[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2350 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2350

To amend the Internal Revenue Code of 1986 to repeal taxes on American 
                                Values.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 24, 1999

Mr. Sam Johnson of Texas (for himself, Mr. McIntosh, Mr. Doolittle, Mr. 
   Istook, Mr. Burton of Indiana, Mr. Hilleary, Mr. Hostettler, Mrs. 
  Chenoweth, Mr. Graham, Mr. Bartlett of Maryland, Mr. Tancredo, Mr. 
Pitts, Mr. Dickey, Mr. Jones of North Carolina, Mr. Sununu, Mr. Hansen, 
Mr. Souder, Mr. Weldon of Florida, Mr. Chabot, Mrs. Cubin, Mr. DeMint, 
 Mr. Herger, Mr. McInnis, Mr. Watkins, Mr. Hulshof, Mr. Hayworth, Mr. 
 DeLay, Mr. Paul, Mr. Manzullo, Mrs. Myrick, Mr. Skeen, Mr. Bilirakis, 
Mr. Hefley, Mr. Rohrabacher, Mr. Miller of Florida, Mr. Thornberry, Mr. 
    Bonilla, Mr. Coburn, Mr. Pombo, Mr. Isakson, Mr. Sessions, Mr. 
 Pickering, Mr. Ryun of Kansas, Mr. Green of Wisconsin, Mr. Riley, Mr. 
 Shadegg, Mr. Ryan of Wisconsin, Mr. Dreier, Mr. Hobson, Mr. Hyde, Mr. 
   Spence, and Mr. Metcalf) introduced the following bill; which was 
  referred to the Committee on Ways and Means, and in addition to the 
Committee on the Budget, 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 repeal taxes on American 
                                Values.

    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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``American Values 
Tax Savings Plan for the 21st Century''.
    (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) Table of Contents.--

Sec. 1. Short title; amendment of 1986 Code; table of contents.
                    TITLE I--MARRIAGE PENALTY RELIEF

Sec. 101. Basic standard deduction for married individuals to be twice 
                            the deduction for unmarried individuals.
Sec. 102. Elimination of marriage penalty in individual income tax 
                            rates.
              TITLE II--PHASEOUT OF ESTATE AND GIFT TAXES

Sec. 201. Phaseout of estate and gift taxes.
    TITLE III--PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL TAXPAYERS

Sec. 301. Phaseout of alternative minimum tax for all taxpayers.
        TITLE IV--REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES

Sec. 401. Reduction in individual capital gain tax rates.
          TITLE V--INCREASED INCENTIVES FOR RETIREMENT SAVINGS

Sec. 501. Increase in limitation on IRA contributions and indexing of 
                            limitation for inflation.
Sec. 502. Increase in income limitation applicable to conversions, etc. 
                            from traditional IRA to Roth IRA.
           TITLE VI--INCENTIVES FOR HEALTH INSURANCE COVERAGE

Sec. 601. 100 percent deduction for health insurance costs of self-
                            employed individuals.
Sec. 602. Carryover of unused benefits from cafeteria plans and 
                            flexible spending arrangements.
                  TITLE VII--INCENTIVES FOR EDUCATION

Sec. 701. Exclusion from gross income of education distributions from 
                            qualified State tuition programs.
               TITLE VIII--REPEAL OF TELEPHONE EXCISE TAX

Sec. 801. Repeal of excise tax on telephone and other communications 
                            services.
Sec. 802. Sense of Congress to repeal Federal Communications Commission 
                            E-rate discount program for schools and 
                            libraries.
               TITLE IX--EXTENSION OF EXPIRING PROVISIONS

Sec. 901. Research credit.
Sec. 902. Work opportunity credit.
Sec. 903. Subpart F exemption for active financing income.
                         TITLE X--PAY-GO REFORM

Sec. 1001. Special pay-as-you-go rule.
Sec. 1002. Additional reporting requirement.

                    TITLE I--MARRIAGE PENALTY RELIEF

SEC. 101. BASIC STANDARD DEDUCTION FOR MARRIED INDIVIDUALS TO BE TWICE 
              THE DEDUCTION FOR UNMARRIED INDIVIDUALS.

    (a) In General.--Paragraph (2) of section 63(c) (relating to 
standard deduction) is amended--
            (1) by striking ``$5,000'' in subparagraph (A) and 
        inserting ``twice the dollar amount in effect under 
        subparagraph (C) for the taxable year'',
            (2) by adding ``or'' at the end of subparagraph (B),
            (3) by striking ``in the case of'' and all that follows in 
        subparagraph (C) and inserting ``in any other case.'', and
            (4) by striking subparagraph (D).
    (b) Technical Amendment.--Subparagraph (B) of section 1(f)(6) is 
amended by striking ``(other than with'' and all that follows through 
``shall be applied'' and inserting ``(other than sections 63(c)(4) and 
151(d)(4)(A)) shall be applied''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 102. ELIMINATION OF MARRIAGE PENALTY IN INDIVIDUAL INCOME TAX 
              RATES.

    (a) In General.--Subsection (f) of section 1 (relating to tax 
imposed) is amended by adding at the end the following new paragraph:
            ``(8) Elimination of marriage penalty.--In prescribing the 
        table under paragraph (1) which applies in lieu of the table 
        contained in subsection (a) with respect to taxable years 
        beginning in a calendar year after 2004, the minimum and 
        maximum dollar amounts for each rate bracket shall be twice the 
        minimum and maximum dollar amounts (respectively) prescribed by 
        the Secretary under this subsection for the comparable rate 
        bracket under subsection (c) for such taxable years. The 
        preceding sentence shall apply in lieu of applying paragraph 
        (2)(A) to the table contained in subsection (a).''
    (b) Technical Amendments.--
            (1) Subparagraph (A) of section 1(f)(2) is amended by 
        inserting ``except as provided in paragraph (8),'' before ``by 
        increasing''.
            (2) The heading for subsection (f) of section 1 is amended 
        by inserting ``Elimination of Marriage Penalty After 2004;'' 
        before ``Adjustments''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

              TITLE II--PHASEOUT OF ESTATE AND GIFT TAXES

SEC. 201. PHASEOUT OF ESTATE AND GIFT TAXES.

    (a) Repeal of Estate and Gift Taxes.--Subtitle B (relating to 
estate and gift taxes) is repealed effective with respect to estates of 
decedents dying, and gifts made, after December 31, 2009.
    (b) Phaseout of Tax.--Subsection (c) of section 2001 (relating to 
imposition and rate of tax) is amended by adding at the end the 
following new paragraph:
            ``(3) Phaseout of tax.--In the case of estates of decedents 
        dying, and gifts made, during any calendar year after 1999 and 
        before 2010--
                    ``(A) In general.--The tentative tax under this 
                subsection shall be determined by using a table 
                prescribed by the Secretary (in lieu of using the table 
                contained in paragraph (1)) which is the same as such 
                table; except that--
                            ``(i) each of the rates of tax shall be 
                        reduced (but not below zero) by the number of 
                        percentage points determined under subparagraph 
                        (B), and
                            ``(ii) the amounts setting forth the tax 
                        shall be adjusted to the extent necessary to 
                        reflect the adjustments under clause (i).
                    ``(B) Percentage points of reduction.--

                  
                                                        The number of  
                ``For calendar year:
                                                  percentage points is:
                    2000...................................         5  
                    2001...................................        10  
                    2002...................................        15  
                    2003...................................        20  
                    2004...................................        25  
                    2005...................................        30  
                    2006...................................        35  
                    2007...................................        40  
                    2008...................................        45  
                    2009...................................       50.  
                    ``(C) Coordination with paragraph (2).--Paragraph 
                (2) shall be applied by reducing the 55 percent 
                percentage contained therein by the number of 
                percentage points determined for such calendar year 
                under subparagraph (B).
                    ``(D) Coordination with credit for state death 
                taxes.--Rules similar to the rules of subparagraph (A) 
                shall apply to the table contained in section 2011(b) 
                except that the number of percentage points referred to 
                in subparagraph (A)(i) shall be determined under the 
                following table:

                  
                                                        The number of  
                ``For calendar year:
                                                  percentage points is:
                    2000...................................    1\1/2\  
                    2001...................................        3   
                    2002...................................    4\1/2\  
                    2003...................................        6   
                    2004...................................    7\1/2\  
                    2005...................................        9   
                    2006...................................   10\1/2\  
                    2007...................................       12   
                    2008...................................   13\1/2\  
                    2009...................................     15.''  
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
1999.

    TITLE III--PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL TAXPAYERS

SEC. 301. PHASEOUT OF ALTERNATIVE MINIMUM TAX FOR ALL TAXPAYERS.

    (a) Repeal in 2004 for Noncorporate Taxpayers and in 2005  for 
Corporations.--Subsection (a) of section 55 (relating to alternative 
minimum tax imposed) is amended to read as follows:
    ``(a) Imposition of Tax.--
            ``(1) In general.--There is hereby imposed (in addition to 
        any other tax imposed by this subtitle) a tax equal to the 
        excess (if any) of--
                    ``(A) the tentative minimum tax for the taxable 
                year, over
                    ``(B) the regular tax for the taxable year.
            ``(2) Termination.--No tax shall be imposed by this section 
        for any taxable year beginning after December 31, 2003 
        (December 31, 2004, in the case of a corporation), and the 
        tentative minimum tax of any taxpayer for any taxable year 
        beginning after December 31, 2003 (December 31, 2004, in the 
        case of a corporation) shall be zero for purposes of this 
        title.''
    (b) Phaseout of Tax on Noncorporate Taxpayers.--
            (1) In general.--Paragraph (1) of section 55(d) (relating 
        to exemption amounts) is amended--
                    (A) by striking ``$45,000'' in subparagraph (A) and 
                inserting ``the applicable amount'',
                    (B) by striking ``$33,750'' in subparagraph (B) and 
                inserting ``\3/4\ of the applicable amount'', and
                    (C) by striking ``$22,500'' in subparagraph (C) and 
                inserting ``\1/2\ of the applicable amount''.
            (2) Applicable amount.--Subsection (d) of section 55 is 
        amended by adding at the end the following new paragraph:
            ``(4) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount shall be determined in accordance with 
        the following table:

        ``For taxable years beginning
                                                         The applicable
          in calendar year--
                                                           amount is-- 
            2000.....................................         $70,000  
            2001.....................................          95,000  
            2002.....................................         120,500  
            2003.....................................      145,000.''  
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

        TITLE IV--REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES

SEC. 401. REDUCTION IN INDIVIDUAL CAPITAL GAIN TAX RATES.

    (a) In General.--Subparagraph (C) of section 1(h)(1) (relating to 
maximum capital gains rate) is amended by striking ``20 percent'' and 
inserting ``15 percent (10 percent in the case of taxable years 
beginning after December 31, 2004)''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1(h) is amended to read as 
        follows:
            ``(2) 8 percent rate for qualified 5-year gain otherwise in 
        15 percent bracket.--In the case of any taxable year beginning 
        after December 31, 2000, the rate under paragraph (1)(B) shall 
        be 8 percent with respect to so much of the amount to which the 
        10-percent rate under paragraph (1)(B) would otherwise apply as 
        does not exceed qualified 5-year gain, and 10 percent with 
        respect to the remainder of such amount.''
            (2) Section 1(h) is amended by striking paragraph (13).
            (3) Subparagraph (C) of section 55(a)(3) is amended by 
        striking ``20 percent'' and inserting ``15 percent (10 percent 
        in the case of taxable years beginning after December 31, 
        2004)''.
            (4) Paragraph (1) of section 1445(e) is amended by striking 
        ``20 percent'' and inserting ``15 percent (10 percent in the 
        case of taxable years beginning after December 31, 2004)''.
            (5) Subparagraph (A) of section 7518(g)(6)(A), and section 
        607(h)(6)(A) of the Merchant Marine Act, 1936, are each amended 
        by striking ``20 percent'' and inserting ``15 percent (10 
        percent in the case of taxable years beginning after December 
        31, 2004)''.
            (6) Section 311 of the Taxpayer Relief Act of 1997 is 
        amended by striking subsection (e).
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 1999.
            (2) Withholding.--The amendment made by subsection (b)(4) 
        shall apply to amounts paid after December 31, 1999.

          TITLE V--INCREASED INCENTIVES FOR RETIREMENT SAVINGS

SEC. 501. INCREASE IN LIMITATION ON IRA CONTRIBUTIONS AND INDEXING OF 
              LIMITATION FOR INFLATION.

    (a) Increase in Maximum Amount of Deduction.--Paragraph (1) of 
section 219(b) (relating to maximum amount of deduction) is amended to 
read as follows:
            ``(1) Maximum amount.--
                    ``(A) In general.--The amount allowable as a 
                deduction under subsection (a) to any individual for 
                any taxable year shall not exceed the lesser of--
                            ``(i) the applicable dollar limitation, or
                            ``(ii) an amount equal to the compensation 
                        includible in the individual's gross income for 
                        such taxable year.
                    ``(B) Applicable dollar limitation.--For purposes 
                of subparagraph (A), the applicable dollar limitation 
                shall be determined in accordance with the following 
                table:

                ``For taxable years beginning
                                                  The applicable dollar
                  in calendar year--
                                                      limitation is--  
                    2000...................................    $2,500  
                    2001...................................     3,000  
                    2002...................................     3,500  
                    2003...................................     4,000  
                    2004...................................     4,500  
                    2006 and thereafter....................  5,000.''  
    (b) Inflation Adjustments.--Subsection (f) of section 219 is 
amended by adding at the end the following new paragraph:
            ``(8) Inflation adjustment.--In the case of taxable years 
        beginning in a calendar year after 2006, the $5,000 amount set 
        forth in subsection (b)(1)(B) shall be increased by an amount 
        equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year by 
                substituting `calendar year 2005' for `calendar year 
                1992' in subparagraph (B) thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $100, such increase shall be rounded to the 
        nearest multiple of $100.''
    (c) Conforming Amendments.--
            (1) Section 408(a)(1) is amended by striking ``in excess of 
        $2,000 on behalf of any individual'' and inserting ``on behalf 
        of any individual in excess of the applicable dollar limitation 
        in effect for such taxable year under section 219(b)(1)''.
            (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
        and inserting ``the applicable dollar limitation in effect 
        under section 219(b)(1)''.
            (3) Section 408(b) is amended by striking ``$2,000'' in the 
        matter following paragraph (4) and inserting ``the applicable 
        dollar limitation in effect under section 219(b)(1)''.
            (4) Section 408(j) is amended by striking ``$2,000''.
            (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
        inserting ``the applicable dollar limitation in effect under 
        section 219(b)(1)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 502. INCREASE IN INCOME LIMITATION APPLICABLE TO CONVERSIONS, ETC. 
              FROM TRADITIONAL IRA TO ROTH IRA.

    (a) In General.--Clause (i) of section 408A(c)(3)(B) (relating to 
rollover from IRA) is amended by striking ``$100,000'' and inserting 
``$1,000,000''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

           TITLE VI--INCENTIVES FOR HEALTH INSURANCE COVERAGE

SEC. 601. 100 PERCENT DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-
              EMPLOYED INDIVIDUALS.

    (a) In General.--Section 162(l)(1) (relating to special rules for 
health insurance costs of self-employed individuals) 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 an 
        amount equal to the amount paid during the taxable year for 
        insurance which constitutes medical care for the taxpayer, the 
        taxpayer's spouse, and dependents.''
    (b) Clarification of Limitations on Other Coverage.--The first 
sentence of section 162(l)(2)(B) is amended to read as follows: 
``Paragraph (1) shall not apply to any taxpayer for any calendar month 
for which the taxpayer participates in any subsidized health plan 
maintained by any employer (other than an employer described in section 
401(c)(4)) of the taxpayer or the spouse of the taxpayer.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 602. CARRYOVER OF UNUSED BENEFITS FROM CAFETERIA PLANS AND 
              FLEXIBLE SPENDING ARRANGEMENTS.

    (a) In General.--Section 125 (relating to cafeteria plans) is 
amended by redesignating subsections (h) and (i) as subsections (i) and 
(j), respectively, and by inserting after subsection (g) the following 
new subsection:
    ``(h) Allowance of Carryovers of Unused Benefits to Later Taxable 
Years.--
            ``(1) In general.--For purposes of this title--
                    ``(A) a plan or other arrangement shall not fail to 
                be treated as a cafeteria plan or flexible spending or 
                similar arrangement, and
                    ``(B) no amount shall be required to be included in 
                gross income by reason of this section or any other 
                provision of this chapter,
        solely because under such plan or other arrangement any 
        nontaxable benefit which is unused as of the close of a taxable 
        year may be carried forward to 1 or more succeeding taxable 
        years.
            ``(2) Limitation.--Paragraph (1) shall not apply to amounts 
        carried from a plan to the extent such amounts exceed $2,000 
        (applied on an annual basis). For purposes of this paragraph, 
        all plans and arrangements maintained by an employer or any 
        related person shall be treated as 1 plan.
            ``(3) Allowance of rollover.--
                    ``(A) In general.--Each flexible spending or 
                similar arrangement which permits a carryover under 
                paragraph (1) of an amount of unused benefit shall 
                provide that each participant may elect, in lieu of a 
                carryover of such amount, to have such amount 
                distributed to the participant.
                    ``(B) Amounts not included in income.--Any 
                distribution under subparagraph (A) shall not be 
                included in gross income to the extent that such amount 
                is transferred in a trustee-to-trustee transfer, or is 
                contributed within 60 days of the date of the 
                distribution, to--
                            ``(i) an individual retirement plan,
                            ``(ii) a qualified cash or deferred 
                        arrangement described in section 401(k),
                            ``(iii) a plan under which amounts are 
                        contributed by an individual's employer for an 
                        annuity contract described in section 403(b),
                            ``(iv) an eligible deferred compensation 
                        plan described in section 457,
                            ``(v) a medical savings account (within the 
                        meaning of section 220), or
                            ``(vi) an education individual retirement 
                        account (within the meaning of section 530(b)).
                Any amount rolled over under this subparagraph shall be 
                treated as a rollover contribution for the taxable year 
                from which the unused amount would otherwise be 
                carried.
                    ``(C) Treatment of rollover.--Any amount rolled 
                over under subparagraph (B)--
                            ``(i) shall be treated as an eligible 
                        rollover under section 219, 220, 401(k), 
                        403(b), 457, or 530, whichever is applicable,
                            ``(ii) shall be taken into account in 
                        applying any limitation on contributions under 
                        such section or any other provision of this 
                        chapter for the taxable year of the rollover, 
                        and
                            ``(iii) shall not be taken into account in 
                        applying any participation requirement on 
                        contributions under such section or other 
                        provision for such taxable year.
            ``(4) Cost-of-living adjustment.--In the case of any 
        taxable year beginning in a calendar year after 1999, the 
        $2,000 amount under paragraph (2) shall be adjusted at the same 
        time and in the same manner as under section 415(d)(2), except 
        that the base period taken into account shall be the calendar 
        quarter beginning October 1, 1999, and any increase which is 
        not a multiple of $50 shall be rounded to the next lowest 
        multiple of $50.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

                  TITLE VII--INCENTIVES FOR EDUCATION

SEC. 701. EXCLUSION FROM GROSS INCOME OF EDUCATION DISTRIBUTIONS FROM 
              QUALIFIED STATE TUITION PROGRAMS.

    (a) In General.--Section 529(c)(3)(B) (relating to distributions) 
is amended to read as follows:
                    ``(B) Distributions for qualified higher education 
                expenses.--
                            ``(i) In general.--No amount shall be 
                        includible in gross income under subparagraph 
                        (A) if the qualified higher education expenses 
                        of the designated beneficiary during the 
                        taxable year are not less than the aggregate 
                        distributions during the taxable year.
                            ``(ii) Distributions in excess of 
                        expenses.--If such aggregate distributions 
                        exceed such expenses during the taxable year, 
                        the amount otherwise includible in gross income 
                        under subparagraph (A) shall be reduced by the 
                        amount which bears the same ratio to the amount 
                        so includible (without regard to this 
                        subparagraph) as such expenses bear to such 
                        aggregate distributions.
                            ``(iii) Election to waive exclusion.--A 
                        taxpayer may elect to waive the application of 
                        this subparagraph for any taxable year.
                            ``(iv) In-kind distributions.--Any benefit 
                        furnished to a designated beneficiary under a 
                        qualified State tuition program shall be 
                        treated as a distribution to the beneficiary 
                        for purposes of this paragraph.
                            ``(v) Disallowance of excluded amounts as 
                        credit or deduction.--No deduction or credit 
                        shall be allowed to the taxpayer under any 
                        other section of this chapter for any qualified 
                        higher education expenses to the extent taken 
                        into account in determining the amount of the 
                        exclusion under this paragraph.''.
    (b) Coordination With Education Credits.--Section 25A(e)(2) 
(relating to coordination with exclusions) is amended--
            (1) by inserting ``a qualified State tuition program or'' 
        before ``an education individual retirement account''; and
            (2) by striking ``section 530(d)(2)'' and inserting 
        ``section 529(c)(3)(B) or 530(d)(2)''.
    (c) Eligible Educational Institutions Permitted To Maintain 
Qualified Tuition Programs.--
            (1) In general.--Section 529(b)(1) (defining qualified 
        State tuition program) is amended by inserting ``or by one or 
        more eligible educational institutions'' after ``maintained by 
        a State or agency or instrumentality thereof''.
            (2) Private qualified tuition programs limited to prepaid 
        plans.--Section 529(b)(1) is amended by adding at the end the 
        following flush sentence:
        ``Clause (ii) of subparagraph (A) shall only apply to a program 
        established and maintained by a State or any agency or 
        instrumentality thereof.''.
            (3) Tax on excess contributions.--
                    (A) In general.--Section 4973(a) (relating to tax 
                imposed) is amended by striking ``or'' at the end of 
                paragraph (3), inserting ``or'' at the end of paragraph 
                (4), and inserting after paragraph (4) the following 
                new paragraph:
            ``(5) a private qualified tuition program (as defined in 
        subsection (g)),''.
                    (B) Excess contributions defined.--Section 4973 is 
                amended by adding at the end the following new 
                subsection:
    ``(g) Excess Contributions to Private Qualified Tuition Program.--
For purposes of this section--
            ``(1) In general.--In the case of private qualified tuition 
        programs, the term `excess contributions' means, with respect 
        to any one beneficiary, the amount contributed to a private 
        qualified tuition program for any taxable year if any amount is 
        contributed during such year for the benefit of such 
        beneficiary to a qualified tuition program (as defined in 
        section 529) other than a private qualified tuition program.
            ``(2) Private qualified tuition program.--The term `private 
        qualified tuition program' means a qualified tuition program 
        (as defined in section 529) not established and maintained by a 
        State or any agency or instrumentality thereof.''.
            (4) Technical amendments.--
                    (A) The text of sections 25A(e)(2), 72(e)(9), 529, 
                530(b)(2)(B), and 4973(e)(1)(B), as previously amended 
                by this Act, are each amended by striking ``qualified 
                State tuition program'' each place it appears and 
                inserting ``qualified tuition program''.
                    (B)(i) The heading of section 529 is amended to 
                read as follows:

``SEC. 529. QUALIFIED TUITION PROGRAMS.''.

                    (ii) The item relating to section 529 in the table 
                of sections for part VIII of subchapter F of chapter 1 
                is amended by striking ``State''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

               TITLE VIII--REPEAL OF TELEPHONE EXCISE TAX

SEC. 801. REPEAL OF EXCISE TAX ON TELEPHONE AND OTHER COMMUNICATIONS 
              SERVICES.

    (a) In General.--Paragraph (2) of section 4251(b) is amended to 
read as follows:

``For bills first rendered
                                                         The applicable
  during calendar year--
                                                        percentage is--
    2000...................................................       2.4  
    2001...................................................       1.8  
    2002...................................................       1.2  
    2003...................................................       0.6  
    2004 and thereafter....................................    0.0.''  
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid pursuant to bills first rendered after December 31, 
1999.

SEC. 802. SENSE OF CONGRESS TO REPEAL FEDERAL COMMUNICATIONS COMMISSION 
              E-RATE DISCOUNT PROGRAM FOR SCHOOLS AND LIBRARIES.

    It is the sense of the Congress that the Federal Communications 
Commission E-rate discount program for schools and libraries should be 
terminated.

               TITLE IX--EXTENSION OF EXPIRING PROVISIONS

SEC. 901. RESEARCH CREDIT.

    (a) Extension.--
            (1) In general.--Paragraph (1) of section 41(h) (relating 
        to termination) is amended--
                    (A) by striking ``June 30, 1999'' and inserting 
                ``June 30, 2004'';
                    (B) by striking ``36-month'' and inserting ``96-
                month''; and
                    (C) by striking ``36 months'' and inserting ``96 
                months''.
            (2) Technical amendment.--Subparagraph (D) of section 
        45C(b)(1) is amended by striking ``June 30, 1999'' and 
        inserting ``June 30, 2004''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after June 30, 1999.
    (b) Increase in Percentages Under Alternative Incremental Credit.--
            (1) In general.--Subparagraph (A) of section 41(c)(4) is 
        amended--
                    (A) by striking ``1.65 percent'' and inserting 
                ``2.65 percent'',
                    (B) by striking ``2.2 percent'' and inserting ``3.2 
                percent'', and
                    (C) by striking ``2.75 percent'' and inserting 
                ``3.75 percent''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after June 30, 1999.

SEC. 902. WORK OPPORTUNITY CREDIT.

    (a) Temporary Extension.--Subparagraph (B) of section 51(c)(4) 
(relating to termination) is amended by striking ``June 30, 1999'' and 
inserting ``June 30, 2000''.
    (b) Certain Benefits Treated as Wages Eligible for Credit.--
Subsection (c) of section 51 is amended by redesignating paragraphs (3) 
and (4) as paragraphs (4) and (5), respectively, and by inserting after 
paragraph (2) the following new paragraph:
            ``(3) Certain amounts treated as wages.--The term `wages' 
        includes amounts paid or incurred by the employer which are 
        excludable from the employee's gross income under--
                    ``(A) section 105 (relating to amounts received 
                under accident and health plans),
                    ``(B) section 106 (relating to contributions by 
                employer to accident and health plans),
                    ``(C) section 127 (relating to educational 
                assistance programs) or would be so excludable but for 
                section 127(d), but only to the extent paid or incurred 
                to a person not related to the employer, or
                    ``(D) section 129 (relating to dependent care 
                assistance programs).
        The amount treated as wages by subparagraph (A) or (B) for any 
        period shall be based on the reasonable cost of coverage for 
        the period, but shall not exceed the applicable premium for the 
        period under section 4980B(f)(4).''
    (c) Consolidation of Welfare-to-Work Tax Credit and Work 
Opportunity Tax Credit.--
            (1) In general.--Paragraph (1) of section 51(d) is amended 
        by striking ``or'' at the end of subparagraph (G), by striking 
        the period at the end of subparagraph (H) and inserting ``, 
        or'', and by adding at the end the following new subparagraph:
                    ``(I) a long-term family assistance recipient.''
            (2) Definition.--Subsection (d) of section 51 is amended by 
        redesignating paragraphs (10), (11), and (12) as paragraphs 
        (11), (12), and (13), respectively, and by inserting after 
        paragraph (9) the following new paragraph:
            ``(10) Long-term family assistance recipient.--
                    ``(A) In general.--The term `long-term family 
                assistance recipient' means any individual who is 
                certified by the designated local agency--
                            ``(i) as being a member of a family 
                        receiving assistance under a IV-A program for 
                        at least the 18-month period ending on the 
                        hiring date,
                            ``(ii)(I) as being a member of a family 
                        receiving such assistance for at least 18 
                        months beginning after August 5, 1997, and
                            ``(II) as having a hiring date which is not 
                        more than 2 years after the end of the 18th 
                        month beginning after August 5, 1997, that the 
                        individual is a member of a family receiving 
                        such assistance, or
                            ``(iii)(I) as being a member of a family 
                        which ceased to be eligible after August 5, 
                        1997, for such assistance by reason of any 
                        limitation imposed by Federal or State law on 
                        the maximum period such assistance is payable 
                        to a family, and
                            ``(II) as having a hiring date which is not 
                        more than 2 years after the date of such 
                        cessation.
                    ``(B) Special rules for determining amount of 
                credit.--For purposes of applying this subpart to wages 
                paid or incurred to any long-term family assistance 
                recipient--
                            ``(i) the credit determined under this 
                        section shall include 40 percent of the 
                        qualified second-year wages for the taxable 
                        year,
                            ``(ii) notwithstanding subsection (b)(3), 
                        the amount of the qualified first-year wages, 
                        and the amount of qualified second-year wages, 
                        which may be taken into account with respect to 
                        any individual shall not exceed $10,000 per 
                        year, and
                            ``(iii) paragraph (1) of subsection (h) 
                        shall be applied by substituting `$10,000' for 
                        `$6,000' in subparagraph (A) and `$833.33' for 
                        `$500' in subparagraph (B).
                    ``(C) Qualified second-year wages.--For purposes of 
                subparagraph (B), the term `qualified second-year 
                wages' means, with respect to any individual, qualified 
                wages attributable to service rendered during the 1-
                year period beginning on the day after the last day of 
                the 1-year period with respect to such individual 
                determined under subsection (b)(2).''
            (3) Repeal of separate welfare-to-work credit.--
                    (A) Section 51A is hereby repealed.
                    (B) The table of sections for subpart E of part IV 
                of subchapter A of chapter 1 is amended by striking the 
                item relating to section 51A.
    (d) Clarification of First Year of Employment.--Paragraph (2) of 
section 51(i) is amended by striking ``during which he was not a member 
of a targeted group''.
    (e) Technical Correction.--Subparagraph (B) of section 51(d)(2) is 
amended--
            (1) by striking ``plan approved'' and inserting ``program 
        funded'', and
            (2) by striking ``(relating to assistance for needy 
        families with minor children)''.
    (f) Effective Date.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        individuals who begin work for the employer after June 30, 
        1999.
            (2) Clarification.--The amendment made by subsection (d) 
        shall apply to individuals who begin work for the employer 
        after June 30, 1999.
            (3) Technical correction.--The amendment made by subsection 
        (e) shall take effect as if included in the amendments made by 
        section 1201 of the Small Business Job Protection Act of 1996.

SEC. 903. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

    (a) In General.--Sections 953(e)(10) and 954(h)(9) are each amended 
by striking ``January 1, 2000'' and inserting ``January 1, 2001''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

                         TITLE X--PAY-GO REFORM

SEC. 1001. SPECIAL PAY-AS-YOU-GO RULE.

    Section 252 of the Balanced Budget and Emergency Deficit Control 
Act of 1985 is amended by adding at the end the following new 
subsections:
    ``(f) Special Rule on Interrelationship Between Sections 251(c) and 
252.--If legislation is enacted that--
            ``(1) reduces receipts; and
            ``(2) decreases the discretionary spending limits for 
        budget authority and outlays for the fiscal years set forth in 
        section 251(c) of the Balanced Budget and Emergency Deficit 
        Control Act of 1985 for which there is such a reduction in 
        receipts;
then, for purposes of subsection (b), an amount equal to that decrease 
in the discretionary spending limit for outlays shall be treated as 
direct spending legislation decreasing the deficit for that fiscal 
year.
    ``(g) Special Rule for Treatment of Budget Surpluses.--For purposes 
of subsection (b), the amount, if any, designated by OMB in the pay-as-
you-go sequestration preview report as the projected budget surplus for 
the current year shall be treated for purposes of offsetting any 
receipts legislation as direct spending legislation decreasing the 
deficit for that fiscal year.''.

SEC. 1002. ADDITIONAL REPORTING REQUIREMENT.

    Section 254(c)(3) of the Balanced Budget and Emergency Deficit 
Control Act of 1985 is amended by adding at the end the following new 
subparagraph:
                    ``(D) The projected budget surplus, if any.''.
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