1.Short title; table of
contents
(a)This Act may be cited as the Tax Simplification Act of
2005
.
(b)
Sec. 1. Short title; table of
contents.
Title I—Tax reduction and
simplification
Sec. 101. Individual income
tax.
Sec. 102. Tax on business
activities.
Sec. 103. Simplification of rules relating
to qualified retirement plans.
Sec. 104. Repeal of alternative minimum
tax.
Sec. 105. Repeal of credits.
Sec. 106. Repeal of estate and gift taxes
and obsolete income tax provisions.
Sec. 107. Effective date.
Title II—Supermajority required for tax
changes
Sec. 201. Supermajority
required.
<enum>I</enum><header>Tax
reduction and simplification</header>
<section id="IDCF06EB21ACAA407584DF077BED22A829"><enum>101.</enum><header>Individual
income tax</header>
<subsection id="ID72CD0A2A760C40FCA46153D30023B82E"><enum>(a)</enum><header>In
general</header><text>Section 1 of the Internal Revenue Code of 1986 is amended
to read as follows:</text>
<quoted-block id="ID593DE2207D524ABBAD2962D3C51BAF94">
<section id="ID714771B8D5A84C3CA1C414656F9E12D5" section-type="section-one"><enum>1.</enum><header>Tax imposed</header><text display-inline="no-display-inline">There is hereby imposed on the taxable
income of every individual a tax equal to 19 percent (17 percent in the case of
taxable years beginning after December 31, 2007) of the taxable income of such
individual for such taxable
year.</text>
</section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID4637FAA1C98444799B0095258B77CCE9"><enum>(b)</enum><header>Taxable
income</header><text>Section 63 of such Code is amended to read as
follows:</text>
<quoted-block id="ID40C4DADF78894F27B154FB7FD63EF1FA">
<section id="ID664380E6818D42F1BDF992EBC1FC2D42"><enum>63.</enum><header>Taxable
income</header>
<subsection id="ID0F8DAD2EF1ED4BD1801E7D00F9990049"><enum>(a)</enum><header>In
general</header><text>For purposes of this subtitle, the term <term>taxable
income</term> means the excess of—</text>
<paragraph id="IDC11FC81DD03846CD9299394E2D066E08"><enum>(1)</enum><text>the sum
of—</text>
<subparagraph id="IDCAAE4E327C18449189DB9642942B5B99"><enum>(A)</enum><text>wages (as defined
in section 3121(a) without regard to paragraph (1) thereof) which are paid in
cash and which are received during the taxable year for services performed in
the United States,</text>
</subparagraph><subparagraph id="ID34C53E6B6363458EA6633059199C2B4E"><enum>(B)</enum><text>retirement
distributions which are includible in gross income for such taxable year,
plus</text>
</subparagraph><subparagraph id="ID2A1D1B88525F4CB39488ADABCC3B9D37"><enum>(C)</enum><text>amounts received
under any law of the United States or of any State which is in the nature of
unemployment compensation, over</text>
</subparagraph></paragraph><paragraph id="ID0C7E09CB5D564B8EA5D2BE967961007B"><enum>(2)</enum><text>the standard
deduction.</text>
</paragraph></subsection><subsection id="ID6E949031B18A4753B0AC8D083C878127"><enum>(b)</enum><header>Standard
deduction</header>
<paragraph id="ID4EC55E70F1264B1500D650434CDC6B93"><enum>(1)</enum><header>In
general</header><text>For purposes of this subtitle, the term <term>standard
deduction</term> means the sum of—</text>
<subparagraph id="IDB7CC35D4299E49B68C64B76C44E15BA4"><enum>(A)</enum><text>the basic
standard deduction, plus</text>
</subparagraph><subparagraph id="ID04AE20525B9A47FE93CEFEE12C217F6B"><enum>(B)</enum><text>the additional
standard deduction.</text>
</subparagraph></paragraph><paragraph id="ID2076D843A95844CF81BDCE00525C51EF"><enum>(2)</enum><header>Basic standard
deduction</header><text>For purposes of paragraph (1), the basic standard
deduction is—</text>
<subparagraph id="IDCD215C1B5ECF40E695A5E9B338C603BA"><enum>(A)</enum><text>$25,580 in the
case of—</text>
<clause id="ID8D8F694034FB47BBBFAAB19BBB57A76E"><enum>(i)</enum><text>a
joint return, or</text>
</clause><clause id="ID1485AECBD61D45FF891124E38DF1E8A1"><enum>(ii)</enum><text>a surviving
spouse (as defined in section 2(a)),</text>
</clause></subparagraph><subparagraph id="ID838901109C0341338100CD7E3B5C97C9"><enum>(B)</enum><text>$16,330 in the
case of a head of household (as defined in section 2(b)), and</text>
</subparagraph><subparagraph id="ID66C2B57BAB3343429EEBCA1BE4BCEFD8"><enum>(C)</enum><text>$12,790 in the
case of an individual—</text>
<clause id="IDC5582F702CAD4BEC9883040700AB1415"><enum>(i)</enum><text>who is not
married and who is not a surviving spouse or head of household, or</text>
</clause><clause id="ID2F1DC933F7E04A2AB7C500EE760002A5"><enum>(ii)</enum><text>who is a married
individual filing a separate return.</text>
</clause></subparagraph></paragraph><paragraph id="ID1AFB9DDBC2FD42FDAE23A0A53FFEA3B0"><enum>(3)</enum><header>Additional
standard deduction</header><text>For purposes of paragraph (1), the additional
standard deduction is $5,510 for each dependent (as defined in section 152) who
is described in section 151(c) for the taxable year and who is not required to
file a return for such taxable year.</text>
</paragraph></subsection><subsection id="ID18242CB2D49D46ECAFF6CE5138532400"><enum>(c)</enum><header>Retirement
distributions</header><text>For purposes of subsection (a), the term
<term>retirement distribution</term> means any distribution from—</text>
<paragraph id="ID36A8C322EBFB4EC8B89CEA1328185476"><enum>(1)</enum><text>a plan described
in section 401(a) which includes a trust exempt from tax under section
501(a),</text>
</paragraph><paragraph id="ID21C334CF692742C08698C8A9008CAB3F"><enum>(2)</enum><text>an annuity plan
described in section 403(a),</text>
</paragraph><paragraph id="ID2B06D33F6DAF4C7EA8C5C64E0295E1DF"><enum>(3)</enum><text>an annuity
contract described in section 403(b),</text>
</paragraph><paragraph id="ID69BE0650E1A046EC00C7A28117B742C3"><enum>(4)</enum><text>an individual
retirement account described in section 408(a),</text>
</paragraph><paragraph id="ID3CB1040F8D8642269C92EA399EC8A978"><enum>(5)</enum><text>an individual
retirement annuity described in section 408(b),</text>
</paragraph><paragraph id="IDF8295A4E695E42AC845167A9D9009DA4"><enum>(6)</enum><text>an eligible
deferred compensation plan (as defined in section 457),</text>
</paragraph><paragraph id="ID1A42C7DA3CB64242840044A02B59E7C4"><enum>(7)</enum><text>a governmental
plan (as defined in section 414(d)), or</text>
</paragraph><paragraph id="IDF6A494E22F84416BBFB14725DF882C51"><enum>(8)</enum><text>a trust described
in section 501(c)(18).</text>
</paragraph><continuation-text continuation-text-level="subsection">Such term
includes any plan, contract, account, annuity, or trust which, at any time, has
been determined by the Secretary to be such a plan, contract, account, annuity,
or trust.</continuation-text></subsection><subsection id="ID935E77A71DFE49C4AC7DCFD3BE460902"><enum>(d)</enum><header>Income of
certain children</header><text>For purposes of this subtitle—</text>
<paragraph id="ID2216E6468C40432E899C59DE00C019E6"><enum>(1)</enum><text>an individual’s
taxable income shall include the taxable income of each dependent child of such
individual who has not attained age 14 as of the close of such taxable year,
and</text>
</paragraph><paragraph id="ID14220D4318484683A35E825B3057122E"><enum>(2)</enum><text>such dependent
child shall have no liability for tax imposed by section 1 with respect to such
income and shall not be required to file a return for such taxable year.</text>
</paragraph></subsection><subsection id="IDB9C28F4EB56445AEA690FFA45CF21B5B"><enum>(e)</enum><header>Inflation
adjustment</header>
<paragraph id="ID0ABB8F0CCE454D3A9CA3D5FB6712DFC5"><enum>(1)</enum><header>In
general</header><text>In the case of any taxable year beginning in a calendar
year after 2006, each dollar amount contained in subsection (b) shall be
increased by an amount determined by the Secretary to be equal to—</text>
<subparagraph id="IDD043862FFF794E7EA0C5CAE78F6FC131"><enum>(A)</enum><text>such dollar
amount, multiplied by</text>
</subparagraph><subparagraph id="ID10CED255101243AB871F096C40C6717B"><enum>(B)</enum><text>the
cost-of-living adjustment for such calendar year.</text>
</subparagraph></paragraph><paragraph id="ID77D19382ED704EF2A9F9ABF0B3C9C3AD"><enum>(2)</enum><header>Cost-of-living
adjustment</header><text>For purposes of paragraph (1), the cost-of-living
adjustment for any calendar year is the percentage (if any) by which—</text>
<subparagraph id="ID1EA392ED244A401DA200EB7DECFF8BEE"><enum>(A)</enum><text>the CPI for the
preceding calendar year, exceeds</text>
</subparagraph><subparagraph id="ID07F47FC717304A87A5450538B26DD7B4"><enum>(B)</enum><text>the CPI for the
calendar year 2005.</text>
</subparagraph></paragraph><paragraph id="ID91B59741992740E782C317D77821B105"><enum>(3)</enum><header>CPI for any
calendar year</header><text>For purposes of paragraph (2), the CPI for any
calendar year is the average of the Consumer Price Index as of the close of the
12-month period ending on August 31 of such calendar year.</text>
</paragraph><paragraph id="ID5C5934EFB5014BD2BAE2D7AD11AA177B"><enum>(4)</enum><header>Consumer Price
Index</header><text>For purposes of paragraph (3), the term <term>Consumer
Price Index</term> means the last Consumer Price Index for all-urban consumers
published by the Department of Labor. For purposes of the preceding sentence,
the revision of the Consumer Price Index which is most consistent with the
Consumer Price Index for calendar year 1986 shall be used.</text>
</paragraph><paragraph id="IDD8A15CB863AB4DFF8D004B6CF2368476"><enum>(5)</enum><header>Rounding</header><text>If
any increase determined under paragraph (1) is not a multiple of $10, such
increase shall be rounded to the next highest multiple of $10.</text>
</paragraph></subsection><subsection id="IDB5842E1F9FBD44DEA03EBD83F4DF7BC0"><enum>(f)</enum><header>Marital
status</header><text>For purposes of this section, marital status shall be
determined under section
7703.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="ID71C0FD97BB1C4A4186E04D5080A4DB36"><enum>102.</enum><header>Tax on
business activities</header>
<subsection id="ID27291820F8BB4E3B83EE4C9FF93C1641"><enum>(a)</enum><header>In
general</header><text>Section 11 of the Internal Revenue Code of 1986 (relating
to tax imposed on corporations) is amended to read as follows:</text>
<quoted-block id="ID12FAE163185246779B656540005287B9">
<section id="ID0AE0F67FE9E047F4A39346DF50D59879"><enum>11.</enum><header>Tax imposed on
business activities</header>
<subsection id="IDEF04C9D2214540A69C07EB9E3DCC9DBA"><enum>(a)</enum><header>Tax
imposed</header><text>There is hereby imposed on every person engaged in a
business activity a tax equal to 19 percent (17 percent in the case of taxable
years beginning after December 31, 2007) of the business taxable income of such
person.</text>
</subsection><subsection id="ID19B2BBD34ABA465292975DC55CB231C7"><enum>(b)</enum><header>Liability for
tax</header><text>The tax imposed by this section shall be paid by the person
engaged in the business activity, whether such person is an individual,
partnership, corporation, or otherwise.</text>
</subsection><subsection id="IDD00973A2ACF64063967D33DF7EA4FB6C"><enum>(c)</enum><header>Business
taxable income</header><text>For purposes of this section—</text>
<paragraph id="ID53E8EB26527B426DBAD9C3F47584DD56"><enum>(1)</enum><header>In
general</header><text>The term <term>business taxable income</term> means gross
active income reduced by the deductions specified in subsection (d).</text>
</paragraph><paragraph id="IDDB52D8BD6D6D4B14BD37D08CAEF8CD02"><enum>(2)</enum><header>Gross active
income</header>
<subparagraph id="IDFAE2689D9DF64E6785AA691FB0E7BE29"><enum>(A)</enum><header>In
general</header><text>For purposes of paragraph (1), the term <term>gross
active income</term> means gross receipts from—</text>
<clause id="ID6EABB704D02D44C4A34060AD7674215C"><enum>(i)</enum><text>the sale or
exchange of property or services in the United States by any person in
connection with a business activity, and</text>
</clause><clause id="ID52B8F61B416B40AEA8BA0028DC28F421"><enum>(ii)</enum><text>the export of
property or services from the United States in connection with a business
activity.</text>
</clause></subparagraph><subparagraph id="IDD491FD39A557435CA86180ECE8466BF6"><enum>(B)</enum><header>Exchanges</header><text>For
purposes of this section, the amount treated as gross receipts from the
exchange of property or services is the fair market value of the property or
services received, plus any money received.</text>
</subparagraph><subparagraph id="IDA0E81B9618DA4C56A4BE0209EB09AD28"><enum>(C)</enum><header>Coordination
with special rules for financial services, etc</header><text>Except as provided
in subsection (e)—</text>
<clause id="IDF644BFCF34F8443DBAB9B84206754079"><enum>(i)</enum><text>the term
<term>property</term> does not include money or any financial instrument,
and</text>
</clause><clause id="ID51C7ED730D4E49280074B6D05053B784"><enum>(ii)</enum><text>the term
<term>services</term> does not include financial services.</text>
</clause></subparagraph></paragraph><paragraph id="ID6C9B152CAD1649209DF364DC59BE8020"><enum>(3)</enum><header>Exemption from
tax for activities of governmental entities and Tax-Exempt
organizations</header><text>For purposes of this section, the term
<term>business activity</term> does not include any activity of a governmental
entity or of any other organization which is exempt from tax under this
chapter.</text>
</paragraph></subsection><subsection id="ID271BFFF29620446A83DCD37062BF9603"><enum>(d)</enum><header>Deductions</header>
<paragraph id="IDBB66CA797F60447BBA4B588D1B93EFAD"><enum>(1)</enum><header>In
general</header><text>The deductions specified in this subsection are—</text>
<subparagraph id="ID83224FB12FF7444497DBFC64B948993C"><enum>(A)</enum><text>the cost of
business inputs for the business activity,</text>
</subparagraph><subparagraph id="IDC4C00E32E6C14718BBE5D5190013D2EB"><enum>(B)</enum><text>wages (as defined
in section 3121(a) without regard to paragraph (1) thereof) which are paid in
cash for services performed in the United States as an employee, and</text>
</subparagraph><subparagraph id="IDD0CDA47A12E34FB480B7CDCAFDE7EAD9"><enum>(C)</enum><text>retirement
contributions to or under any plan or arrangement which makes retirement
distributions (as defined in section 63(c)) for the benefit of such employees
to the extent such contributions are allowed as a deduction under section
404.</text>
</subparagraph></paragraph><paragraph id="IDA45E9E9BEBA64512A3B4BE2776A4DB41"><enum>(2)</enum><header>Business
inputs</header>
<subparagraph id="ID0425D5319A0A4C57A706B84414ED1E71"><enum>(A)</enum><header>In
general</header><text>For purposes of paragraph (1), the term <term>cost of
business inputs</term> means—</text>
<clause id="ID1A5FA6CB08F5495FA553A5BC5EB916EC"><enum>(i)</enum><text>the amount paid
for property sold or used in connection with a business activity,</text>
</clause><clause id="IDD8DAEED4E501448CB23759CB000643D9"><enum>(ii)</enum><text>the amount paid
for services (other than for the services of employees, including fringe
benefits paid by reason of such services) in connection with a business
activity, and</text>
</clause><clause id="ID00AF23E780204966913EF36B4B349F6E"><enum>(iii)</enum><text>any excise tax,
sales tax, customs duty, or other separately stated levy imposed by a Federal,
State, or local government on the purchase of property or services which are
for use in connection with a business activity.</text>
</clause><continuation-text continuation-text-level="subparagraph">Such
term shall not include any tax imposed by chapter 2 or 21.</continuation-text></subparagraph><subparagraph id="ID651BF9EBA2DC44A984885CA4DCFA7DD4"><enum>(B)</enum><header>Exceptions</header><text>Such
term shall not include—</text>
<clause id="IDA6F86847E021437997F5D9C2CA35B320"><enum>(i)</enum><text>items described
in subparagraphs (B) and (C) of paragraph (1), and</text>
</clause><clause id="IDCEE116CC40E942ED83DE4556C7B9633B"><enum>(ii)</enum><text>items for
personal use not in connection with any business activity.</text>
</clause></subparagraph><subparagraph id="IDA8B07C15300142A9A52024FABE01D4EA"><enum>(C)</enum><header>Exchanges</header><text>For
purposes of this section, the amount treated as paid in connection with the
exchange of property or services is the fair market value of the property or
services exchanged, plus any money paid.</text>
</subparagraph></paragraph></subsection><subsection id="ID208B4E2644ED4866A20086414F238412"><enum>(e)</enum><header>Special rules
for financial intermediation service activities</header><text>In the case of
the business activity of providing financial intermediation services, the
taxable income from such activity shall be equal to the value of the
intermediation services provided in such activity.</text>
</subsection><subsection id="ID3EF0F323E229456FAE833ECF64155D1C"><enum>(f)</enum><header>Exception for
services performed as employee</header><text>For purposes of this section, the
term <term>business activity</term> does not include the performance of
services by an employee for the employee’s employer.</text>
</subsection><subsection id="ID2903E86512DA4DB59C249CF8A643BB97"><enum>(g)</enum><header>Carryover of
Credit-Equivalent of excess deductions</header>
<paragraph id="ID5353630FFA1845C5B3261CAA52E1FF56"><enum>(1)</enum><header>In
general</header><text>If the aggregate deductions for any taxable year exceed
the gross active income for such taxable year, the credit-equivalent of such
excess shall be allowed as a credit against the tax imposed by this section for
the following taxable year.</text>
</paragraph><paragraph id="IDB144269FBE73409497CA97BD16B16631"><enum>(2)</enum><header>Credit-Equivalent
of excess deductions</header><text>For purposes of paragraph (1), the
credit-equivalent of the excess described in paragraph (1) for any taxable year
is an amount equal to—</text>
<subparagraph id="ID4664A0FE0BEA4364A44D8391DE84327E"><enum>(A)</enum><text>the sum
of—</text>
<clause id="ID45F5A5CEC36F44A88E11866876043407"><enum>(i)</enum><text>such excess,
plus</text>
</clause><clause id="ID75F90C70AF0241A596DFE1BA005FEE4F"><enum>(ii)</enum><text>the product of
such excess and the 3-month Treasury rate for the last month of such taxable
year, multiplied by</text>
</clause></subparagraph><subparagraph id="ID776B12DCE67D465097D015F603738100"><enum>(B)</enum><text>the rate of the
tax imposed by subsection (a) for such taxable year.</text>
</subparagraph></paragraph><paragraph id="ID3430014A3E084EF08446F009F0DBFB9B"><enum>(3)</enum><header>Carryover of
unused credit</header><text>If the credit allowable for any taxable year by
reason of this subsection exceeds the tax imposed by this section for such
year, then (in lieu of treating such excess as an overpayment) the sum
of—</text>
<subparagraph id="ID382E42E35C5F49B8A56CEBB79D2BDA78"><enum>(A)</enum><text>such excess,
plus</text>
</subparagraph><subparagraph id="IDFBEA145E6A634CBAA8CB00222FE56D13"><enum>(B)</enum><text>the product of
such excess and the 3-month Treasury rate for the last month of such taxable
year, shall be allowed as a credit against the tax imposed by this section for
the following taxable year.</text>
</subparagraph></paragraph><paragraph id="ID9345525AA6AD4787A3A9A4B122E5DE22"><enum>(4)</enum><header>3-month
Treasury rate</header><text>For purposes of this subsection, the 3-month
Treasury rate is the rate determined by the Secretary based on the average
market yield (during any 1-month period selected by the Secretary and ending in
the calendar month in which the determination is made) on outstanding
marketable obligations of the United States with remaining periods to maturity
of 3 months or
less.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="ID4ED6A6AEFCAC4B22B95144B5825FA595"><enum>(b)</enum><header>Tax on
Tax-Exempt entities providing noncash compensation to
employees</header><text>Section 4977 of such Code is amended to read as
follows:</text>
<quoted-block id="IDFA63D0EEA5254469812E5201A6430468">
<section id="ID8236790653794F3C8DF30086334CDFE8"><enum>4977.</enum><header>Tax on
noncash compensation provided to employees not engaged in business
activity</header>
<subsection id="ID803C0F12A2E04F56B995FB5CC3287C10"><enum>(a)</enum><header>Imposition of
tax</header><text>There is hereby imposed a tax equal to 19 percent (17 percent
in the case of calendar years beginning after December 31, 2007) of the value
of excludable compensation provided during the calendar year by an employer for
the benefit of employees to whom this section applies.</text>
</subsection><subsection id="IDF0F4A27DB13C456FAE4781091E8CAF5D"><enum>(b)</enum><header>Liability for
tax</header><text>The tax imposed by this section shall be paid by the
employer.</text>
</subsection><subsection id="ID87DC9A1FFDEB4B51BDB9FCEEA11FF574"><enum>(c)</enum><header>Excludable
compensation</header><text>For purposes of subsection (a), the term
<term>excludable compensation</term> means any remuneration for services
performed as an employee other than—</text>
<paragraph id="ID86F04F977E174365A1A1ED9F1307FAA1"><enum>(1)</enum><text>wages (as defined
in section 3121(a) without regard to paragraph (1) thereof) which are paid in
cash,</text>
</paragraph><paragraph id="IDC189FB3F664A43A0B3152B5200189575"><enum>(2)</enum><text>remuneration for
services performed outside the United States, and</text>
</paragraph><paragraph id="IDE90BCEC9E3B54940BBCD00D783C4C945"><enum>(3)</enum><text>retirement
contributions to or under any plan or arrangement which makes retirement
distributions (as defined in section 63(c)).</text>
</paragraph></subsection><subsection id="ID82D3AD785A784650B9230004C423F6E1"><enum>(d)</enum><header>Employees to
whom Section applies</header><text>This section shall apply to an employee who
is employed in any activity by—</text>
<paragraph id="IDD5F22D817AC34A74AB840119345F5C00"><enum>(1)</enum><text>any organization
which is exempt from taxation under this chapter, or</text>
</paragraph><paragraph id="ID6EB4FAA8212F4836B167861CDF541520"><enum>(2)</enum><text>any agency or
instrumentality of the United States, any State or political subdivision of a
State, or the District of
Columbia.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="IDB82CFE578AC64FC10061A154C7BB5C2D"><enum>103.</enum><header>Simplification
of rules relating to qualified retirement plans</header>
<subsection id="ID1D3C2C0902C14272BCA99BF716BEF7F9"><enum>(a)</enum><header>In
general</header><text>The following provisions of the Internal Revenue Code of
1986 are hereby repealed:</text>
<paragraph id="ID1A2E96266FDB441697BB586B4F760044"><enum>(1)</enum><header>Nondiscrimination
rules</header>
<subparagraph id="IDAB894CA6CD2A47AA9F00D3F3901E3EB0"><enum>(A)</enum><text>Paragraphs (4)
and (5) of section 401(a) (relating to nondiscrimination requirements).</text>
</subparagraph><subparagraph id="ID27539914701D4CBC9F003C79379CB882"><enum>(B)</enum><text>Sections
401(a)(10)(B) and 416 (relating to top heavy plans).</text>
</subparagraph><subparagraph id="IDCF55037A34224239951CD64E09BE7874"><enum>(C)</enum><text>Section
401(a)(17) (relating to compensation limit).</text>
</subparagraph><subparagraph id="ID6FD438BBE9324EB2A469B5CC2517B56C"><enum>(D)</enum><text>Sections
401(a)(26) and 410(b) (relating to minimum participation and coverage
requirements).</text>
</subparagraph><subparagraph id="IDB4F8C58CCF934A3D81B2996BC1D4F6E1"><enum>(E)</enum><text>Paragraphs (3),
(8), (11), and (12) of sections 401(k), and section 4979, (relating to actual
deferral percentage).</text>
</subparagraph><subparagraph id="ID0DD6F018148A41E2A8105270C470291D"><enum>(F)</enum><text>Section 401(l)
(relating to permitted disparity in plan contributions or benefits).</text>
</subparagraph><subparagraph id="ID7A08B49DBB8E4E1C8675F9CB99963837"><enum>(G)</enum><text>Section 401(m)
(relating to nondiscrimination test for matching contributions and employee
contributions).</text>
</subparagraph><subparagraph id="IDA44759165B034AAA8EC61F4C8EEF965F"><enum>(H)</enum><text>Paragraphs (1)(D)
and (12) of section 403(b) (relating to nondiscrimination requirements).</text>
</subparagraph><subparagraph id="IDD8934FA189934EF9B53B1D4C7BA91C57"><enum>(I)</enum><text>Paragraph (3) of
section 408(k) and paragraph (6) (other than subparagraph (A)(i)) of such
section (relating to simplified employee pensions).</text>
</subparagraph></paragraph><paragraph id="ID05A99F4BC8384FA8A3814351C8477DF8"><enum>(2)</enum><header>Contribution
limits</header>
<subparagraph id="ID56F285F6ADBA4FE2BF41DA447D07B836"><enum>(A)</enum><text>Sections
401(a)(16), 403(b) (2) and (3), and 415 (relating to limitations on benefits
and contributions under qualified plans).</text>
</subparagraph><subparagraph id="ID05C8834BE82942D5B833AEF0C6628B59"><enum>(B)</enum><text>Sections
401(a)(30) and 402(g) (relating to limitation on exclusion for elective
deferrals).</text>
</subparagraph><subparagraph id="IDC80A7B9CFDDE45E7916DD000B4007562"><enum>(C)</enum><text>Paragraphs (3)
and (7) of section 404(a) (relating to percentage of compensation
limits).</text>
</subparagraph><subparagraph id="IDD20F88EF7C8C46068BE8DBDDB513003F"><enum>(D)</enum><text>Section 404(l)
(relating to limit on includible compensation).</text>
</subparagraph></paragraph><paragraph id="ID452EF8102C1447E28417A97CB320FBAC"><enum>(3)</enum><header>Restrictions on
distributions</header>
<subparagraph id="ID540025833F154E7A00B1553C4CD17EBF"><enum>(A)</enum><text>Section 72(t)
(relating to 10-percent additional tax on early distributions from qualified
retirement plans).</text>
</subparagraph><subparagraph id="ID21D3940F7A1C482AA700AA6D82D0B9A2"><enum>(B)</enum><text>Sections
401(a)(9), 403(b)(10), and 4974 (relating to minimum distribution
rules).</text>
</subparagraph><subparagraph id="IDA771CF96C11547F0B0489DA30298DCCE"><enum>(C)</enum><text>Section 402(e)(4)
(relating to net unrealized appreciation).</text>
</subparagraph></paragraph><paragraph id="ID044FA77F36534D8CA2639517A5EB8003"><enum>(4)</enum><header>Special
requirements for plan benefiting self-employed
individuals</header><text>Subsections (a)(10)(A) and (d) of section 401.</text>
</paragraph><paragraph id="ID40DCE800E1794224AA1124DE4E5E1D38"><enum>(5)</enum><header>Prohibition of
Tax-Exempt organizations and governments from having qualified cash or deferred
arrangements</header><text>Section 401(k)(4)(B).</text>
</paragraph></subsection><subsection id="ID00E6E8FD6934491CBF41915CC7ED75C7"><enum>(b)</enum><header>Employer
reversions of excess pension assets permitted subject only to income
inclusion</header>
<paragraph id="IDA8D2FF1865ED4E20804476001615811B"><enum>(1)</enum><header>Repeal of tax
on employer reversions</header><text>Section 4980 of such Code is hereby
repealed.</text>
</paragraph><paragraph id="IDEE432467FCC945389EEFFDC7BB001C56"><enum>(2)</enum><header>Employer
reversions permitted without plan termination</header><text>Section 420 of such
Code is amended to read as follows:</text>
<quoted-block id="ID44D9C6AEA00243BDB3D9EEC011370016">
<section id="IDEB0D1500182E49278EEA7600588183CB"><enum>420.</enum><header>Transfers of
excess pension assets</header>
<subsection id="IDBEF599BEC70F41BAAA78008FB1E703AC"><enum>(a)</enum><header>In
general</header><text>If there is a qualified transfer of any excess pension
assets of a defined benefit plan (other than a multiemployer plan) to an
employer—</text>
<paragraph id="ID2056109C324C48A5A4A73413B0065021"><enum>(1)</enum><text>a trust which is
part of such plan shall not be treated as failing to meet the requirements of
section 401(a) or any other provision of law solely by reason of such transfer
(or any other action authorized under this section), and</text>
</paragraph><paragraph id="ID7CC754896F0849C1AAF8FFB1005D116D"><enum>(2)</enum><text>such transfer
shall not be treated as a prohibited transaction for purposes of section
4975.</text>
</paragraph><continuation-text continuation-text-level="subsection">The gross
income of the employer shall include the amount of any qualified transfer made
during the taxable year.</continuation-text></subsection><subsection id="ID47393598A9E54083B2B701A600FE3F7B"><enum>(b)</enum><header>Qualified
transfer</header><text>For purposes of this section—</text>
<paragraph id="IDA8023882AE19426384E222F93075C3FD"><enum>(1)</enum><header>In
general</header><text>The term <term>qualified transfer</term> means a
transfer—</text>
<subparagraph id="ID0A3AE84A611A4F2B9B619F7F2F1F3242"><enum>(A)</enum><text>of excess pension
assets of a defined benefit plan to the employer, and</text>
</subparagraph><subparagraph id="ID1032B531C00F467AB19D138424F06D58"><enum>(B)</enum><text>with respect to
which the vesting requirements of subsection (c) are met in connection with the
plan.</text>
</subparagraph></paragraph><paragraph id="ID166B452389F043D5BAEA7899E7567655"><enum>(2)</enum><header>Only 1 transfer
per year</header><text>No more than 1 transfer with respect to any plan during
a taxable year may be treated as a qualified transfer for purposes of this
section.</text>
</paragraph></subsection><subsection id="ID9D1F2DC6A1F4427FB54CBAC9E0F6E160"><enum>(c)</enum><header>Vesting
requirements of plans transferring assets</header><text>The vesting
requirements of this subsection are met if the plan provides that the accrued
pension benefits of any participant or beneficiary under the plan become
nonforfeitable in the same manner which would be required if the plan had
terminated immediately before the qualified transfer (or in the case of a
participant who separated during the 1-year period ending on the date of the
transfer, immediately before such separation).</text>
</subsection><subsection id="ID575CA2714BCA43EE8796A2DB6CE40600"><enum>(d)</enum><header>Definition and
special rule</header><text>For purposes of this section—</text>
<paragraph id="ID13A596DD9D6B450D0099B97FF7EED627"><enum>(1)</enum><header>Excess pension
assets</header><text>The term <term>excess pension assets</term> means the
excess (if any) of—</text>
<subparagraph id="IDE9AC1BA7BCEA471C819F762F327CD1B9"><enum>(A)</enum><text>the amount
determined under section 412(c)(7)(A)(ii), over</text>
</subparagraph><subparagraph id="ID5D3062D1C4B148D8B7F532D002FAC9D9"><enum>(B)</enum><text>the greater
of—</text>
<clause id="ID85EB78E694AD4A57884D5D8E789F558D"><enum>(i)</enum><text>the amount
determined under section 412(c)(7)(A)(i), or</text>
</clause><clause id="ID673254BA4D664995AAD2A6DA45C023A4"><enum>(ii)</enum><text>125 percent of
current liability (as defined in section 412(c)(7)(B)).</text>
</clause></subparagraph><continuation-text continuation-text-level="paragraph">The
determination under this paragraph shall be made as of the most recent
valuation date of the plan preceding the qualified transfer.</continuation-text></paragraph><paragraph id="IDA75165570BE2423E846C8735547130A2"><enum>(2)</enum><header>Coordination
with Section <enum-in-header>412</enum-in-header></header><text>In the case of
a qualified transfer—</text>
<subparagraph id="ID7B6259C11E2644A8B2F8B3B9F64654A7"><enum>(A)</enum><text>any assets
transferred in a plan year on or before the valuation date for such year (and
any income allocable thereto) shall, for purposes of section 412, be treated as
assets in the plan as of the valuation date for such year, and</text>
</subparagraph><subparagraph id="IDF65CE57F0D5C4A9E8E8716D0DFF8C49C"><enum>(B)</enum><text>the plan shall be
treated as having a net experience loss under section 412(b)(2)(B)(iv) in an
amount equal to the amount of such transfer and for which amortization charges
begin for the first plan year after the plan year in which such transfer
occurs, except that such section shall be applied to such amount by
substituting <quote>10 plan years</quote> for <quote>5 plan
years</quote>.</text>
</subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="IDBD8C5162CFBB4602BEE092FC3DD5E540"><enum>104.</enum><header>Repeal of
alternative minimum tax</header><text display-inline="no-display-inline">Part
VI of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is hereby
repealed.</text>
</section><section id="IDA44CD39EA91C455C87715B1BBE9F9C52"><enum>105.</enum><header>Repeal of
credits</header><text display-inline="no-display-inline">Part IV of subchapter
A of chapter 1 of the Internal Revenue Code of 1986 is hereby repealed.</text>
</section><section id="ID50F5F9E687754733B16BF1C49666EBE3"><enum>106.</enum><header>Repeal of
estate and gift taxes and obsolete income tax provisions</header>
<subsection id="ID8FFB20D112B14799AC00CC00BEEB4E4E"><enum>(a)</enum><header>Repeal of
estate and gift taxes</header>
<paragraph id="ID7E641AA3F5004F0693DDF924463DA300"><enum>(1)</enum><header>In
general</header><text>Subtitle B of the Internal Revenue Code of 1986 is hereby
repealed.</text>
</paragraph><paragraph id="ID3E87F584BBF0489D8B266E55BC567E2F"><enum>(2)</enum><header>Effective
date</header><text>The repeal made by paragraph (1) shall apply to the estates
of decedents dying, and gifts and generation-skipping transfers made, after
December 31, 2005.</text>
</paragraph></subsection><subsection id="IDA1D4B5F913E24528B661B444ADBCC474"><enum>(b)</enum><header>Repeal of
obsolete income tax provisions</header>
<paragraph id="ID2CA24F91CEB340DF9DA4F51D2801FCFE"><enum>(1)</enum><header>In
general</header><text>Except as provided in paragraph (2), chapter 1 of the
Internal Revenue Code of 1986 is hereby repealed.</text>
</paragraph><paragraph id="ID9B65E8225B314B6C9879E0BC6ED4C34D"><enum>(2)</enum><header>Exceptions</header><text>Paragraph
(1) shall not apply to—</text>
<subparagraph id="ID8A5968B0F06F46F688BD5400AD2DA9EA"><enum>(A)</enum><text>sections 1, 11,
and 63 of such Code, as amended by this Act,</text>
</subparagraph><subparagraph id="ID1C2EC6615AF049C8B4144D5B677543B0"><enum>(B)</enum><text>those provisions
of chapter 1 of such Code which are necessary for determining whether or
not—</text>
<clause id="ID8B3FB4A15B5C4F17A900BC505BEC4EC8"><enum>(i)</enum><text>retirement
distributions are includible in the gross income of employees, or</text>
</clause><clause id="ID708E01BD19E74DAD94DF9CA0C63D9BFC"><enum>(ii)</enum><text>an
organization is exempt from tax under such chapter, and</text>
</clause></subparagraph><subparagraph id="ID11D7396BDD6F4EAF8BFDA5282CD0A259"><enum>(C)</enum><text>subchapter D of
such chapter 1 (relating to deferred compensation).</text>
</subparagraph></paragraph></subsection></section><section id="ID5F5BC912C5E645BB8C6279E92566AF23"><enum>107.</enum><header>Effective
date</header><text display-inline="no-display-inline">Except as otherwise
provided in this title, the amendments made by this title shall apply to
taxable years beginning after December 31, 2005.</text>
</section><enum>II</enum><header>Supermajority
required for tax changes</header>
<section id="ID37C02CCF1BF64006003282BFFA1C8D8C"><enum>201.</enum><header>Supermajority
required</header>
<subsection id="IDAF8F9BE5F9A444E5B3F7224BC3F231C6"><enum>(a)</enum><header>In
general</header><text>It shall not be in order in the House of Representatives
or the Senate to consider any bill, joint resolution, amendment thereto, or
conference report thereon that includes any provision that—</text>
<paragraph id="ID0ED32F7B76BD4C81880900A054A7D692"><enum>(1)</enum><text>increases any
Federal income tax rate,</text>
</paragraph><paragraph id="IDC046C341AF824C6E93D37600CFC7AE8D"><enum>(2)</enum><text>creates any
additional Federal income tax rate,</text>
</paragraph><paragraph id="ID450760BE75104B2FA1FC1800BED20048"><enum>(3)</enum><text>reduces the
standard deduction, or</text>
</paragraph><paragraph id="ID7CD8EC24538048AA8824007FC4FA84FF"><enum>(4)</enum><text>provides any
exclusion, deduction, credit, or other benefit which results in a reduction in
Federal revenues.</text>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ID491E913964FC487187E789E8DEE3F04F"><enum>(b)</enum><header>Waiver or
suspension</header><text>This section may be waived or suspended in the House
of Representatives or the Senate only by the affirmative vote of three-fifths
of the Members, duly chosen and sworn.</text>
</subsection></section>