[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 96 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 96

 To repeal the sunset of the provisions of the Economic Growth and Tax 
       Relief Reconciliation Act of 2001, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 7, 2003

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

_______________________________________________________________________

                                 A BILL


 
 To repeal the sunset of the provisions of the Economic Growth and Tax 
       Relief Reconciliation Act of 2001, 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.

    This Act may be cited as the ``Contract With Investors''.

SEC. 2. REPEAL OF SUNSET.

    Title IX of the Economic Growth and Tax Relief Reconciliation Act 
of 2001 (Public Law 107-16) is repealed.

SEC. 3. ACCELERATION OF INDIVIDUAL INCOME TAX RATE REDUCTIONS.

    (a) In General.--The table contained in section 1(i)(2) of the 
Internal Revenue Code of 1986 (relating to reductions in rates after 
June 30, 2001) is amended--
            (1) by striking ``and 2003'',
            (2) by striking ``2004 and 2005'' and inserting ``2003'', 
        and
            (3) by striking ``2006'' and inserting ``2004''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 4. REPEAL OF ESTATE AND GENERATION-SKIPPING TRANSFER TAXES 
              ACCELERATED TO 2005.

    (a) Estate Tax Repeal.--Section 2210 of the Internal Revenue Code 
of 1986 (relating to termination) is amended--
            (1) by striking ``December 31, 2009'' and inserting 
        ``December 31, 2004'' both places it appears,
            (2) by striking ``January 1, 2010'' in subsection (b) and 
        inserting ``January 1, 2005'', and
            (3) by striking ``December 31, 2020'' in subsection (b)(1) 
        and inserting ``December 31, 2014''.
    (b) Generation-Skipping Transfer Tax Repeal.--Section 2664 of such 
Code (relating to termination) is amended by striking ``December 31, 
2009'' and inserting ``December 31, 2004''.
    (c) Conforming Amendments.--
            (1) The table contained in section 2010(c) of such Code is 
        amended--
                    (A) by striking ``and 2005'',
                    (B) by inserting a period after ``$1,500,000'', and
                    (C) by striking the last 2 items.
            (2) Section 1014(f) of such Code is amended by striking 
        ``December 31, 2009'' and inserting ``December 31, 2004''.
            (3) Section 1022 of such Code is amended--
                    (A) by striking ``December 31, 2009'' in the 
                heading and in subsection (a)(1) and inserting 
                ``December 31, 2004'', and
                    (B) in subsection (d)(4)(A)--
                            (i) by striking ``2010'' and inserting 
                        ``2005'',
                            (ii) by striking ``2009'' in clause (ii) 
                        and inserting ``2004''.
            (4) The table contained in section 2001(c)(2)(B) of such 
        Code is amended--
                    (A) by inserting a period after ``48 percent'', and
                    (B) by striking the last 3 items.
            (5) Section 2001(c)(2)(A) of such Code is amended by 
        striking ``2010'' and inserting ``2005''.
            (6) The item in the table of sections for part II of 
        subchapter O of chapter 1 of such Code relating to section 1022 
        is amended by striking ``December 31, 2009'' and inserting 
        ``December 31, 2004''.
            (7) Section 501(d) of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001 (Public Law 107-16) is amended by 
        striking ``December 31, 2009'' and inserting ``December 31, 
        2004''.
            (8) Paragraph (3) of section 511(f) of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 (Public Law 107-16) 
        is amended by striking ``December 31, 2009'' and inserting 
        ``December 31, 2004''.
            (9) Paragraph (2) of section 521(e) of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 (Public Law 107-16) 
        is amended by striking ``December 31, 2009'' and inserting 
        ``December 31, 2004''.
            (10) Subsection (f) of section 542 of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 (Public Law 107-16) 
        is amended by striking ``December 31, 2009'' each place it 
        appears and inserting ``December 31, 2004''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 5. REDUCTION OF MAXIMUM CAPITAL GAINS RATES FOR INDIVIDUALS.

    (a) In General.--Section 1(h) of the Internal Revenue Code of 1986 
(relating to maximum capital gains rate) is amended to read as follows:
    ``(h) Maximum Capital Gains Rate.--
            ``(1) In general.--If a taxpayer has a net capital gain for 
        any taxable year, the tax imposed by this section for such 
        taxable year shall not exceed the sum of--
                    ``(A) a tax computed on taxable income reduced by 
                the net capital gain, at the rates and in the same 
                manner as if this subsection had not been enacted, plus
                    ``(B) 10 percent of the taxpayer's net capital gain 
                (or, if less, taxable income).
            ``(2) Net capital gain taken into account as investment 
        income.--For purposes of this subsection, the net capital gain 
        for any taxable year shall be reduced (but not below zero) by 
        the amount which the taxpayer elects to take into account as 
investment income for the taxable year under section 
163(d)(4)(B)(iii).''.
    (b) Minimum Tax.--
            (1) In general.--Subparagraph (A) of section 55(b)(1) of 
        the Internal Revenue Code of 1986 (relating to amount of 
        tentative tax) is amended by redesignating clauses (ii) and 
        (iii) as clauses (iii) and (iv), respectively, and by inserting 
        after clause (i) the following new clause:
                            ``(ii) Maximum rate of tax on net capital 
                        gain.--The amount determined under the first 
                        sentence of clause (i) shall not exceed the sum 
                        of--
                                    ``(I) the amount determined under 
                                such first sentence computed at the 
                                rates and in the same manner as if this 
                                clause had not been enacted on the 
                                taxable excess reduced by the net 
                                capital gain, plus
                                    ``(II) a tax of 10 percent of the 
                                lesser of the net capital gain or the 
                                taxable excess.''.
            (2) Conforming amendment.--Section 55(b) of such Code is 
        amended by striking paragraph (3).
    (c) Conforming Amendments.--
            (1) Section 57(a)(7) of the Internal Revenue Code of 1986 
        is amended by striking the last sentence.
            (2) Paragraph (1) of section 1445(e) of such Code is 
        amended by striking ``20 percent'' and inserting ``10 
        percent''.
            (3)(A) The second sentence of section 7518(g)(6)(A) of such 
        Code is amended by striking ``20 percent'' and inserting ``10 
        percent''.
            (B) The second sentence of section 607(h)(6)(A) of the 
        Merchant Marine Act, 1936 is amended by striking ``20 percent'' 
        and inserting ``10 percent''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 2002.
            (2) Withholding.--The amendment made by subsection (c)(2) 
        shall apply to amounts paid after December 31, 2002.

SEC. 6. INCREASE IN LIMITATION ON CAPITAL LOSSES APPLICABLE TO 
              INDIVIDUALS.

    (a) In General.--Paragraph (1) of section 1211(b) of the Internal 
Revenue Code of 1986 (relating to limitation on capital losses for 
taxpayers other than corporations) is amended by striking ``$3,000 
($1,500'' and inserting ``$10,000 ($5,000''.
    (b) Adjustment for Inflation.--Section 1211 of the Internal Revenue 
Code of 1986 (relating to limitation on capital losses) is amended by 
adding at the end the following new subsection:
    ``(c) Adjustment for Inflation.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 2003, the $10,000 and $5,000 
        amounts contained in subsection (b)(1) shall each be increased 
        by an amount equal to--
                    ``(A)(i) such 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 
                2002' for `calendar year 1992' in subparagraph (B) 
                thereof.
                    ``(B) Rounding.--If any increase determined under 
                paragraph (1) is not a multiple of $5, such increase 
                shall be rounded to the next highest multiple of $5.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 7. ACCELERATION OF INCREASE IN CONTRIBUTIONS TO CERTAIN RETIREMENT 
              PLANS.

    (a) IRAs.--
            (1) In general.--Subparagraph (A) of section 219(b)(5) of 
        the Internal Revenue Code of 1986 (defining deductible amount) 
        is amended to read as follows:
                    ``(A) The deductible amount shall be $5,000.''.
            (2) Inflation adjustment.--Section 219(b)(5)(C) of such 
        Code is amended--
                    (A) by striking ``2008'' and inserting ``2003'', 
                and
                    (B) by striking ``2007'' and inserting ``2002''.
    (b) 401(k) Plans.--
            (1) In general.--Paragraph (1) of section 402(g) of such 
        Code is amended--
                    (A) by striking ``the applicable dollar amount'' in 
                subparagraph (A) and inserting ``$15,000'',
                    (B) by striking subparagraph (B),
                    (C) by redesignating subparagraph (C) as 
                subparagraph (B), and
                    (D) by striking ``the applicable dollar amount 
                under subparagraph (B)'' in subparagraph (B) (as 
                redesignated by subparagraph (C)) and inserting ``the 
                dollar amount in subparagraph (A)''.
            (2) Inflation adjustment.--Section 402(g)(4) of such Code 
        is amended--
                    (A) by striking ``2006'' and inserting ``2003'', 
                and
                    (B) by striking ``2005'' and inserting ``2002''.
            (3) Conforming amendment.--Section 401(a)(30) of such Code 
        is amended by striking ``section 402(g)(1)(A)'' and inserting 
        ``section 402(g)(1)''.
    (c) 457 Plans.--
            (1) In general.--Subparagraph (A) of section 457(b)(2) of 
        such Code is amended by striking ``the applicable dollar 
        amount'' and inserting ``$15,000''.
            (2) Inflation adjustment.--Section 457(e)(15) of such Code 
        is amended to read as follows:
            ``(15) Cost-of-living adjustment.--In the case of taxable 
        years beginning after December 31, 2003, the Secretary shall 
        adjust the $15,000 amount under subsection (b)(2)(A) at the 
        same time and in the same manner as under section 415(d), 
        except that the base period shall be the calendar quarter 
        beginning July 1, 2002, and any increase under this paragraph 
        which is not a multiple of $500 shall be rounded to the next 
        lowest multiple of $500.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 8. AGE FOR BEGINNING MANDATORY DISTRIBUTIONS INCREASED TO 75.

    (a) Qualified Pension Plans.--Subparagraphs (B)(iv) and (C) of 
section 401(a)(9) of the Internal Revenue Code of 1986 (relating to 
required distributions) are each amended by striking ``70\1/2\'' each 
place it appears and inserting ``75''.
    (b) Individual Retirement Plans.--
            (1) Paragraph (1) of section 219(d) of such Code is 
        amended--
                    (A) by striking ``70\1/2\'' in the text and 
                inserting ``75'', and
                    (B) by striking ``70\1/2\'' in the heading and 
                inserting ``75''.
            (2) Subsection (b) of section 408 of such Code is amended 
        by striking ``70\1/2\'' and inserting ``75''.
    (c) Roth IRA's.--Paragraph (4) of section 408A(c) of such Code is 
amended--
            (1) by striking ``70\1/2\'' in the text and inserting 
        ``75'', and
            (2) by striking ``70\1/2\'' in the heading and inserting 
        ``75''.
    (d) Section 457  Plans.--Clause (i) of section 457(d)(1)(A) of such 
Code is amended by striking ``70\1/2\'' and inserting ``75''.
    (e) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2002.

SEC. 9. EXCLUSION OF DIVIDEND INCOME FROM TAX.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by inserting after section 115 
the following new section:

``SEC. 116. EXCLUSION OF DIVIDENDS RECEIVED BY INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income does not include 
100 percent of the amounts received during the taxable year by an 
individual as dividends from domestic, publicly traded, C corporations 
(within the meaning of section 1297(f)(3)).
    ``(b) Certain Dividends Excluded.--Subsection (a) shall not apply 
to any dividend from a corporation which, for the taxable year of the 
corporation in which the distribution is made, or for the next 
preceding taxable year of the corporation, is a corporation exempt from 
tax under section 501 (relating to certain charitable, etc., 
organization) or section 521 (relating to farmers' cooperative 
associations).
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Exclusion not to apply to capital gain dividends from 
        regulated investment companies and real estate investment 
        trusts.--For treatment of capital gain dividends, see sections 
        854(a) and 857(c).
            ``(2) Certain nonresident aliens ineligible for 
        exclusion.--In the case of a nonresident alien individual, 
        subsection (a) shall apply only--
                    ``(A) in determining the tax imposed for the 
                taxable year pursuant to section 871(b)(1) and only in 
                respect of dividends which are effectively connected 
                with the conduct of a trade or business within the 
                United States, or
                    ``(B) in determining the tax imposed for the 
                taxable year pursuant to section 877(b).
            ``(3) Dividends from employee stock ownership plans.--
        Subsection (a) shall not apply to any dividend described in 
        section 404(k).''.
    (b) Conforming Amendments.--
            (1)(A) Subparagraph (A) of section 135(c)(4) of such Code 
        is amended by inserting ``116,'' before ``137''.
            (B) Subsection (d) of section 135 of such Code is amended 
        by redesignating paragraph (4) as paragraph (5) and by 
        inserting after paragraph (3) the following new paragraph:
            ``(4) Coordination with section 116.--This section shall be 
        applied before section 116.''.
            (2) Subsection (c) of section 584 of such Code is amended 
        by adding at the end thereof the following new flush sentence:
``The proportionate share of each participant in the amount of 
dividends received by the common trust fund and to which section 116 
applies shall be considered for purposes of such section as having been 
received by such participant.''.
            (3) Subsection (a) of section 643 of such Code is amended 
        by redesignating paragraph (7) as paragraph (8) and by 
        inserting after paragraph (6) the following new paragraph:
            ``(7) Dividends.--There shall be included the amount of any 
        dividends excluded from gross income pursuant to section 
        116.''.
            (4) Section 854(a) of such Code is amended by inserting 
        ``section 116 (relating to exclusion of dividends received by 
        individuals) and'' after ``For purposes of''.
            (5) Section 857(c) of such Code is amended to read as 
        follows:
    ``(c) Restrictions Applicable to Dividends Received From Real 
Estate Investment Trusts.--
            ``(1) Treatment for section 116.--For purposes of section 
        116 (relating to exclusion of dividends received by 
        individuals), a capital gain dividend (as defined in subsection 
        (b)(3)(C)) received from a real estate investment trust which 
        meets the requirements of this part shall not be considered as 
        a dividend.
            ``(2) Treatment for section 243.--For purposes of section 
        243 (relating to deductions for dividends received by 
        corporations), a dividend received from a real estate 
        investment trust which meets the requirements of this part 
        shall not be considered as a dividend.''.
            (6) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 115 the following new item:

                              ``Sec. 116. Exclusion of dividends 
                                        received by individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 10. SENSE OF THE SENATE REGARDING A CONTRACT WITH INVESTORS.

    It is the sense of the Senate that--
            (1) Congress should pass legislation to safeguard American 
        workers' pension and retirement accounts,
            (2) Congress should modernize this country's international 
        tax provisions in order to permit United States companies to 
        better compete internationally,
            (3) Congress should repeal redundant, outdated, and 
        unscientific regulatory burdens on investors and United States 
        companies and perform a cost benefit analysis before enacting 
        new burdens on United States businesses and investors,
            (4) Congress should enact meaningful tort reform, and
            (5) Congress should enact meaningful tax reform that 
        simplifies the Federal tax code and reduces the cost recovery 
        periods that businesses are forced to use to recover the costs 
        of capital.
                                 <all>