[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3591 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 3591

  To amend the Internal Revenue Code of 1986 to provide that the net 
    capital gain of certain individuals shall not be subject to tax.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 19, 2007

 Mr. Lampson 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 provide that the net 
    capital gain of certain individuals shall not be subject to tax.

    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 Investor Tax Relief Act 
of 2007''.

SEC. 2. DEDUCTION FOR NET CAPITAL GAIN OF CERTAIN INDIVIDUALS.

    (a) In General.--Part I of subchapter P of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new section:

``SEC. 1203. DEDUCTION FOR NET CAPITAL GAIN OF CERTAIN INDIVIDUALS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed a deduction against gross income the amount equal to the 
taxpayer's net capital gain for such year.
    ``(b) Limitation Based on Adjusted Gross Income.--
            ``(1) In general.--The amount which would (but for this 
        paragraph) be allowed as a deduction under subsection (a) shall 
        be reduced (but not below zero) by the amount which bears the 
        same ratio to such amount as--
                    ``(A) the excess (if any) of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for the taxable year, over
                            ``(ii) the threshold amount bears to
                    ``(B) $10,000 ($20,000 in the case of a joint 
                return).
            ``(2) Threshold amount.--For purposes of paragraph (1), the 
        threshold amount is $100,000 (twice such amount in the case of 
        a joint return).
            ``(3) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2008, the $100,000 
        amount contained in paragraph (1)(B) 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, determined by substituting 
                `calendar year 2007' for `calendar year 1992' in 
                subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded to the nearest multiple of $1,000.
    ``(c) Modified Adjusted Gross Income.--For purposes of this 
section, the term `modified adjusted gross income' means adjusted gross 
income determined--
            ``(1) without regard to this section and sections 199, 911, 
        931, and 933, and
            ``(2) after application of sections 86, 135, 137, 219, 221, 
        222, and 469.''.
    (b) Coordination With Maximum Capital Gains Rates.--Paragraph (2) 
of section 1(h) of such Code is amended to read as follows:
            ``(2) Reduction of net capital gain.--For purposes of this 
        subsection, the net capital gain for any taxable year shall be 
        reduced (but not below zero) by the sum of--
                    ``(A) the amount which the taxpayer takes into 
                account as investment income under section 
                163(d)(4)(B)(iii), and
                    ``(B) the deduction allowed by section 1203.''.
    (c) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code is amended by 
inserting before the last sentence the following new paragraph:
            ``(22) Net capital gain of certain individuals.--The 
        deduction allowed by section 1203.''.
    (d) Conforming Amendments.--
            (1) Sections 86(b)(2)(A), 135(c)(4)(A), 137(b)(3)(A), and 
        221(b)(2)(C)(i) of such Code are each amended by striking ``and 
        933'' and inserting ``933, and 1203''.
            (2) Subparagraph (B) of section 172(d)(2) of such Code is 
        amended to read as follows:
                    ``(B) the exclusion under section 1202, and the 
                deduction under section 1203, shall not be allowed.''.
            (3) Section 219(g)(3)(A)(ii) of such Code is amended by 
        striking ``and 911'' and inserting ``911, and 1203''.
            (4) Section 469(i)(3)(F)(ii) of such Code is amended by 
        striking ``and 137'' and inserting ``137, and 1203''.
            (5) Paragraph (4) of section 691(c) of such Code is amended 
        by inserting ``1203,'' after ``1202,''.
            (6) Paragraph (2) of section 871(a) of such Code is amended 
        by inserting ``or 1203,'' after ``1202,''.
            (7) The table of sections for part I of subchapter P of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

``Sec. 1203. Deduction for net capital gain of certain individuals.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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