ``(19) Employee business expenses.--The deductions allowed 
        by part VI (section 161 and following) which consist of 
        expenses paid or incurred by the taxpayer in connection with 
        the performance by him of services as an employee (other than 
        expenses for which a deduction is allowed under paragraph (2)) 
        to the extent that the aggregate amount of such expenses 
        exceeds 2 percent of adjusted gross income (determined without 
        regard to this paragraph).''
    (d) Deductions for Retirement Savings Not Allowed in Computing 
Adjusted Gross Income; Termination of Roth IRA.--
            (1) Subsection (a) of section 62 (defining adjusted gross 
        income) is amended by striking paragraph (6) (relating to 
        pension, profit-sharing and annuity plans of self-employed 
        individuals) and paragraph (7) (relating to retirement 
        savings).
            (2) Section 408A (relating to Roth IRA) is amended by 
        adding at the end the following new subsection:
    ``(f) Termination.--The contribution limit under subsection (c)(2) 
for any taxable year beginning after December 31, 1998, shall be zero; 
and no rollover or other transfer may be made to a Roth IRA from an 
individual retirement plan (other than a Roth IRA) after such date.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 203. REPEAL OF CERTAIN CREDITS.

    (a) Dependent Care Credit.--Section 21 (relating to expenses for 
household and dependent care services necessary for gainful employment) 
is hereby repealed.
    (b) Elderly Credit.--Section 22 (relating to credit for the elderly 
and permanently and totally disabled) is hereby repealed.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

             TITLE III--CORPORATE SUBSIDY REFORM COMMISSION

SEC. 301. THE COMMISSION.

    (a) Establishment.--There is established an independent commission 
to be known as the ``Corporate Subsidy Reform Commission'' (hereafter 
in this Act, referred to as the ``Commission'').
    (b) Duties.--The Commission shall--
            (1) examine the programs and tax laws of the Federal 
        Government and identify programs and tax laws that provide 
        inequitable Federal subsidies;
            (2) review inequitable Federal subsidies; and
            (3) submit the report required under section 302(b) to the 
        President and the Congress.
    (c) Limitations.--
            (1) Creation of new programs or taxes.--This Act is not 
        intended to result in the creation of new programs or taxes, 
        and the Commission established in this section shall limit its 
        activities to reviewing existing programs or tax laws with the 
        goal of ensuring fairness and equity in the operation and 
        application thereof.
            (2) Elimination of agencies and departments.--The 
        Commission shall limit its recommendations to the termination 
        or reform of payments, benefits, services, or tax advantages, 
        rather than the termination of Federal agencies or departments.
    (d) Advisory Committee.--The Commission shall be considered an 
advisory committee within the meaning of the Federal Advisory Committee 
Act (5 U.S.C. App.).
    (e) Appointment.--
            (1) Members.--The Commissioners shall be appointed for the 
        life of the Commission and shall be composed of nine members of 
        whom--
                    (A) three shall be appointed by the President of 
                the United States;
                    (B) two shall be appointed by the Speaker of the 
                House of Representatives;
                    (C) one shall be appointed by the minority Leader 
                of the House of Representatives;
                    (D) two shall be appointed by the majority Leader 
                of the Senate; and
                    (E) one shall be appointed by the minority Leader 
                of the Senate.
            (2) Consultation required.--The President, the Speaker of 
        the House of Representatives, the minority leader of the House 
        of Representatives, the majority leader of the Senate, and the 
        minority leader of the Senate shall consult among themselves 
        prior to the appointment of the members of the Commission in 
        order to achieve, to the maximum extent possible, fair and 
        equitable representation of various points of view with respect 
        to the matters to be studied by the Commission under subsection 
        (b).
            (3) Appointments.--During the period of January 1, 1999 
        through January 31, 1999, the President shall submit to the 
        Senate the names of three individuals for appointment to the 
        Commission.
            (4) Failure to appoint.--If the President does not submit 
        to Congress the names of three individuals for appointment to 
        the Commission on or before the date specified in paragraph 
        (3), the process established under this Act shall be 
        terminated.
            (5) Chairman.--At the time the President nominates 
        individuals for appointment to the Commission the President 
        shall designate one such individual who shall serve as Chairman 
        of the Commission.
            (6) Background.--The members shall represent a broad array 
        of expertise covering, to the extent practical, all subject 
        matter, programs, and tax laws the Commission is likely to 
        review.
    (f) Terms.--Each member of the Commission including the Chairman 
shall serve until the termination of the Commission.
    (g) Meetings.--
            (1) Initial meeting.--No later than April 1, 1999, the 
        Commission shall conduct its first meeting.
            (2) Open meetings.--Each meeting of the Commission shall be 
        open to the public. In cases where classified information, 
        trade secrets, or personnel matters are discussed, the Chairman 
        may close the meeting. All proceedings, information, and 
        deliberations of the Commission shall be available, upon 
        request, to the chairman and ranking member of the relevant 
        committees of Congress.
    (h) Vacancies.--A vacancy on the Commission shall be filled in the 
same manner as the original appointment.
    (i) Pay and Travel Expenses.--
            (1) Pay.--Notwithstanding section 7 of the Federal Advisory 
        Committee Act (5 U.S.C. App.), each Commissioner, other than 
        the Chairman, shall be paid at a rate equal to the daily 
        equivalent of the minimum annual rate of basic pay for level IV 
        of the Executive Schedule under section 5315 of title 5, United 
        States Code, for each day (including travel time) during which 
        the member is engaged in the actual performance of duties 
        vested in the Commission.
            (2) Chairman.--Notwithstanding section 7 of the Federal 
        Advisory Committee Act (5 U.S.C. App.), the Chairman shall be 
        paid for each day referred to in paragraph (1) at a rate equal 
        to the daily payment of the minimum annual rate of basic pay 
        payable for level III of the Executive Schedule under section 
        5314 of title 5, United States Code.
            (3) Travel expenses.--Members shall receive travel 
        expenses, including per diem in lieu of subsistence, in 
        accordance with sections 5702 and 5703 of title 5, United 
        States Code.
    (j) Director of Staff.--
            (1) Qualifications.--The Chairman shall appoint a Director 
        who has not served in any of the entities or industries that 
        the Commission intends to review during the 12 months preceding 
        the date of such appointment.
            (2) Pay.--Notwithstanding section 7 of the Federal Advisory 
        Committee Act (5 U.S.C. App.), the Director shall be paid at 
        the rate of basic pay payable for level IV of the Executive 
        Schedule under section 5315 of title 5, United States Code.
            (3) Reports.--On administrative and personnel matters, the 
        Director shall submit periodic reports to the Chairman of the 
        Commission and the chairman and ranking member of the Committee 
        on Governmental Affairs of the Senate and the Committee on 
        Government Reform and Oversight of the House of the 
        Representatives.
    (k) Staff.--
            (1) Additional personnel.--Subject to paragraphs (2) and 
        (4), the Director, with the approval of the Commission, may 
        appoint and fix the pay of additional personnel.
            (2) Appointments.--The Director may make such appointments 
        without regard to the provisions of title 5, United States 
        Code, governing appointments in the competitive service, and 
        any personnel so appointed may be paid without regard to the 
        provisions of chapter 51 and subchapter III of chapter 53 of 
that title relating to classification and General Schedule pay rates.
            (3) Detailees.--Upon the request of the Director, the head 
        of any Federal department or agency may detail any of the 
        personnel of that department or agency to the Commission to 
        assist the Commission in accordance with an agreement entered 
        into with the Commission.
            (4) Restrictions on personnel and detailees.--The following 
        restrictions shall apply to personnel and detailees of the 
        Commission:
                    (A) Personnel.--No more than one-third of the 
                personnel detailed to the Commission may be on detail 
                from Federal agencies that deal directly or indirectly 
                with the Federal subsidies the Commission intends to 
                review.
                    (B) Analysts.--No more than one-fifth of the 
                professional analysts of the Commission may be persons 
                detailed from a Federal agency that deals directly or 
                indirectly with the Federal subsidies the Commission 
                intends to review.
                    (C) Lead analyst.--No person detailed from a 
                Federal agency to the Commission may be assigned as the 
                lead professional analyst with respect to an entity or 
                industry the Commission intends to review if the person 
                has been involved in regulatory or policy-making 
                decisions affecting any such entity or industry in the 
                12 months preceding such assignment.
                    (D) Detailee.--A person may not be detailed from a 
                Federal agency to the Commission if, within 12 months 
                before the detail is to begin, that person participated 
                personally and substantially in any matter within that 
                particular agency concerning the preparation of 
                recommendations under this Act.
                    (E) Federal officer or employee.--No member of a 
                Federal agency, and no officer or employee of a Federal 
                agency, may--
                            (i) prepare any report concerning the 
                        effectiveness, fitness, or efficiency of the 
                        performance on the staff of the Commission of 
                        any person detailed from a Federal agency to 
                        that staff;
                            (ii) review the preparation of such report; 
                        or
                            (iii) approve or disapprove such a report.
                    (F) Limitation on staff size.--
                            (i) Subject to clause (ii), there may not 
                        be more than 25 persons (including any 
                        detailees) on the staff at any time.
                            (ii) The Commission may increase personnel 
                        in excess of the limitation under clause (i), 
                        15 days after submitting notification of such 
                        increase to the Committee on Governmental 
                        Affairs of the Senate and the Committee on 
                        Government Reform and Oversight of the House of 
                        Representatives.
                    (G) Limitation on federal officer.--No member of a 
                Federal agency and no employee of a Federal agency may 
                serve as a Commissioner or as a paid member of the 
                staff.
            (5) Assistance.--
                    (A) In general.--The Comptroller General of the 
                United States may provide assistance, including the 
                detailing of employees, to the Commission in accordance 
                with an agreement entered into with the Commission.
                    (B) Consultation.--The Commission and the 
                Comptroller General of the United States shall consult 
                with the Committee on Governmental Affairs of the 
                Senate and the Committee on Government Reform and 
                Oversight of the House of Representatives on the 
                agreement referred to under subparagraph (A) before 
                entering into such agreement.
    (l) Other Authority.--
            (1) Experts and consultants.--The Commission may procure by 
        contract, to the extent funds are available, the temporary or 
        intermittent services of experts or consultants pursuant to 
        section 3109 of title 5, United States Code.
            (2) Leasing.--The Commission may lease space and acquire 
        personal property to the extent that funds are available.
    (m) Funding.--
            (1) Commission.--There are authorized to be appropriated to 
        the Commission such funds as are necessary to carry out its 
        duties under this Act.
            (2) Comptroller general.--There are authorized to be 
        appropriated to the Comptroller General of the United States 
        such funds as are necessary to carry out its duties under 
        subsection (k)(5) and section 302(b)(5).
    (n) Termination.--The Commission shall terminate on September 1, 
2000.

SEC. 302. PROCEDURE FOR MAKING RECOMMENDATIONS TO TERMINATE CORPORATE 
              SUBSIDIES.

    (a) Agency Plan.--
            (1) In general.--No later than April 1, 1999, or the date 
        budget documents are submitted to Congress in 1999, whichever 
        is earlier, in support of the budget of each Federal department 
        or agency, the head of each department or agency shall include 
        in such documents a list identifying all programs or tax laws 
        within that department or agency that the head of the 
        department or agency determines provide inequitable Federal 
        subsidies.
            (2) Contents.--Such a list shall include--
                    (A) a detailed description of each program or tax 
                law in question;
                    (B) a statement detailing the extent to which a 
                payment, benefit, service, or tax advantage meets the 
                provisions of section 304;
                    (C) a statement summarizing the legislative history 
                and purpose of such payment, benefit, service, or tax 
                advantage, and the laws or policies directly or 
                indirectly giving rise to the need for such programs or 
                tax laws; and
                    (D) a recommendation to the Commission regarding 
                actions to be taken under section 301(b)(3).
            (3) International trade programs.--As part of its agency 
        plan submitted pursuant to this subsection, the United States 
        Trade Representative shall survey all federally supported 
        international trade programs in all Federal agencies and shall 
        certify to the Commission which of those programs meet the 
        requirements of section 304(4)(D). The Trade Representative 
        shall provide the Commission a detailed statement of the 
        reasons each program was or was not so certified as part of its 
        agency plan.
    (b) Review and Recommendations by the Commission.--
            (1) Review and hearings.--At any time after the submission 
        of the budget documents to Congress, the Commission shall 
        conduct public hearings on the recommendations included in the 
        lists required under subsection (a). All testimony before the 
        Commission at a public hearing conducted under this paragraph 
        shall be presented under oath.
            (2) Report of commission.--
                    (A) Report to president.--No later than November 
                30, 1999, the Commission shall submit a report to the 
                President containing the Commission's findings and 
                recommendations for termination, modification, or 
                retention of each of the inequitable Federal subsidies 
                reviewed by the Commission. Such findings and 
                recommendations shall specify--
                            (i) all actions, circumstances, and 
                        considerations relating to or bearing upon the 
                        recommendations; and
                            (ii) to the maximum extent practicable, the 
                        estimated effect of the recommendations upon 
                        the policies, laws and programs directly or 
                        indirectly affected by the recommendations.
                    (B) Changes in recommendations.--Subject to the 
                deadline in subparagraph (A), in making its 
                recommendations, the Commission may make changes in any 
                of the recommendations made by a department or agency 
                if the Commission determines that such department or 
                agency deviated substantially from the provisions of 
                section 304.
                    (C) Changes.--In the case of a change in the 
                recommendations made by a department or agency, the 
                Commission may make the change only if the Commission--
                            (i) makes the determination required under 
                        subparagraph (B); and
                            (ii) conducts a public hearing on the 
                        Commission's proposed changes.
                    (D) Application.--Subparagraph (C) shall apply to a 
                change by the Commission in a department or agency 
                recommendation that would--
                            (i) add or delete a payment, benefit, 
                        service, or tax advantage to the list 
                        recommended for termination;
                            (ii) add or delete a payment, benefit, 
                        service, or tax advantage to the list 
                        recommended for modification; or
                            (iii) increase or decrease the extent of a 
                        recommendation to modify a payment, benefit, 
                        service, or tax advantage included in a 
                        department's or agency's recommendation.
            (3) Justification.--The Commission shall explain and 
        justify in the report submitted to the President under 
        paragraph (2) any recommendation made by the Commission that is 
        different from a recommendation made by an agency under 
        subsection (a).
            (4) Report to congress.--After November 30, 1999, or after 
        the date the Commission submits recommendations to the 
        President, the Commission shall, upon request, promptly provide 
        to any Member of Congress the information used by the 
        Commission in making its recommendations.
            (5) Comptroller general.--The Comptroller General of the 
        United States shall--
                    (A) assist the Commission, to the extent requested, 
                in the Commission's review and analysis of the list, 
                statements, and recommendations made by departments and 
                agencies under subsection (a); and
                    (B) no later than 60 days after April 1, 1999, or 
                the public release of the President's budget documents 
                in 1999, whichever is earlier, submit to the Congress 
                and to the Commission a report containing a detailed 
                analysis of the list, statements, and recommendations 
                of each department or agency.
    (c) Review by the President.--
            (1) In general.--No later than December 31, 1999, the 
        President shall submit a report to the Commission and to the 
        Congress containing the President's approval or disapproval of 
        the Commission's recommendations submitted under subsection 
        (b).
            (2) Approval.--If the President approves all the 
        recommendations of the Commission, the President shall submit a 
        copy of such recommendations to the Congress, together with a 
        certification of such approval.
            (3) Disapproval.--If the President disapproves the 
        recommendations of the Commission in whole or in part, the 
        President shall submit to the Commission and the Congress the 
        reasons for that disapproval. No later than February 1, 2000, 
        the Commission shall submit to the President a revised list of 
        recommendations.
            (4) Revision.--If the President approves all of the revised 
        recommendations of the Commission submitted to the President 
        under paragraph (3), the President shall submit a copy of such 
        revised recommendations to the Congress, together with a 
        certification of such approval.
            (5) Approval of entire package.--The President may only 
        submit an approval certificate that pertains to the entire 
        package of recommendations submitted by the Commission under 
        subsection (b)(2) or paragraph (3) of this subsection.
            (6) Failure to submit.--If the President does not submit to 
        the Congress an approval and certification described in 
        paragraph (2) or (4) by February 15, 2000, the process 
        established under this Act shall be terminated.

 SEC. 303. CONGRESSIONAL CONSIDERATION.

    (a) Submission of Recommendations of the President.--If the 
President submits the Commission recommendations to the Congress under 
section 302(c) (2) or (4), such recommendations shall be accompanied by 
information specifying--
            (1) the reasons and justifications for the recommendations;
            (2) to the maximum extent practicable, the estimated 
        fiscal, economic, and budgetary impact of accepting the 
        recommendations;
            (3) the amount of the projected savings resulting from each 
        recommendation;
            (4) all actions, circumstances, and considerations relating 
        to or bearing upon the recommendations and to the maximum 
        extent practicable, the estimated effect of the recommendations 
        upon the policies, laws and programs directly or indirectly 
        affected by the recommendations; and
            (5) the specific changes in Federal statute necessary to 
        implement the recommendations.
    (b) Submission of Recommendations to the Senate and House of 
Representatives.--
            (1) Submission to congress.--The recommendations submitted 
        by the President to the Congress under subsection (a) shall be 
        submitted to the Senate and the House of Representatives on the 
        same day, and shall be delivered to the Secretary of the Senate 
        if the Senate is not in session, and to the Clerk of the House 
        of the Representatives if the House is not in session.
            (2) Federal register.--Any recommendations and accompanying 
        information submitted under subsection (a) shall be printed in 
        the first issue of the Federal Register after such submission.
    (c) Introduction.--
            (1) Date of introduction.--The Majority Leader of the 
        Senate or his designee, and the Speaker of the House of 
        Representatives, or his designee, shall introduce a bill (or 
        bills as provided under paragraph (2)) that implements the 
        recommendations submitted by the President under subsection 
        (a), no later than the later of 14 calendar days in session 
        after the date on which--
                    (A) the Senate or the House of Representatives 
                received the recommendations submitted by the President 
                under subsection (a), if the Senate or the House of 
                Representatives (as applicable) is in session on the 
                date of such submission; or
                    (B) the Senate or the House of Representatives is 
                first in session after such recommendations are 
                submitted, if the Senate or the House of 
                Representatives (as applicable) is not in session on 
                the date of such submission.
            (2) Multiple bills.--The majority leader of the Senate, or 
        his designee, or the Speaker of the House of Representatives, 
        or his designee, shall introduce a bill or separate bills 
        ensuring that all such recommendations will be implemented.
    (d) Committee Referral and Action.--
            (1) In general.--Any committee to which a bill or bills 
        introduced under subsection (c) is referred shall report such 
        bill no later than 60 calendar days after the date of referral. 
        Any such reported bill shall be referred to the Committee on 
        Governmental Affairs of the Senate or the Committee on 
        Government Reform and Oversight of the House of 
        Representatives, as applicable.
            (2) Discharge.--If a committee does not report a bill 
        within the 60-day period as provided under paragraph (1), such 
        bill shall be discharged from the committee and referred to the 
        Committee on Governmental Affairs of the Senate or the 
        Committee on Government Reform and Oversight of the House of 
        Representatives, as applicable.
            (3) Report to floor; consolidation.--
                    (A) In general.--No later than the first day the 
                Senate or the House of Representatives (as applicable) 
                is in session following 10 calendar days in session 
                after the end of the 60-day period described under 
                paragraphs (1) and (2), the Committee on Governmental 
                Affairs of the Senate and the Committee on Government 
                Reform and Oversight of the House of Representatives, 
                as applicable, shall--
                            (i) consolidate all bills referred under 
                        paragraphs (1) and (2) into a single bill 
                        (without substantive amendment) and report such 
                        bill to the Senate or the House of 
                        Representatives; or
                            (ii) if only 1 bill is referred under 
                        paragraph (1) or (2), report such bill (without 
                        amendment) to the Senate or House of 
                        Representatives.
                    (B) Legislative calendar.--The bill reported under 
                subparagraph (A) shall be placed on the legislative 
                calendar of the appropriate House.
    (e) Procedure in Senate After Report of Committee; Debate; 
Amendments.--
            (1) Debate on bill.--Debate in the Senate on a bill 
        reported by the Committee on Governmental Affairs under 
        subsection (d)(3), and all amendments thereto and debatable 
        motions and appeals in connection therewith, shall be limited 
        to not more than 30 hours. The time shall be equally divided 
        between, and controlled by, the Majority Leader and Minority 
        Leader or their designees.
            (2) Debate on amendments.--Debate in the Senate on any 
        amendment to the bill shall be limited to 1 hour, to be equally 
        divided between, and controlled by, the mover and the manager 
        of the bill, and debate on any amendment to an amendment, 
        debatable motion, or appeal shall be limited to 30 minutes, to 
        be equally divided between, and controlled by, the mover and 
        the manager of the bill, except that in the event the manager 
        of the bill is in favor of any such amendment, motion or 
        appeal, the time in opposition thereto shall be controlled by 
        the minority leader or his designee.
            (3) Limit of debate.--(A) A motion to further limit debate 
        is not debatable. A motion by the majority leader or his 
        designee to extend debate is not debatable. A motion to 
        recommit is not in order.
            (B) No amendment not germane to the bill reported by the 
        Committee on Governmental Affairs under subsection (d)(3) shall 
        be in order.
            (4) Conference reports.--
                    (A) Motion to proceed.--A motion to proceed to the 
                consideration of the conference report on a bill 
                subject to the procedures of this section and reported 
                to the Senate may be made even though a previous motion 
                to the same effect has been disagreed to.
                    (B) Time limitation.--The consideration in the 
                Senate of the conference report on the bill and any 
                amendments in disagreement thereto, including all 
                debatable motions and appeals in connection therewith, 
                shall be limited to 5 hours, to be equally divided 
                between, and controlled by, the majority leader and 
                minority leader or their designees. Debate on any 
                debatable motion, appeal related to the conference 
                report, or any amendment to an amendment in 
                disagreement, shall be limited to 30 minutes, to be 
                equally divided between, and controlled by, the mover 
                and the manager of the conference report (or a message 
                between Houses).
    (f) Procedure in House of Representatives After Report of the 
Committee; Debate.--
            (1) Motion to consider.--When the Committee on Government 
        Reform and Oversight of the House of Representatives reports a 
        bill under subsection (d)(3) it is in order (at any time after 
        the fifth day (excluding Saturdays, Sundays, and legal 
        holidays) following the day on which any committee report filed 
        on a bill referred under subsection (d)(1) to the Committee on 
        Government Reform and Oversight has been available to Members 
        of the House) to move to proceed to the consideration of the 
        bill reported to the House of Representatives. The motion is 
        highly privileged and is not debatable. An amendment to the 
        motion is not in order, and it is not in order to move to 
        reconsider the vote by which the motion is agreed to or 
        disagreed to.
            (2) Debate.--General debate on the bill in the House of 
        Representatives shall be limited to not more than 10 hours, 
which shall be divided equally between the majority and minority 
parties. A motion further to limit debate is not debatable. A motion to 
postpone debate is not in order, and it is not in order to move to 
reconsider the vote by which the bill is agreed to or disagreed to.
            (3) Terms of consideration.--Consideration of the bill by 
        the House of Representatives shall be in the Committee of the 
        Whole, and the bill shall be considered for amendment under the 
        5-minute rule in accordance with the applicable provisions of 
        rule XXIII of the Rules of the House of Representatives. After 
        the committee rises and reports the bill back to the House, the 
        previous question shall be considered as ordered on the bill 
        and any amendments thereto to final passage without intervening 
        motion.
            (4) Limit on debate.--Debate in the House of 
        Representatives on the conference report on a bill subject to 
        the procedures under this section and reported to the House of 
        Representatives shall be limited to not more than 5 hours, 
        which shall be divided equally between the majority and 
        minority parties. A motion further to limit debate is not 
        debatable. A motion to recommit the conference report is not in 
        order, and it is not in order to move to reconsider the vote by 
        which the conference report is agreed to or disagreed to. A 
        motion to postpone is not in order.
            (5) Appeals.--Appeals from decisions of the Chair relating 
        to the application of the Rules of the House of Representatives 
        to the procedure relating to the bill shall be decided without 
        debate.
    (g) Rules of the Senate and House of Representatives.--This section 
is enacted by Congress--
            (1) as an exercise of the rulemaking power of the Senate 
        and the House of Representatives, respectively, but applicable 
        only with respect to the procedure to be followed in that House 
        in the case of a bill under this section, and it supersedes 
        other rules only to the extent that it is inconsistent with 
        such rules; and
            (2) with full recognition of the constitutional right of 
        either House to change the rules as far as relating to the 
        procedure of that House at any time, in the same manner, and to 
        the same extent as in the case of any other rule of that House.

SEC. 304. DEFINITION.

    For purposes of this title, the term ``inequitable Federal 
subsidy'' means a payment, benefit, service, or tax advantage that--
            (1) is provided by the Federal Government to any 
        corporation, partnership, joint venture, association, or 
        business trust, not to include--
                    (A) a nonprofit organization described under 
                section 501(c)(3) of the Internal Revenue Code of 1986 
                that is exempt from taxation under section 501(a) of 
                the Internal Revenue Code of 1986; or
                    (B) a State or local government or Indian Tribe;
            (2) is provided without a reasonable expectation, 
        demonstrated with the use of reliable performance criteria, 
        that actions or activities undertaken or performed in return 
        for such payment, benefit, service, or tax advantage would 
        result in a return or benefit, quantifiable or nonquantifiable, 
        to the public at least as great as the payment, benefit, 
        service, or tax advantage;
            (3) provides an unfair competitive advantage or financial 
        windfall; and
            (4) shall not include a payment, benefit, service, or tax 
        advantage that--
                    (A)(i) is awarded for the purposes of research and 
                development in the broad public interest on the basis 
                of a peer reviewed or other open, competitive, merit-
                based procedure;
                    (ii) is for a purpose consistent with the mission 
                of the agency;
                    (iii) supports competing technologies at levels 
                appropriate to their potential, as determined by an 
                appropriate priority setting process; and
                    (iv) is for research and development that the 
                private sector cannot reasonably be expected to 
                undertake without Federal support at a level or in a 
                time frame consistent with the payment, benefit, 
                service, or tax advantage's potential to provide broad 
                economic or other public benefit;
                    (B) primarily benefits public health, safety, the 
                environment, or education;
                    (C) is necessary to comply with international trade 
                or treaty obligations;
                    (D) is certified by the United States Trade 
                Representative as specifically intended and as 
                substantially needed to protect the foreign trade 
                interests of the United States; or
                    (E) is for the purpose of procurement of property 
                or services by the United States Government.

SEC. 305. CORPORATE RATE INCREASE IF REVENUES FROM SUBSIDY REDUCTIONS 
              ARE LESS THAN $10,000,000,000 PER YEAR.

    (a) In General.--If there is a subsidy reduction shortfall for any 
fiscal year beginning after September 30, 2000, section 11 of the 
Internal Revenue Code of 1986 (relating to tax on corporations) shall 
be applied (for taxable years beginning in such fiscal year) by 
substituting for the highest rate of tax imposed by such section the 
rate estimated by the Director of the Congressional Budget Office to be 
necessary to increase revenues to the Treasury for such year equal to 
such shortfall. Proper adjustments shall be made under this subsection 
to the extent such rate is less than or greater than the appropriate 
rate.
    (b) Subsidy Reduction Shortfall.--For purposes of subsection (a), 
the term ``subsidy reduction shortfall'' means, for any fiscal year, 
the excess of--
            (1) $10,000,000,000, over
            (2) the additional revenues that the Director of the 
        Congressional Budget Office estimates will be received in the 
        Treasury (for taxable years beginning in such fiscal year) by 
        reason of the enactment of recommendations of the Commission.

  TITLE IV--NATIONAL REFERENDUM REQUIRED FOR FEDERAL INCOME TAX RATE 
                        INCREASES TO TAKE EFFECT

SEC. 401. NATIONAL REFERENDUM REQUIRED FOR FEDERAL INCOME TAX RATE 
              INCREASES TO TAKE EFFECT.

    (a) In General.--An individual income tax rate increase shall apply 
only to taxable years beginning after the date of a national referendum 
in which a majority of individuals voting in the referendum vote in 
favor of such increase.
    (b) Individual Income Tax Rate Increase.--For purposes of this 
section, the term ``individual income tax rate increase'' means any 
provision of law--
            (1) which amends subsection (a), (b), (c), (d), or (e) of 
        section 1 of the Internal Revenue Code of 1986 (relating to 
        income tax) or section 55(b)(1)(A) of such Code (relating to 
        alternative minimum tax on noncorporate taxpayers), and
            (2) which imposes a new percentage as a rate of tax and 
        thereby increases the amount of tax imposed by any such 
        section.
    (c) Administrative Provisions.--
            (1) In general.--The referendum with respect to any 
        individual income tax rate increase shall occur at the time of 
        the first regularly scheduled Federal election after the date 
        of the enactment of such increase and shall be on the general 
        election ballot for such election.
            (2) Form.--The form of the referendum question shall be as 
        follows:

          ``referendum on individual income tax rate increase

``Should the provisions enacted on ____ which are individual income tax 
rate increases take effect?
          ``Yes                No''.
        Such blank shall be filled in with the date that the law 
        containing such provisions was enacted.
            (3) Procedures.--The Secretary of the Treasury or such 
        Secretary's delegate shall take such steps as are necessary to 
        arrange for any referendum under this section.
    (d) Authorization.--There are authorized to be appropriated such 
sums as are necessary to carry out this section, including amounts to 
reimburse States for their tabulation and other costs incurred by 
reason of any referendum under this section.

                      TITLE V--RETURN-FREE FILING

SEC. 501. RETURN-FREE FILING.

    The Secretary of the Treasury or the Secretary's delegate shall 
develop a plan to implement a return-free Federal income tax system for 
the largest number of taxpayers as is practicable. The plan of 
implementation shall be submitted to the House of Representatives and 
the Senate not later than 180 days after the date of the enactment of 
this Act.
                                 <all>