Income disparity tax credit

(a)

In general

Part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 32 the following new section:

32A.

Income disparity credit

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to income disparity credit amount with respect to the taxpayer for the taxable year. (b)

Income disparity credit amount

For purposes of this section— (1)

In general

The income disparity credit amount shall be an amount equal to the applicable credit amount reduced (but not below zero) by the applicable percentage of so much of the taxpayer’s modified adjusted gross income as exceeds the phaseout threshold. (2)

Applicable amount; percentage

The applicable credit amount, the applicable percentage, and the phaseout threshold shall be determined as follows: In the case of a taxpayer with:The applicable credit amount is:The applicable percentage is:The phaseout threshold is: No dependents$2,50031/3$15,000 1 dependent$4,00051/3$20,000 2 dependents$4,5006$25,000 3 or more dependents$5,00062/3$30,000.

(c)

Definitions and special rules

For purposes of this section— (1)

Dependent

The term dependent has the meaning given such term by section 152 (determined without regard to subsections (b)(2) and (d)(1)(B) thereof.) (2)

Modified adjusted gross income

The term modified adjusted gross income means adjusted gross income increased by— (A)any amount excluded from gross income under section 911, 931, or 933, (B)any amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax, (C)an amount equal to the portion of the taxpayer’s social security benefits (as defined in section 86(d)) which is not included in gross income under section 86 for the taxable year, and (D)any Federal assistance otherwise excluded from gross income. (3)

Married individuals

In the case of an individual who is married (within the meaning of section 7703), this section shall apply only if a joint return is filed for the taxable year under section 6013. (4)

Rule for excessive investment income

No credit shall be allowed under subsection (a) for the taxable year if the aggregate amount of disqualified income (as defined in section 32(i)(1)) of the taxpayer for the taxable year exceeds $3,100. (5)

Dependent ineligible

If an individual is a dependent with respect to a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be allowed a credit under this section for any taxable year of such individual beginning in such calendar year. (6)

Limitation on eligibility of nonresident aliens

No credit shall be allowed with respect to any individual who is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013. (7)

Principal place of abode in United States

(A)

In general

No credit shall be allowed with respect to an individual for a taxable year, unless such individual’s principal place of abode is in the United States for more than 1/2 of such taxable year. (B)

Treatment of military personnel stationed outside the United States

Rules similar to the rules of section 32(c)(4) shall apply for purposes of subparagraph (A). (8)

Minimum hours of service

(A)

In general

No credit shall be allowed under subsection (a) with respect to an individual unless such individual (or, if married, such individual’s spouse) has performed 390 hours of service or more for an employer during the taxable year. (B)

Special rule for self-employment

A taxpayer who is an employee within the meaning of section 401(c)(1) shall be treated as performing service for an employer for purposes of this paragraph. (9)

Identifying information required

No credit shall be allowed under subsection (a) with respect to an individual unless the TIN of such individual, and the TIN of any dependent taken into account under this section with respect to such individual, is included on the return claiming the credit. (d)

Inflation adjustment

In the case of any taxable year beginning in a calendar year after 2012, each of the dollar amounts in the table in subsection (b)(2) and the dollar amount in subsection (c)(4) shall be increased by an amount equal to— (1)such dollar amount, multiplied by (2)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 2011 for calendar year 1992 in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $10.

(b)

Clerical amendment

The table of sections for part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 32 the following new item:

Sec. 32A. Income disparity credit.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2011.