[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2085 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2085

To amend the Internal Revenue Code of 1986 to end the marriage penalty, 
 to provide estate tax relief for family-owned farms and other family-
owned businesses, to provide a tax credit for long term care needs, to 
    expand the child and dependent care tax credit, to increase the 
deduction for health insurance costs for self-employed individuals, and 
  to adjust for inflation the exemption amounts used to calculate the 
                  individual alternative minimum tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 9, 1999

Ms. Hooley of Oregon (for herself and Mr. Walden of Oregon) introduced 
  the following bill; which was referred to the Committee on Ways and 
                                 Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to end the marriage penalty, 
 to provide estate tax relief for family-owned farms and other family-
owned businesses, to provide a tax credit for long term care needs, to 
    expand the child and dependent care tax credit, to increase the 
deduction for health insurance costs for self-employed individuals, and 
  to adjust for inflation the exemption amounts used to calculate the 
                  individual alternative minimum tax.

    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 ``Family Tax Reduction Act of 1999''.

SEC. 2. INCREASE OF STANDARD DEDUCTION FOR JOINT RETURNS TO END 
              MARRIAGE PENALTY.

    (a) In General.--Paragraph (2) of section 63(c) of the Internal 
Revenue Code of 1986 (relating to basic standard deduction) is amended 
to read as follows:
            ``(2) Basic standard deduction.--For purposes of paragraph 
        (1), the basic standard deduction is--
                    ``(A) $8,600 in the case of--
                            ``(i) a joint return, or
                            ``(ii) a surviving spouse (as defined in 
                        section 2(a)),
                    ``(B) $6,350 in the case of a head of household (as 
                defined in section 2(b)), and
                    ``(C) \1/2\ the dollar amount applicable under 
                subparagraph (A) in any other case.''
    (b) Inflation Adjustment.--Paragraph (4) of section 63(c) of such 
Code is amended to read as follows:
            ``(4) Adjustments for inflation.--
                    ``(A) Adjustment of basic standard deduction.--In 
                the case of any taxable year beginning in a calendar 
                year after 2000, each dollar amount contained in 
                paragraph (2) 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 
                        by substituting `calendar year 1999' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Adjustment of other amounts.--In the case of 
                any taxable year beginning in a calendar year after 
                1988, each dollar amount contained in paragraph (5)(A) 
                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 
                        by substituting `calendar year 1987' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 3. INCREASE IN DEDUCTION FROM ESTATE TAX FOR FAMILY-OWNED FARMS 
              AND OTHER FAMILY-OWNED BUSINESS INTERESTS.

    (a) In General.--Subsection (a) of section 2057 of the Internal 
Revenue Code of 1986 (relating to family-owned business interests) is 
amended--
            (1) in paragraph (2), by striking ``$675,000'' and 
        inserting ``$5,000,000''; and
            (2) by striking paragraph (3).
    (b) Change in Period of Ownership and Material Participation.--
Subparagraph (D) of section 2057(b)(1) of such Code (relating to 
estates to which section applies) is amended--
            (1) by striking ``8-year period'' and inserting ``7-year 
        period''; and
            (2) by striking ``5 years'' and inserting ``4 years''.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to estates of decedents dying after December 31, 2000.

SEC. 4. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

    (a) Allowance of Credit.--
            (1) In general.--Section 24(a) of the Internal Revenue Code 
        of 1986 (relating to allowance of child tax credit) is amended 
        to read as follows:
    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the sum of--
            ``(1) $500 multiplied by the number of qualifying children 
        of the taxpayer, plus
            ``(2) $1,000 multiplied by the number of applicable 
        individuals with respect to whom the taxpayer is an eligible 
        caregiver for the taxable year.
In any case in which the applicable individual and the eligible 
caregiver are the same individual, the credit allowed by paragraph (2) 
with respect to such individual shall not exceed the aggregate amount 
paid by the taxpayer during the taxable year (not compensated for by 
insurance or otherwise) for qualified long-term care services (as 
defined in section 7702B(c)) for such individual.''
            (2) Additional credit for taxpayer with 3 or more separate 
        credit amounts.--So much of section 24(d) of such Code as 
        precedes paragraph (1)(A) thereof is amended to read as 
        follows:
    ``(d) Additional Credit for Taxpayers With 3 or More Separate 
Credit Amounts.--
            ``(1) In general.--If the sum of the number of qualifying 
        children of the taxpayer and the number of applicable 
        individuals with respect to which the taxpayer is an eligible 
        caregiver is 3 or more for any taxable year, the aggregate 
        credits allowed under subpart C shall be increased by the 
        lesser of--''.
            (3) Conforming amendments.--
                    (A) The heading for section 32(n) of such Code is 
                amended by striking ``Child'' and inserting ``Family 
                Care''.
                    (B) The heading for section 24 is amended to read 
                as follows:

``SEC. 24. FAMILY CARE CREDIT.''

                    (C) The table of sections for subpart A of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 24 and inserting 
                the following new item:

                              ``Sec. 24. Family care credit.''.
    (b) Definitions.--Section 24(c) of such Code (defining qualifying 
child) is amended to read as follows:
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying child.--
                    ``(A) In general.--The term `qualifying child' 
                means any individual if--
                            ``(i) the taxpayer is allowed a deduction 
                        under section 151 with respect to such 
                        individual for the taxable year,
                            ``(ii) such individual has not attained the 
                        age of 17 as of the close of the calendar year 
                        in which the taxable year of the taxpayer 
                        begins, and
                            ``(iii) such individual bears a 
                        relationship to the taxpayer described in 
                        section 32(c)(3)(B).
                    ``(B) Exception for certain noncitizens.--The term 
                `qualifying child' shall not include any individual who 
                would not be a dependent if the first sentence of 
                section 152(b)(3) were applied without regard to all 
                that follows `resident of the United States'.
            ``(2) Applicable individual.--
                    ``(A) In general.--The term `applicable individual' 
                means, with respect to any taxable year, any individual 
                who has been certified, before the due date for filing 
                the return of tax for the taxable year (without 
                extensions), by a physician (as defined in section 
                1861(r)(1) of the Social Security Act) as being an 
                individual with long-term care needs described in 
                subparagraph (B) for a period--
                            ``(i) which is at least 180 consecutive 
                        days, and
                            ``(ii) a portion of which occurs within the 
                        taxable year.
                Such term shall not include any individual otherwise 
                meeting the requirements of the preceding sentence 
                unless within the 12 month period ending on such due 
                date (or such other period as the Secretary prescribes) 
                a physician (as so defined) has certified that such 
                individual meets such requirements.
                    ``(B) Individuals with long-term care needs.--An 
                individual is described in this subparagraph if the 
                individual meets any of the following requirements:
                            ``(i) The individual is at least 6 years of 
                        age and--
                                    ``(I) is unable to perform (without 
                                substantial assistance from another 
                                individual) at least 3 activities of 
                                daily living (as defined in section 
                                7702B(c)(2)(B)) due to a loss of 
                                functional capacity, or
                                    ``(II) requires substantial 
                                supervision to protect such individual 
                                from threats to health and safety due 
                                to severe cognitive impairment and is 
                                unable to perform at least 1 activity 
                                of daily living (as so defined).
                            ``(ii) The individual is at least 2 but not 
                        6 years of age and is unable due to a loss of 
                        functional capacity to perform (without 
                        substantial assistance from another individual) 
                        at least 2 of the following activities: eating, 
                        transferring, or mobility.
                            ``(iii) The individual is under 2 years of 
                        age and requires specific durable medical 
                        equipment by reason of a severe health 
                        condition or requires a skilled practitioner 
                        trained to address the individual's condition 
                        to be available if the individual's parents or 
                        guardians are absent.
            ``(3) Eligible caregiver.--
                    ``(A) In general.--A taxpayer shall be treated as 
                an eligible caregiver for any taxable year with respect 
                to the following individuals:
                            ``(i) The taxpayer.
                            ``(ii) The taxpayer's spouse.
                            ``(iii) An individual with respect to whom 
                        the taxpayer is allowed a deduction under 
                        section 151 for the taxable year.
                            ``(iv) An individual who would be described 
                        in clause (iii) for the taxable year if section 
                        151(c)(1)(A) were applied by substituting for 
                        the exemption amount an amount equal to the sum 
                        of the exemption amount, the standard deduction 
                        under section 63(c)(2)(C), and any additional 
                        standard deduction under section 63(c)(3) which 
                        would be applicable to the individual if clause 
                        (iii) applied.
                            ``(v) An individual who would be described 
                        in clause (iii) for the taxable year if--
                                    ``(I) the requirements of clause 
                                (iv) are met with respect to the 
                                individual, and
                                    ``(II) the requirements of 
                                subparagraph (B) are met with respect 
                                to the individual in lieu of the 
                                support test of section 152(a).
                    ``(B) Residency test.--The requirements of this 
                subparagraph are met if an individual has as his 
                principal place of abode the home of the taxpayer and--
                            ``(i) in the case of an individual who is 
                        an ancestor or descendant of the taxpayer or 
                        the taxpayer's spouse, is a member of the 
                        taxpayer's household for over half the taxable 
                        year, or
                            ``(ii) in the case of any other individual, 
                        is a member of the taxpayer's household for the 
                        entire taxable year.
                    ``(C) Special rules where more than 1 eligible 
                caregiver.--
                            ``(i) In general.--If more than 1 
                        individual is an eligible caregiver with 
                        respect to the same applicable individual for 
                        taxable years ending with or within the same 
                        calendar year, a taxpayer shall be treated as 
                        the eligible care giver if each such individual 
                        (other than the taxpayer) files a written 
                        declaration (in such form and manner as the 
                        Secretary may prescribe) that such individual 
                        will not claim such applicable individual for 
                        the credit under this section.
                            ``(ii) No agreement.--If each individual 
                        required under clause (i) to file a written 
                        declaration under clause (i) does not do so, 
                        the individual with the highest modified 
                        adjusted gross income (as defined in section 
                        32(c)(5)) shall be treated as the eligible 
                        caregiver.
                            ``(iii) Married individuals filing 
                        separately.--In the case of married individuals 
                        filing separately, the determination under this 
                        subparagraph as to whether the husband or wife 
                        is the eligible caregiver shall be made under 
                        the rules of clause (ii) (whether or not one of 
                        them has filed a written declaration under 
                        clause (i)).''.
    (c) Identification Requirements.--
            (1) In general.--Section 24(e) of such Code is amended by 
        adding at the end the following new sentence: ``No credit shall 
        be allowed under this section to a taxpayer with respect to any 
        applicable individual unless the taxpayer includes the name and 
        taxpayer identification number of such individual, and the 
        identification number of the physician certifying such 
        individual, on the return of tax for the taxable year.''.
            (2) Assessment.--Section 6213(g)(2)(I) of such Code is 
        amended--
                    (A) by inserting ``or physician identification'' 
                after ``correct TIN'', and
                    (B) by striking ``child'' and inserting ``family 
                care''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 5. EXPANSION OF CHILD AND DEPENDENT CARE TAX CREDIT.

    (a) Increase of Maximum Credit Rate.--Paragraph (2) of section 
21(a) of the Internal Revenue Code of 1986 (relating to expenses for 
household and dependent care services necessary for gainful employment) 
is amended to read as follows:
            ``(2) Applicable percentage defined.--For purposes of 
        paragraph (1), the term `applicable percentage' means 50 
        percent reduced (but not below 20 percent) by 1 percentage 
        point for each $1,000 (or fraction thereof) by which the 
        taxpayer's adjusted gross income for the taxable year exceeds 
        $30,000.''.
    (b) Credit Allowed Based on Residency in Certain Cases.--Subsection 
(e) of section 21 of such Code is amended by adding at the end the 
following new paragraph:
            ``(11) Credit allowed based on residency in certain 
        cases.--In the case of a taxpayer--
                    ``(A) who does not satisfy the household 
                maintenance test of subsection (a) for any period, but
                    ``(B) whose principal place of abode for such 
                period is also the principal place of abode of any 
                qualifying individual,
        then such taxpayer shall be treated as satisfying such test for 
        such period but the amount of credit allowable under this 
        section with respect to such individual shall be determined by 
        allowing only \1/12\ of the limitation under subsection (c)(1) 
        for each full month that the requirement of subparagraph (B) is 
        met.''
    (c) Inflation Adjustment of Dollar Amounts.--
            (1) Section 21 of such Code is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2000, the $30,000 amount contained 
in subsection (a), the $2,400 amount in subsection (c), and the $500 
amount in subsection (f) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for such calendar year by substituting 
        `calendar year 1999' for `calendar year 1992' in subparagraph 
        (B) thereof.
If the increase determined under the preceding sentence is not a 
multiple of $50, such amount shall be rounded to the next lowest 
multiple of $50.''
            (2) Paragraph (2) of section 21(c) of such Code is amended 
        by striking ``$4,800'' and inserting ``twice the dollar amount 
        applicable under paragraph (1)''.
            (3) Paragraph (2) of section 21(d) of such Code is amended 
        by striking ``less than--'' and all that follows through the 
        end of the first sentence and inserting ``less than \1/12\ of 
        the amount which applies under subsection (c) to the taxpayer 
        for the taxable year.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 6. DEDUCTION FOR HEALTH INSURANCE COSTS FOR SELF-EMPLOYED 
              INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 162(l) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) Allowance of deduction.--In the case of an individual 
        who is an employee within the meaning of section 401(c)(1), 
        there shall be allowed as a deduction under this section 100 
        percent of the amount paid during the taxable year for 
        insurance which constitutes medical care for the taxpayer, his 
        spouse, and dependents.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 1999.

SEC. 7. INFLATION ADJUSTMENT FOR ALTERNATIVE MINIMUM TAX EXEMPTION 
              AMOUNT FOR INDIVIDUALS.

    (a) In General.--Section 55(d) of the Internal Revenue Code of 1986 
(relating to exemption amount) is amended by adding at the end the 
following:
            ``(4) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2002, each of the 
                dollar amounts contained in paragraphs (1) and (3) 
                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 
                        by substituting `calendar year 2000' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any increase determined under 
                subparagraph (A) is not a multiple of $50, such 
                increase shall be rounded to the nearest multiple of 
                $50.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2002.

SEC. 8. EFFECTIVE DATE SUBJECT TO ENACTMENT OF LEGISLATION EXTENDING 
              THE SOLVENCY OF SOCIAL SECURITY AND MEDICARE.

    Notwithstanding any other effective date provision in this Act, 
this Act and the amendments made by this Act shall not take effect 
until after the enactment of legislation to extend the solvency of the 
Federal Old-Age and Survivors Insurance Trust Fund, the Federal 
Disability Insurance Trust Fund, and the Federal Hospital Insurance 
Trust Fund, and to ensure that no funds from such trust funds are used 
to pay for any tax expenditure resulting from the provisions of this 
Act.
                                 <all>