[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3393 Placed on Calendar Senate (PCS)]

                                                       Calendar No. 457
112th CONGRESS
  2d Session
                                S. 3393

  To amend the Internal Revenue Code of 1986 to provide tax relief to 
                         middle-class families.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 17, 2012

 Mr. Reid introduced the following bill; which was read the first time

                             July 18, 2012

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to provide tax relief to 
                         middle-class families.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Middle Class Tax 
Cut Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; etc.
               TITLE I--TEMPORARY EXTENSION OF TAX RELIEF

Sec. 101. Temporary extension of 2001 tax relief.
Sec. 102. Temporary extension of 2003 tax relief.
Sec. 103. Temporary extension of 2010 tax relief.
Sec. 104. Temporary extension of election to expense certain 
                            depreciable business assets.
                      TITLE II--ESTATE TAX RELIEF

Sec. 201. Modifications to estate, gift, and generation-skipping 
                            transfer taxes.
               TITLE III--ALTERNATIVE MINIMUM TAX RELIEF

Sec. 301. Temporary extension of increased alternative minimum tax 
                            exemption amount.
Sec. 302. Temporary extension of alternative minimum tax relief for 
                            nonrefundable personal credits.
                      TITLE IV--BUDGETARY EFFECTS

Sec. 401. Budgetary effects.

               TITLE I--TEMPORARY EXTENSION OF TAX RELIEF

SEC. 101. TEMPORARY EXTENSION OF 2001 TAX RELIEF.

    (a) Temporary Extension.--
            (1) In general.--Section 901 of the Economic Growth and Tax 
        Relief Reconciliation Act of 2001 is amended by striking 
        ``December 31, 2012'' both places it appears and inserting 
        ``December 31, 2013''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the enactment of the 
        Economic Growth and Tax Relief Reconciliation Act of 2001.
    (b) Application to Certain High-Income Taxpayers.--
            (1) Income tax rates.--
                    (A) Treatment of 25- and 28-percent rate 
                brackets.--Paragraph (2) of section 1(i) is amended to 
                read as follows:
            ``(2) 25- and 28-percent rate brackets.--The tables under 
        subsections (a), (b), (c), (d), and (e) shall be applied--
                    ``(A) by substituting `25%' for `28%' each place it 
                appears (before the application of subparagraph (B)), 
                and
                    ``(B) by substituting `28%' for `31%' each place it 
                appears.''.
                    (B) 33-percent rate bracket.--Subsection (i) of 
                section 1 is amended by redesignating paragraph (3) as 
                paragraph (4) and by inserting after paragraph (2) the 
                following new paragraph:
            ``(3) 33-percent rate bracket.--
                    ``(A) In general.--In the case of taxable years 
                beginning after December 31, 2012--
                            ``(i) the rate of tax under subsections 
                        (a), (b), (c), and (d) on a taxpayer's taxable 
                        income in the fourth rate bracket shall be 33 
                        percent to the extent such income does not 
                        exceed an amount equal to the excess of--
                                    ``(I) the applicable amount, over
                                    ``(II) the dollar amount at which 
                                such bracket begins, and
                            ``(ii) the 36 percent rate of tax under 
                        such subsections shall apply only to the 
                        taxpayer's taxable income in such bracket in 
                        excess of the amount to which clause (i) 
                        applies.
                    ``(B) Applicable amount.--For purposes of this 
                paragraph, the term `applicable amount' means the 
                excess of--
                            ``(i) the applicable threshold, over
                            ``(ii) the sum of the following amounts in 
                        effect for the taxable year:
                                    ``(I) the basic standard deduction 
                                (within the meaning of section 
                                63(c)(2)), and
                                    ``(II) the exemption amount (within 
                                the meaning of section 151(d)(1) (or, 
                                in the case of subsection (a), 2 such 
                                exemption amounts).
                    ``(C) Applicable threshold.--For purposes of this 
                paragraph, the term `applicable threshold' means--
                            ``(i) $250,000 in the case of subsection 
                        (a),
                            ``(ii) $225,000 in the case of subsection 
                        (b),
                            ``(iii) $200,000 in the case of subsections 
                        (c), and
                            ``(iv) \1/2\ the amount applicable under 
                        clause (i) (after adjustment, if any, under 
                        subparagraph (E)) in the case of subsection 
                        (d).
                    ``(D) Fourth rate bracket.--For purposes of this 
                paragraph, the term `fourth rate bracket' means the 
                bracket which would (determined without regard to this 
                paragraph) be the 36-percent rate bracket.
                    ``(E) Inflation adjustment.--For purposes of this 
                paragraph, with respect to taxable years beginning in 
                calendar years after 2012, each of the dollar amounts 
                under clauses (i), (ii), and (iii) of subparagraph (C) 
                shall be adjusted in the same manner as under paragraph 
                (1)(C), except that subsection (f)(3)(B) shall be 
                applied by substituting `2008' for `1992'.''.
            (2) Phaseout of personal exemptions and itemized 
        deductions.--
                    (A) Overall limitation on itemized deductions.--
                Section 68 is amended--
                            (i) by striking ``the applicable amount'' 
                        the first place it appears in subsection (a) 
                        and inserting ``the applicable threshold in 
                        effect under section 1(i)(3)'',
                            (ii) by striking ``the applicable amount'' 
                        in subsection (a)(1) and inserting ``such 
                        applicable threshold'',
                            (iii) by striking subsection (b) and 
                        redesignating subsections (c), (d), and (e) as 
                        subsections (b), (c), and (d), respectively, 
                        and
                            (iv) by striking subsections (f) and (g).
                    (B) Phaseout of deductions for personal 
                exemptions.--
                            (i) In general.--Paragraph (3) of section 
                        151(d) is amended--
                                    (I) by striking ``the threshold 
                                amount'' in subparagraphs (A) and (B) 
                                and inserting ``the applicable 
                                threshold in effect under section 
                                1(i)(3)'',
                                    (II) by striking subparagraph (C) 
                                and redesignating subparagraph (D) as 
                                subparagraph (C), and
                                    (III) by striking subparagraphs (E) 
                                and (F).
                            (ii) Conforming amendments.--Paragraph (4) 
                        of section 151(d) is amended--
                                    (I) by striking subparagraph (B),
                                    (II) by redesignating clauses (i) 
                                and (ii) of subparagraph (A) as 
                                subparagraphs (A) and (B), 
                                respectively, and by indenting such 
                                subparagraphs (as so redesignated) 
                                accordingly, and
                                    (III) by striking all that precedes 
                                ``in a calendar year after 1989,'' and 
                                inserting the following:
            ``(4) Inflation adjustment.--In the case of any taxable 
        year beginning''.
    (c) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to taxable years beginning after 
December 31, 2012.
    (d) Application of EGTRRA Sunset.--Each amendment made by 
subsection (b) shall be subject to title IX of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 to the same extent and in the 
same manner as if such amendment was included in title I of such Act.

SEC. 102. TEMPORARY EXTENSION OF 2003 TAX RELIEF.

    (a) Extension.--
            (1) In general.--Section 303 of the Jobs and Growth Tax 
        Relief Reconciliation Act of 2003 is amended by striking 
        ``December 31, 2012'' and inserting ``December 31, 2013''.
            (2) Effective date.--The amendment made by this subsection 
        shall take effect as if included in the enactment of the Jobs 
        and Growth Tax Relief Reconciliation Act of 2003.
    (b) 20-Percent Capital Gains Rate for Certain High Income 
Individuals.--
            (1) In general.--Paragraph (1) of section 1(h) is amended 
        by striking subparagraph (C), by redesignating subparagraphs 
        (D) and (E) as subparagraphs (E) and (F) and by inserting after 
        subparagraph (B) the following new subparagraphs:
                    ``(C) 15 percent of the lesser of--
                            ``(i) so much of the adjusted net capital 
                        gain (or, if less, taxable income) as exceeds 
                        the amount on which a tax is determined under 
                        subparagraph (B), or
                            ``(ii) the excess (if any) of--
                                    ``(I) the amount of taxable income 
                                which would (without regard to this 
                                paragraph) be taxed at a rate below 36 
                                percent, over
                                    ``(II) the sum of the amounts on 
                                which a tax is determined under 
                                subparagraphs (A) and (B),
                    ``(D) 20 percent of the adjusted net capital gain 
                (or, if less, taxable income) in excess of the sum of 
                the amounts on which tax is determined under 
                subparagraphs (B) and (C),''.
            (2) Minimum tax.--Paragraph (3) of section 55(b) is amended 
        by striking subparagraph (C), by redesignating subparagraph (D) 
        as subparagraph (E), and by inserting after subparagraph (B) 
        the following new subparagraphs:
                    ``(C) 15 percent of the lesser of--
                            ``(i) so much of the adjusted net capital 
                        gain (or, if less, taxable excess) as exceeds 
                        the amount on which tax is determined under 
                        subparagraph (B), or
                            ``(ii) the excess described in section 
                        1(h)(1)(C)(ii), plus
                    ``(D) 20 percent of the adjusted net capital gain 
                (or, if less, taxable excess) in excess of the sum of 
                the amounts on which tax is determined under 
                subparagraphs (B) and (C), plus''.
    (c) Conforming Amendments.--
            (1) The following provisions are each amended by striking 
        ``15 percent'' and inserting ``20 percent'':
                    (A) Section 531.
                    (B) Section 541.
                    (C) Section 1445(e)(1).
                    (D) The second sentence of section 7518(g)(6)(A).
                    (E) Section 53511(f)(2) of title 46, United States 
                Code.
            (2) Sections 1(h)(1)(B) and 55(b)(3)(B) are each amended by 
        striking ``5 percent (0 percent in the case of taxable years 
        beginning after 2007)'' and inserting ``0 percent''.
            (3) Section 1445(e)(6) is amended by striking ``15 percent 
        (20 percent in the case of taxable years beginning after 
        December 31, 2010)'' and inserting ``20 percent''.
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided, the 
        amendments made by subsections (b) and (c) shall apply to 
        taxable years beginning after December 31, 2012.
            (2) Withholding.--The amendments made by paragraphs (1)(C) 
        and (3) of subsection (c) shall apply to amounts paid on or 
        after January 1, 2013.
    (e) Application of JGTRRA Sunset.--Each amendment made by 
subsections (b) and (c) shall be subject to section 303 of the Jobs and 
Growth Tax Relief Reconciliation Act of 2003 to the same extent and in 
the same manner as if such amendment was included in title III of such 
Act.

SEC. 103. TEMPORARY EXTENSION OF 2010 TAX RELIEF.

    (a) American Opportunity Tax Credit.--
            (1) In general.--Section 25A(i) is amended by striking ``or 
        2012'' and inserting ``2012, or 2013''.
            (2) Treatment of possessions.--Section 1004(c)(1) of 
        division B of the American Recovery and Reinvestment Tax Act of 
        2009 is amended by striking ``and 2012'' each place it appears 
        and inserting ``2012, and 2013''.
    (b) Child Tax Credit.--Section 24(d)(4) is amended--
            (1) by striking ``and 2012'' in the heading and inserting 
        ``2012, and 2013'', and
            (2) by striking ``or 2012'' and inserting ``2012, or 
        2013''.
    (c) Earned Income Tax Credit.--Section 32(b)(3) is amended--
            (1) by striking ``and 2012'' in the heading and inserting 
        ``2012, and 2013'', and
            (2) by striking ``or 2012'' and inserting ``2012, or 
        2013''.
    (d) Temporary Extension of Rule Disregarding Refunds in the 
Administration of Federal Programs and Federally Assisted Programs.--
Subsection (b) of section 6409 is amended by striking ``December 31, 
2012'' and inserting ``December 31, 2013''.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2012.
            (2) Rule disregarding refunds in the administration of 
        certain programs.--The amendment made by subsection (d) shall 
        apply to amounts received after December 31, 2012.

SEC. 104. TEMPORARY EXTENSION OF ELECTION TO EXPENSE CERTAIN 
              DEPRECIABLE BUSINESS ASSETS.

    (a) In General.--
            (1) Dollar limitation.--Section 179(b)(1) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C),
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E),
                    (C) by inserting after subparagraph (C) the 
                following new subparagraph:
                    ``(D) $250,000 in the case of taxable years 
                beginning in 2013, and'', and
                    (D) in subparagraph (E), as so redesignated, by 
                striking ``2012'' and inserting ``2013''.
            (2) Reduction in limitation.--Section 179(b)(2) is 
        amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C),
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E),
                    (C) by inserting after subparagraph (C) the 
                following new subparagraph:
                    ``(D) $800,000 in the case of taxable years 
                beginning in 2013, and'', and
                    (D) in subparagraph (E), as so redesignated, by 
                striking ``2012'' and inserting ``2013''.
    (b) Computer Software.--Section 179(d)(1)(A)(ii) is amended by 
striking ``2013'' and inserting ``2014''.
    (c) Election.--Section 179(c)(2) is amended by striking ``2013'' 
and inserting ``2014''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2012.

                      TITLE II--ESTATE TAX RELIEF

SEC. 201. MODIFICATIONS TO ESTATE, GIFT, AND GENERATION-SKIPPING 
              TRANSFER TAXES.

    (a) Modifications to Estate Tax.--
            (1) Exclusion amount.--Paragraph (3) of section 2010(c) is 
        amended to read as follows:
            ``(3) Basic exclusion amount.--For purposes of this 
        section, the basic exclusion amount is $3,500,000.''.
            (2) Maximum estate tax rate.--The table in subsection (c) 
        of section 2001 is amended by striking ``Over $500,000'' and 
        all that follows and inserting the following:

    ``Over $500,000 but not over 
        $750,000.
                                        $155,800, plus 37 percent of 
                                                the excess of such 
                                                amount over $500,000.
    Over $750,000 but not over 
        $1,000,000.
                                        $248,300, plus 39 percent of 
                                                the excess of such 
                                                amount over $750,000.
    Over $1,000,000 but not over 
        $1,250,000.
                                        $345,800, plus 41 percent of 
                                                the excess of such 
                                                amount over $1,000,000.
    Over $1,250,000 but not over 
        $1,500,000.
                                        $448,300, plus 43 percent of 
                                                the excess of such 
                                                amount over $1,250,000.
    Over $1,500,000................
                                        $555,800, plus 45 percent of 
                                                the excess of such 
                                                amount over 
                                                $1,500,000.''.
    (b) Modifications of Estate and Gift Taxes To Reflect Differences 
in Credit Resulting From Different Tax Rates and Exclusion Amounts.--
            (1) Changing tax rates.--Notwithstanding section 304 of the 
        Tax Relief, Unemployment Insurance Reauthorization, and Job 
        Creation Act of 2010, section 901 of the Economic Growth and 
        Tax Relief Reconciliation Act of 2001 shall not apply to the 
        amendments made by section 302(d) of the Tax Relief, 
        Unemployment Insurance Reauthorization, and Job Creation Act of 
        2010.
            (2) Decreasing exclusions.--
                    (A) Estate tax adjustment.--Section 2001 is amended 
                by adding at the end the following new subsection:
    ``(h) Adjustment To Reflect Changes in Exclusion Amount.--
            ``(1) In general.--If, with respect to any gift to which 
        subsection (b)(2) applies, the applicable exclusion amount in 
        effect at the time of the decedent's death is less than such 
        amount in effect at the time such gift is made by the decedent, 
        the amount of tax computed under subsection (b) shall be 
        reduced by the amount of tax which would have been payable 
        under chapter 12 at the time of the gift if the applicable 
        exclusion amount in effect at such time had been the applicable 
        exclusion amount in effect at the time of the decedent's death 
        and the modifications described in subsection (g) had been 
        applicable at the time of such gifts.
            ``(2) Limitation.--The aggregate amount of gifts made in 
        any calendar year to which the reduction under paragraph (1) 
        applies shall not exceed the excess of--
                    ``(A) the applicable exclusion amount in effect for 
                such calendar year, over
                    ``(B) the applicable exclusion amount in effect at 
                the time of the decedent's death.
            ``(3) Applicable exclusion amount.--The term `applicable 
        exclusion amount' means, with respect to any period, the amount 
        determined under section 2010(c) for such period, except that 
        in the case of any period for which such amount includes the 
        deceased spousal unused exclusion amount (as defined in section 
        2010(c)(4)), such term shall mean the basic exclusion amount 
        (as defined under section 2010(c)(3), as in effect for such 
        period).''.
                    (B) Gift tax adjustment.--Section 2502 is amended 
                by adding at the end the following new subsection:
    ``(d) Adjustment To Reflect Changes in Exclusion Amount.--
            ``(1) In general.--If the taxpayer made a taxable gift in 
        an applicable preceding calendar period, the amount of tax 
        computed under subsection (a) shall be reduced by the amount of 
        tax which would have been payable under chapter 12 for such 
        applicable preceding calendar period if the applicable 
        exclusion amount in effect for such preceding calendar period 
        had been the applicable exclusion amount in effect for the 
        calendar year for which the tax is being computed and the 
        modifications described in subsection (g) had been applicable 
        for such preceding calendar period.
            ``(2) Limitation.--The aggregate amount of gifts made in 
        any applicable preceding calendar period to which the reduction 
        under paragraph (1) applies shall not exceed the excess of--
                    ``(A) the applicable exclusion amount for such 
                preceding calendar period, over
                    ``(B) the applicable exclusion amount for the 
                calendar year for which the tax is being computed.
            ``(3) Applicable preceding calendar year period.--The term 
        `applicable preceding calendar year period' means any preceding 
        calendar year period in which the applicable exclusion amount 
        exceeded the applicable exclusion amount for the calendar year 
        for which the tax is being computed.
            ``(4) Applicable exclusion amount.--The term `applicable 
        exclusion amount' means, with respect to any period, the amount 
        determined under section 2010(c) for such period, except that 
        in the case of any period for which such amount includes the 
        deceased spousal unused exclusion amount (as defined in section 
        2010(c)(4)), such term shall mean the basic exclusion amount 
        (as defined under section 2010(c)(3), as in effect for such 
        period).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and generation-skipping transfers 
and gifts made, after December 31, 2012.
    (d) Application of EGTRRA Sunset.--Section 901 of the Economic 
Growth and Tax Relief Reconciliation Act shall apply to the amendments 
made by subsection (a).

               TITLE III--ALTERNATIVE MINIMUM TAX RELIEF

SEC. 301. TEMPORARY EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX 
              EXEMPTION AMOUNT.

    (a) In General.--Paragraph (1) of section 55(d) is amended--
            (1) by striking ``$72,450'' and all that follows through 
        ``2011'' in subparagraph (A) and inserting ``$78,750 in the 
        case of taxable years beginning in 2012'', and
            (2) by striking ``$47,450'' and all that follows through 
        ``2011'' in subparagraph (B) and inserting ``$50,600 in the 
        case of taxable years beginning in 2012''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 302. TEMPORARY EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR 
              NONREFUNDABLE PERSONAL CREDITS.

    (a) In General.--Paragraph (2) of section 26(a) is amended--
            (1) by striking ``or 2011'' and inserting ``2011, or 
        2012'', and
            (2) by striking ``2011'' in the heading thereof and 
        inserting ``2012''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

                      TITLE IV--BUDGETARY EFFECTS

SEC. 401. BUDGETARY EFFECTS.

    (a) PAYGO Scorecard.--The budgetary effects of this Act shall not 
be entered on either PAYGO scorecard maintained pursuant to section 
4(d) of the Statutory Pay-As-You-Go Act of 2010.
    (b) Senate PAYGO Scorecard.--The budgetary effects of this Act 
shall not be entered on any PAYGO scorecard maintained for purposes of 
section 201 of S. Con. Res. 21 (110th Congress).
                                                       Calendar No. 457

112th CONGRESS

  2d Session

                                S. 3393

_______________________________________________________________________

                                 A BILL

  To amend the Internal Revenue Code of 1986 to provide tax relief to 
                         middle-class families.

_______________________________________________________________________

                             July 18, 2012

            Read the second time and placed on the calendar