[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2902 Introduced in House (IH)]
110th CONGRESS
1st Session
H. R. 2902
To amend the Internal Revenue Code to double the child tax credit for
the first year, to expand the credit dependent care services, to
provide relief from the alternative minimum tax, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 28, 2007
Mr. Allen (for himself, Mr. Bishop of New York, Mrs. Boyda of Kansas,
Mr. Braley of Iowa, Ms. Castor, Mr. Cohen, Mr. Ellison, Mr. Hall of New
York, Mr. Hare, Ms. Hirono, Ms. Jackson-Lee of Texas, Mr. Johnson of
Georgia, Mr. McNerney, Mr. Perlmutter, Mr. Sestak, Mr. Walz of
Minnesota, Mr. Weiner, Mr. Murphy of Connecticut, Mr. Welch of Vermont,
and Mr. Gene Green of Texas) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code to double the child tax credit for
the first year, to expand the credit dependent care services, to
provide relief from the alternative minimum tax, 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 ``Middle Class Opportunity Act of
2007''.
SEC. 2. INCREASED CHILD TAX CREDIT FOR FIRST YEAR CHILD IS CLAIMED AS A
QUALIFYING CHILD.
(a) In General.--Subsection (a) of section 24 of the Internal
Revenue Code of 1986 (relating to child tax credit) is amended by
striking ``with respect to each qualifying child of the taxpayer an
amount equal to $1,000.'' and inserting ``with respect to each
individual who is a qualifying child of the taxpayer an amount equal
to--
``(1) $2,000, for the first taxable year in which such
individual is a qualifying child, and
``(2) $1,000, for any other taxable year in which such
individual is a qualifying child.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2006.
SEC. 3. EXPANSION OF DEPENDENT CARE CREDIT.
(a) Increased Phaseout Threshold.--Paragraph (2) of section 21(a)
of the Internal Revenue Code of 1986 (defining applicable percentage)
is amended by striking ``$15,000'' and inserting ``$75,000''.
(b) Credit Allowed for Costs Incurred To Care for Parents and
Grandparents Who Do Not Live With the Taxpayer.--
(1) In general.--Paragraph (1) of section 21(b) of the
Internal Revenue Code of 1986 (relating to qualifying
individual) is amended by striking ``or'' at the end of
subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``, or'', and by adding at the
end the following new subparagraph:
``(D) a dependent of the taxpayer (as defined in
section 152, determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B)) who is the father or
mother of the taxpayer (or an ancestor of such father
or mother) and who is physically or mentally incapable
of caring for himself or herself.''.
(2) Conforming amendment.--Section 21(b)(1)(B) of such Code
is amended by inserting ``(other than a dependent described in
subparagraph (D))'' after ``and (d)(1)(B))''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
SEC. 4. ALTERNATIVE MINIMUM TAX RELIEF.
(a) Increase in Alternative Minimum Tax Exemption Amount for 2007
and 2008.--
(1) In general.--Section 55(d)(1) of the Internal Revenue
Code of 1986 is amended--
(A) by striking ``$62,550'' and all that follows
through ``2006'' in subparagraph (A) and inserting
``the joint return amount in the case of taxable years
beginning in 2006, 2007, and 2008'', and
(B) by striking ``$42,500'' and all that follows
through ``2006'' in subparagraph (B) and inserting
``the unmarried individual return amount in the case of
taxable years beginning in 2006, 2007, and 2008''.
(2) Joint return amount; unmarried individual return
amount.--Section 55(d) of such Code is amended by adding at the
end the following new paragraph:
``(4) Joint return amount; unmarried individual return
amount.--
``(A) Joint return amount.--For purposes of
paragraph (1)(A), the joint return amount shall be
determined as follows:
The joint return
``For taxable years beginning in-- amount is--
2006.......................................... $62,550
2007.......................................... $65,350
2008.......................................... $68,200.
``(B) Unmarried individual return amount.--For
purposes of paragraph (1)(B), the unmarried individual
return amount shall be determined as follows:
The unmarried individual
``For taxable years beginning in-- return amount is--
2006.......................................... $42,500
2007.......................................... $43,900
2008.......................................... $45,300.''.
(b) Allowance of Nonrefundable Personal Credits Against Regular and
Alternative Minimum Tax Liability.--Paragraph (2) of section 26(a) of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``2006'' in the heading thereof and
inserting ``2008'', and
(2) by striking ``or 2006'' and inserting ``2006, 2007, or
2008''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2006.
SEC. 5. CONSOLIDATION OF EDUCATION TAX INCENTIVES INTO THE EDUCATION
TAX CREDIT.
(a) In General.--Section 25A of the Internal Revenue Code of 1986
(relating to Hope and Lifetime Learning credits) is amended to read as
follows:
``SEC. 25A. EDUCATION TAX CREDIT.
``(a) Allowance of Credit.--In the case of any eligible student for
whom an election is in effect under this section for any taxable year,
there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year in an amount equal to the sum of--
``(1) 100 percent of so much of the qualified tuition and
related expenses paid by the taxpayer during the taxable year
(for education furnished to the eligible student during any
academic period beginning in such taxable year) as does not
exceed $1,000,
``(2) 50 percent of so much of such expenses as exceeds
$1,000 but does not exceed $3,000, and
``(3) 20 percent of so much of such expenses as exceeds
$3,000 but does not exceed $5,500.
``(b) Limitations.--
``(1) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount which would (but for
this paragraph) be taken into account under subsection
(a) for the taxable year shall be reduced (but not
below zero) by the amount determined under subparagraph
(B).
``(B) Amount of reduction.--The amount determined
under this subparagraph is the amount which bears the
same ratio to the amount which would be so taken into
account as--
``(i) the excess of--
``(I) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(II) $70,000 ($140,000 in the
case of a joint return), bears to
``(ii) $20,000 ($40,000 in the case of a
joint return).
``(C) Modified adjusted gross income.--The term
`modified adjusted gross income' means the adjusted
gross income of the taxpayer for the taxable year
increased by any amount excluded from gross income
under section 911, 931, or 933.
``(2) Limitation based on amount of tax.--In the case of a
taxable year to which section 26(a)(2) does not apply, the
credit allowed under subsection (a) for any taxable year shall
not exceed the excess of --
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section and sections 23, 24,
and 25B) and section 27 for the taxable year.
``(3) Credit allowed only for 3 eligible students.--The
credit under subsection (a) to any taxpayer shall not be
allowed with respect to more than 3 eligible students for any
taxable year.
``(4) Other limitations.--
``(A) Credit allowed only for 4 taxable years.--An
election to have this section apply with respect to any
eligible student may not be made for any taxable year
if such an election (by the taxpayer or any other
individual) is in effect with respect to such student
for any 4 prior taxable years.
``(B) Credit allowed for year only if individual is
at least 1/2 time student for portion of year.--The
credit under subsection (a) shall not be allowed for a
taxable year with respect to the qualified tuition and
related expenses of an individual unless such
individual is an eligible student for at least one
academic period which begins during such year.
``(C) Denial of credit if student convicted of a
felony drug offense.--The credit under subsection (a)
shall not be allowed for qualified tuition and related
expenses for the enrollment or attendance of a student
for any academic period if such student has been
convicted of a Federal or State felony offense
consisting of the possession or distribution of a
controlled substance before the end of the taxable year
with or within which such period ends.
``(c) Definitions.--For purposes of this subsection--
``(1) Eligible student.--The term `eligible student' means,
with respect to any academic period, a student who--
``(A) meets the requirements of section 484(a)(1)
of the Higher Education Act of 1965 (20 U.S.C.
1091(a)(1)), as in effect on the date of the enactment
of the Taxpayer Relief Act of 1997, and
``(B) is carrying at least 1/2 the normal full-time
work load for the course of study the student is
pursuing.
``(2) Qualified tuition and related expenses.--
``(A) In general.--The term `qualified tuition and
related expenses' means tuition and fees required for
the enrollment or attendance of an eligible student who
is--
``(i) the taxpayer,
``(ii) the taxpayer's spouse, or
``(iii) any dependent of the taxpayer with
respect to whom the taxpayer is allowed a
deduction under section 151,
at an eligible educational institution for courses of
instruction of such individual at such institution.
``(B) Inclusion of certain expenses for books.--
``(i) In general.--For purposes of
subparagraph (A), tuition and fees shall
include 50 percent of amounts paid or incurred
for books.
``(ii) Limitation.--The amount of tuition
and fees taken into account under subparagraph
(A) by reason of clause (i) for any taxable
year shall not exceed $250 with respect to any
eligible student.
``(C) Exception for education involving sports,
etc.--Such term does not include expenses with respect
to any course or other education involving sports,
games, or hobbies, unless such course or other
education is part of the individual's degree program.
``(D) Exception for nonacademic fees.--Such term
does not include student activity fees, athletic fees,
insurance expenses, or other expenses unrelated to an
individual's academic course of instruction.
``(3) Eligible educational institution.--The term `eligible
educational institution' means an institution--
``(A) which is described in section 481 of the
Higher Education Act of 1965 (20 U.S.C. 1088), as in
effect on the date of the enactment of the Taxpayer
Relief Act of 1997, and
``(B) which is eligible to participate in a program
under title IV of the Higher Education Act of 1965.
``(d) Election Not To Have Section Apply.--A taxpayer may elect not
to have this section apply with respect to the qualified tuition and
related expenses of an individual for any taxable year.
``(e) Special Rules.--
``(1) Identification requirement.--No credit shall be
allowed under subsection (a) to a taxpayer with respect to the
qualified tuition and related expenses of an individual unless
the taxpayer includes the name and taxpayer identification
number of such individual on the return of tax for the taxable
year.
``(2) Adjustment for certain scholarships, etc.--The amount
of qualified tuition and related expenses otherwise taken into
account under subsection (a) with respect to an individual for
an academic period shall be reduced (before the application of
subsections (a), (b), and (c)) by the sum of any amounts paid
for the benefit of such individual which are allocable to such
period as--
``(A) a qualified scholarship which is excludable
from gross income under section 117,
``(B) an educational assistance allowance under
chapter 30, 31, 32, 34, or 35 of title 38, United
States Code, or under chapter 1606 of title 10, United
States Code, and
``(C) a payment (other than a gift, bequest,
devise, or inheritance within the meaning of section
102(a)) for such individual`s educational expenses, or
attributable to such individual's enrollment at an
eligible educational institution, which is excludable
from gross income under any law of the United States.
``(3) Treatment of expenses paid by dependent.--If a
deduction under section 151 with respect to an individual is
allowed to another taxpayer for a taxable year beginning in the
calendar year in which such individual's taxable year begins--
``(A) no credit shall be allowed under subsection
(a) to such individual for such individual's taxable
year, and
``(B) qualified tuition and related expenses paid
by such individual during such individual's taxable
year shall be treated for purposes of this section as
paid by such other taxpayer.
``(4) Treatment of certain prepayments.--If qualified
tuition and related expenses are paid by the taxpayer during a
taxable year for an academic period which begins during the
first 3 months following such taxable year, such academic
period shall be treated for purposes of this section as
beginning during such taxable year.
``(5) Denial of double benefit.--No credit shall be allowed
under this section for any expense for which a deduction is
allowed under any other provision of this chapter.
``(6) No credit for married individuals filing separate
returns.--If the taxpayer is a married individual (within the
meaning of section 7703), this section shall apply only if the
taxpayer and the taxpayer's spouse file a joint return for the
taxable year.
``(7) Nonresident aliens.--If the taxpayer is a nonresident
alien individual for any portion of the taxable year, this
section shall apply only if such individual is treated as a
resident alien of the United States for purposes of this
chapter by reason of an election under subsection (g) or (h) of
section 6013.
``(f) Inflation Adjustments.--
``(1) Dollar limitation on amount of credit.--
``(A) In general.--In the case of a taxable year
beginning after 2008, each of the dollar amounts under
subsection (a) shall be increased by an amount equal
to--
``(i) such dollar 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,
determined by substituting `calendar year 2007'
for `calendar year 1992' in subparagraph (B)
thereof.
``(B) Rounding.--If any amount as adjusted under
subparagraph (A) is not a multiple of $100, such amount
shall be rounded to the next lowest multiple of $100.
``(2) Income limits.--
``(A) In general.--In the case of a taxable year
beginning after 2008, the $70,000 and $140,000 amounts
in subsection (b)(1)(B) shall each be increased by an
amount equal to--
``(i) such dollar 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,
determined by substituting `calendar year 2007'
for `calendar year 1992' in subparagraph (B)
thereof.
``(B) Rounding.--If any amount as adjusted under
subparagraph (A) is not a multiple of $1,000, such
amount shall be rounded to the next lowest multiple of
$1,000.
``(g) Regulations.--The Secretary may prescribe such regulations as
may be necessary or appropriate to carry out this section, including
regulations providing for a recapture of the credit allowed under this
section in cases where there is a refund in a subsequent taxable year
of any amount which was taken into account in determining the amount of
such credit.''.
(b) Repeal of Deduction for Qualified Tuition and Related
Expenses.--
(1) In general.--Part VII of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by striking
section 222 (relating to qualified tuition and related
expenses).
(2) Clerical amendment.--The table of section for part VII
of subchapter B of chapter 1 of such Code is amended by
striking the item relating to section 222.
(c) Conforming Amendments.--
(1) Paragraph (1) of section 26(a) of the Internal Revenue
Code of 1986 is amended by inserting ``25A,'' after ``24,''.
(2) Section 62(a) of such Code is amended by striking
paragraph (18).
(3) Subparagraph (B) of section 72(t)(7) of such Code is
amended by striking ``section 25A(g)(2)'' and inserting
``section 25A(e)(2)''.
(4) Section 221(d) of such Code is amended--
(A) by striking ``section 25A(g)(2)'' in paragraph
(2)(B) and inserting ``section 25A(e)(2)'',
(B) by striking ``section 25A(f)(2)'' in paragraph
(2)(B) and inserting ``section 25A(c)(3)'', and
(C) by striking ``section 25A(b)(3)'' in paragraph
(3) and inserting ``section 25A(c)(1)''.
(5) Section 529 of such Code is amended--
(A) by striking ``section 25A(g)(2)'' in subclause
(I) of subsection (c)(3)(B)(v) and inserting ``section
25(e)(2)'',
(B) by striking ``section 25A(b)(3)'' in clause (i)
of subsection (e)(3)(B) and inserting ``section
25A(c)(1)''.
(6) Section 530 of such Code is amended--
(A) by striking ``section 25A(g)(2)'' in subclause
(I) of subsection (d)(2)(C)(i) and inserting ``section
25A(e)(2)'',
(B) by striking ``section 25A(g)(2)'' in clause
(iii) of subsection (d)(4)(B) and inserting ``section
25A(e)(2)''.
(7) Section 1400O of such Code is amended by adding at the
end the following flush sentence:
``For purposes of this section, any reference to section 25A shall be
treated as a reference to such section before the date of the enactment
of this sentence.''.
(8) Subsection (e) of section 6050S of such Code is amended
by striking ``(without regard to subsection (g)(2) thereof)''
and inserting ``(without regard to subsection (e)(2)
thereof)''.
(9) Subparagraph (J) of section 6213(g)(2) of such Code is
amended by striking ``section 25A(g)(1)'' and inserting
``section 25A(e)(1)''.
(10) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by striking
the item relating to section 25A and inserting the following:
``Sec. 25A. Education tax credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to expenses paid after December 31, 2007 (in taxable years ending
after such date), for education furnished in academic periods beginning
after such date.
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