[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2305 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2305

   To amend the Internal Revenue Code of 1986 to reduce the marriage 
penalty by providing a nonrefundable marriage credit and adjustment to 
                       the earned income credit.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 28, 2000

   Mr. Bayh introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to reduce the marriage 
penalty by providing a nonrefundable marriage credit and adjustment to 
                       the earned income credit.

    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 ``Targeted Marriage 
Tax Penalty Relief Act of 2000''.
    (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 2 shall 
be treated as a change in a rate of tax for purposes of section 15 of 
the Internal Revenue Code of 1986 .

SEC. 2. MARRIAGE CREDIT.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25A the following new section:

``SEC. 25B. MARRIAGE CREDIT.

    ``(a) Allowance of Credit.--In the case of a joint return under 
section 6013, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount equal to the 
lesser of the amount determined under subsection (b) or (c) for the 
taxable year.
    ``(b) Amount Under Subsection (b).--For purposes of subsection (a), 
the amount under this subsection for any taxable year with respect to a 
taxpayer is determined in accordance with the following table:

``Taxable year:                                                 Amount:
    2001..........................................                $500 
    2002..........................................                $750 
    2003..........................................              $1,000 
    2004..........................................              $1,250 
    2005 and thereafter...........................              $1,500.
    ``(c) Determination of Amount.--
            ``(1) In general.--For purposes of subsection (a), the 
        amount determined under this subsection for any taxable year 
        with respect to a taxpayer is equal to the excess (if any) of--
                    ``(A) the joint tentative tax of such taxpayer for 
                such year, over
                    ``(B) the combined tentative tax of such taxpayer 
                for such year.
            ``(2) Joint tentative tax.--For purposes of paragraph 
        (1)(A)--
                    ``(A) In general.--The joint tentative tax of a 
                taxpayer for any taxable year is equal to the tax 
                determined in accordance with the table contained in 
                section 1(a) on the joint tentative taxable income of 
                the taxpayer for such year.
                    ``(B) Joint tentative taxable income.--For purposes 
                of subparagraph (A), the joint tentative taxable income 
                of a taxpayer for any taxable year is equal to the 
                excess of--
                            ``(i) the earned income (as defined in 
                        section 32(c)(2)) of such taxpayer for such 
                        year, over
                            ``(ii) the sum of--
                                    ``(I) the standard deduction for 
                                such taxpayer for such year determined 
                                under section 63(c)(2)(A)(i), and
                                    ``(II) the total exemption amount 
                                for such taxpayer for such year 
                                determined under section 151.
            ``(3) Combined tentative tax.--For purposes of paragraph 
        (1)(A)--
                    ``(A) In general.--The combined tentative tax of a 
                taxpayer for any taxable year is equal to the sum of 
                the taxes determined in accordance with the table 
                contained in section 1(c) on the individual tentative 
                taxable income of each spouse for such year.
                    ``(B) Individual tentative taxable income.--For 
                purposes of subparagraph (A), the individual tentative 
                taxable income of a spouse for any taxable year is 
                equal to the excess of--
                            ``(i) the earned income (as defined in 
                        section 32(c)(2)) of such spouse for such year, 
                        over
                            ``(ii) the sum of--
                                    ``(I) the standard deduction for 
                                such spouse for such year determined 
                                under section 63(c)(2)(C), and
                                    ``(II) one-half of the total 
                                exemption amount determined under 
                                paragraph (2)(B)(ii)(II) for such year.
    ``(d) Phaseout of Credit.--
            ``(1) In general.--The amount which would (but for this 
        subsection) be taken into account under subsection (a) shall be 
        reduced (but not below zero) by the amount determined under 
        paragraph (2).
            ``(2) Amount of reduction.--The amount determined under 
        this paragraph is the amount which bears the same ratio to the 
        amount which would be so taken into account as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's adjusted gross income 
                        for such taxable year, over
                            ``(ii) $100,000, bears to
                    ``(B) $20,000.
    ``(e) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning after 2005, the $1,500 amount referred to in 
        subsection (b) and the $100,000 amount referred to in 
        subsection (d)((2)(A)(ii) 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 the calendar year in which 
                the taxable year begins, by substituting `2004' for 
                `1992'.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $20, such amount shall be rounded to 
        the nearest multiple of $20.''.
    (b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25A the following new item:

                              ``Sec. 25B. Marriage credit.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 3. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

    (a) In General.--Section 32(b) (relating to percentages and 
amounts) is amended--
            (1) by striking ``Percentages.--The credit'' in paragraph 
        (1) and inserting ``Percentages.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                credit'',
            (2) by adding at the end of paragraph (1) the following new 
        subparagraph:
                    ``(B) Joint returns.--In the case of a joint 
                return, the phaseout percentage determined under 
                subparagraph (A)--
                            ``(i) in the case of an eligible individual 
                        with 1 qualifying child shall be increased by 
                        3.196 percentage points, and
                            ``(ii) in the case of an eligible 
                        individual with 2 or more qualifying child 
                        shall be increased by 4.212 percentage 
                        points.'',
            (3) by striking ``amounts.--The earned'' in paragraph (2) 
        and inserting ``amounts.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                earned'', and
            (4) by adding at the end the following new subparagraph:
                    ``(B) Joint returns.--In the case of a joint 
                return, the phaseout amount determined under 
                subparagraph (A) shall be increased by $2,000.''.
    (b) Inflation Adjustment.--Paragraph (1)(B) of section 32(j) 
(relating to inflation adjustments) is amended to read as follows:
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined--
                            ``(i) in the case of amounts in subsections 
                        (b)(2)(A) and (i)(1), by substituting `calendar 
                        year 1995' for `calendar year 1992' in 
                        subparagraph (B) thereof, and
                            ``(ii) in the case of the $2,000 amount in 
                        subsection (b)(2)(B), by substituting `calendar 
                        year 2000' for `calendar year 1992' in 
                        subparagraph (B) of such section 1.''.
    (c) Rounding.--Section 32(j)(2)(A) (relating to rounding) is 
amended by striking ``subsection (b)(2)'' and inserting ``subsection 
(b)(2)(A) (after being increased under subparagraph (B) thereof)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.
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