109 HR 1500 IH: Investment Tax Simplification Act of 2005 U.S. House of Representatives 2005-04-06 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 1500 IN THE HOUSE OF REPRESENTATIVES April 6, 2005 Mr. Dreier (for himself and Mr. English of Pennsylvania) 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 make the 2003 reduction in the individual capital gains tax rates permanent and to further reduce and simplify such rates and to reduce the corporate capital gains rate.

1.

Short title

This Act may be cited as the Investment Tax Simplification Act of 2005.

2.

Permanent reduction in capital gains rates for individuals and corporations

(a)

Repeal of sunset of reduction in capital gains rates for individuals

Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 shall not apply to section 301 of such Act. (b)

Further reduction in and simplification of capital gains rates for individuals

(1)

In general

Paragraph (1) of section 1(h) of the Internal Revenue Code of 1986 is amended to read as follows: (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 at the rates and in the same manner as if this subsection had not been enacted on taxable income reduced by the net capital gain, and (B)15 percent of the excess (if any) of— (i)the net capital gain (or, if less, taxable income), over (ii)the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 25 percent.. (2)

Alternative minimum tax

Paragraph (3) of section 55(b) of such Code is amended to read as follows: (3)

Maximum rate of tax on net capital gain of noncorporate taxpayers

The amount determined under the first sentence of paragraph (1)(A)(i) shall not exceed the sum of— (A)the amount determined under such first sentence computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the net capital gain, plus (B)the amount determined under section 1(h)(1)(B).. (3)

Conforming amendments

(A) (i)Subsection (h) of section 1 of such Code is amended by striking paragraphs (3) through (8) and by redesignating paragraphs (9), (10), and (11) as paragraphs (3), (4), and (5), respectively. (ii)Sections 163(d)(4)(B), 854(b)(5), and 857(c)(2)(D) of such Code are each amended by striking section 1(h)(11)(B) and inserting section 1(h)(5)(B). (iii)Sections 301(f)(4), 306(a)(1)(D), 584(c), 702(a)(5), 854(a), and 854(b)(2) of such Code are each amended by striking section 1(h)(11) and inserting section 1(h)(5). (iv)The heading of section 857(c)(2) of such Code is amended by striking Section 1(h)(11) and inserting Section 1(h)(5). (B)Section 4985(a)(1) of such Code is amended by striking section 1(h)(1)(C) and inserting section 1(h)(1)(B). (c)

Reduced capital gains rate for corporations

(1)

In general

Section 1201 of such Code is amended by striking 35 percent both places it appears and inserting 15 percent. (2)

Alternative minimum tax

Section 55(b) of such Code is amended by adding at the end the following new paragraph: (4)

Maximum rate of tax on net capital gain of corporations

The amount determined under paragraph (1)(B)(i) shall not exceed the sum of— (A)the amount determined under such paragraph computed at the rates and in the same manner as if this paragraph had not been enacted on the taxable excess reduced by the net capital gain, plus (B)the amount determined under section 1201.. (3)

Technical amendments

(A)Section 1445(e)(1) of such Code is amended by striking 35 percent (or, to the extent provided in regulations, 15 percent) and inserting 15 percent. (B)Section 1445(e)(2) of such Code is amended by striking 35 percent and inserting 15 percent. (C)Section 7518(g)(6)(A) of such Code is amended by striking (34 percent in the case of a corporation). (D)Section 607(h)(6)(A) of the Merchant Marine Act, 1936 is amended by striking (34 percent in the case of a corporation). (d)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. (2)

Withholding

The amendment made by subsection (c)(3)(B) shall apply to amounts paid after the date of the enactment of this Act.