[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1616 Introduced in Senate (IS)]

113th CONGRESS
  1st Session
                                S. 1616

       To amend the Internal Revenue Code of 1986 to provide for 
  simplification, to reduce the number of tax brackets, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 30, 2013

    Mr. Lee introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
       To amend the Internal Revenue Code of 1986 to provide for 
  simplification, to reduce the number of tax brackets, 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 ``Family Fairness and Opportunity Tax 
Reform Act''.

SEC. 2. CONSOLIDATION OF TAX BRACKETS AND MODIFICATIONS TO TAX RATES.

    (a) In General.--Section 1 of the Internal Revenue Code of 1986 is 
amended by striking subsections (a) through (d) and inserting the 
following:
    ``(a) In General.--There is hereby imposed on the taxable income of 
every individual a tax determined in accordance with the following 
table:

``If taxable income is:             The tax is:
    Not over the first bracket 
        dollar limit.
                                        15% of taxable income.
    Over the first bracket dollar 
        limit.
                                        An amount equal to 15% of the 
                                                first bracket dollar 
                                                limit, plus 35% of the 
                                                excess over such first 
                                                bracket dollar limit.
    ``(b) First Bracket Dollar Limit.--For purposes of this section, 
the first bracket dollar limit is--
            ``(1) in the case of--
                    ``(A) a married individual (as defined in section 
                7703) who makes a single return jointly with the 
                individual's spouse under section 6013, or
                    ``(B) a surviving spouse (as defined in section 
                2(a)),
        200 percent of the amount determined under paragraph (2), and
            ``(2) in the case of any other individual, $87,850.
    ``(c) Inflation Adjustment for Rates Applicable to Individuals.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 2013, the dollar amount in 
        subsection (b)(2) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under subsection (f)(3) for the calendar year in which 
                the taxable year begins, by substituting `calendar year 
                2012' for `calendar year 1992' in subparagraph (B) 
                thereof.
            ``(2) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $50, such amount shall be rounded to 
        the next lowest multiple of $50.''.
    (b) Treatment of Capital Gains Rate.--
            (1) Zero percent rate.--Clause (i) of section 1(h)(1)(B) of 
        the Internal Revenue Code of 1986 is amended to read as 
        follows:
                            ``(i) $36,250 (200 percent of such amount 
                        in the case of a joint return or a surviving 
                        spouse (as defined in section 2(a))), over''.
            (2) 20 percent rate.--Subclause (I) of section 
        1(h)(1)(C)(ii) of such Code is amended to read as follows:
                                    ``(I) $400,000 ($450,000 in the 
                                case of a joint return or a surviving 
                                spouse (as defined in section 2(a))), 
                                over''.
            (3) Inflation adjustment.--Subsection (h) of section 1 of 
        such Code is amended by adding at the end the following new 
        paragraph:
            ``(12) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2013, each of the 
                dollar amounts in subparagraphs (B)(i) and (C)(ii)(I) 
                of paragraph (1) shall be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under subsection (f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `calendar year 2012' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any increase determined under 
                paragraph (1) is not a multiple of $50, such amount 
                shall be rounded to the next lowest multiple of $50.''.
    (c) Conforming Amendments.--
            (1) Subsection (f) of section 1 of such Code is amended--
                    (A) by striking the heading and inserting 
                ``Inflation Adjustments for Estates and Trusts'',
                    (B) in paragraph (1), by striking ``subsections 
                (a), (b), (c), (d), and (e)'' and inserting 
                ``subsection (e)'',
                    (C) in paragraph (2)--
                            (i) by striking ``subsection (a), (b), (c), 
                        (d), and (e), as the case may be,'' and 
                        inserting ``subsection (e)'', and
                            (ii) by striking ``except as provided in 
                        paragraph (8),'', and
                    (D) by striking paragraphs (6), (7), and (8) and 
                inserting the following:
            ``(6) Rounding.--If any increase determined under paragraph 
        (2)(A) is not a multiple of $50, such increase shall be rounded 
        to the next lowest multiple of $50.''.
            (2) Section 1 of such Code is amended by striking 
        subsection (i).
            (3) Section 2 of such Code is amended by striking 
        subsection (b).
            (4) Paragraph (2) of section 25B(b) of the Internal Revenue 
        Code of 1986 is amended to read as follows:
            ``(2) Other returns.--In the case of any taxpayer not 
        described in paragraph (1), the applicable percentage shall be 
        determined under paragraph (1) except that such paragraph shall 
        be applied by substituting for each dollar amount therein (as 
        adjusted under paragraph (3)) a dollar amount equal to 50 
        percent of such dollar amount.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.

SEC. 3. REPEAL OF ALTERNATIVE MINIMUM TAX.

    (a) In General.--Subsection (a) of section 55 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
flush sentence:
``No tax shall be imposed by this section for any taxable year 
beginning after December 31, 2013, and the tentative minimum tax of any 
taxpayer for any such taxable year shall be zero for purposes of this 
title.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2013.

SEC. 4. ADDITIONAL CHILD TAX CREDIT.

    (a) In General.--Section 24 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(g) Additional Refundable Credit.--
            ``(1) In general.--In addition to the amount allowed under 
        subsection (a), there shall be allowed as a credit against tax 
        imposed by this chapter for the taxable year with respect to 
        each qualifying child of the taxpayer an amount equal to 
        $2,500.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2013, the dollar 
                amount in paragraph (1) shall be the greater of the 
                amount in effect under such paragraph for the preceding 
                taxable year or the amount determined under 
                subparagraph (B).
                    ``(B) Adjustment.--
                            ``(i) In general.--Not later than November 
                        1 of 2013, and each subsequent calendar year, 
                        the Secretary shall make and publish the 
                        determination under this subparagraph for the 
                        succeeding calendar year.
                            ``(ii) Amount determined.--The amount 
                        determined under this subparagraph for any 
                        calendar year is an amount equal to--
                                    ``(I) $2,500, multiplied by
                                    ``(II) the ratio of the national 
                                average wage index (as defined in 
                                section 209(k)(1) of the Social 
                                Security Act) for the calendar year 
                                before the calendar year in which the 
                                determination under this subparagraph 
                                is made to the national average wage 
                                index (as so defined) for 2012.
                            ``(iii) Rounding.--If any increase 
                        determined under clause (i) is not a multiple 
                        of $50, such amount shall be rounded to the 
                        next lowest multiple of $50.
            ``(3) Portion of additional credit refundable.--
                    ``(A) In general.--The aggregate credits allowed to 
                a taxpayer under subpart C shall be increased by the 
                lesser of--
                            ``(i) the credit which would be allowed 
                        under this section without regard to this 
                        subsection and the limitation under section 
                        26(a), or
                            ``(ii) the amount by which the aggregate 
                        amount of credits allowed by this subpart 
                        (determined without regard to this subsection) 
                        would increase if the limitation imposed by 
                        section 26(a) were increased by the excess (if 
                        any) of--
                                    ``(I) the taxpayer's social 
                                security taxes for the taxable year, 
                                over
                                    ``(II) the credit allowed under 
                                section 32 for the taxable year.
                        The amount of the credit allowed under this 
                        paragraph shall not be treated as a credit 
                        allowed under this subpart and shall reduce the 
                        amount of credit otherwise allowable under 
                        paragraph (1) without regard to section 26(a).
                    ``(B) Social security taxes.--For purposes of 
                subparagraph (A), the term `social security taxes' has 
                the meaning given such term under subsection (d)(2), 
                except that--
                            ``(i) such term shall include the amount of 
                        taxes imposed by section 3111 and 3221(a) on 
                        amounts paid with respect to such taxpayer 
                        during the calendar year in which the taxable 
                        year begins, and
                            ``(ii) in applying clauses (ii) and (iii) 
                        of subparagraph (A) thereof, `100 percent' 
                        shall be substituted for `50 percent' each 
                        place it appears.
                    ``(C) Coordination with subsection (a).--For 
                purposes of this title, the amount of any refundable 
                credit allowed by reason of subsection (d) shall be 
                taken into account before the application of this 
                paragraph.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 24 of the Internal Revenue 
        Code of 1986 is amended by striking ``for which the taxpayer is 
        allowed a deduction under section 151''.
            (2) Subparagraph (A) of section 24(d)(1) of such Code is 
        amended by striking ``section'' and inserting ``subsection 
        (a)''.
    (c) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2013.

SEC. 5. PERSONAL CREDIT.

    (a) In General.--
            (1) Allowance of credit.--Subpart A of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after section 25D the following new 
        section:

``SEC. 25E. PERSONAL CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed a credit against the tax imposed by this chapter for 
the taxable year an amount equal to--
            ``(1) in the case of an individual who does not file a 
        joint return, $2,000, and
            ``(2) in the case of an individual who files a joint return 
        or a surviving spouse (as defined in section 2(a)), 200 percent 
        of the amount in effect under paragraph (1).
    ``(b) Limitation.--No credit shall be allowed under subsection (a) 
to any individual who is a qualifying child (as defined in section 
24(c)) with respect to whom a credit is allowed under section 24 to 
another taxpayer for any taxable year beginning in the same calendar 
year as such taxable year.
    ``(c) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in a calendar year after 2013, the dollar amount 
        under subsection (a)(1) 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, by substituting `calendar year 
                2012' for `calendar year 1992' in subparagraph (B) 
                thereof.
            ``(2) Rounding.--If any increase determined under paragraph 
        (1) is not a multiple of $50, such amount shall be rounded to 
        the next lowest multiple of $50.''.
            (2) Conforming amendment.--The table of sections for 
        subpart A of part IV of subchapter A of chapter 1 of such Code 
        is amended by inserting after the item relating to section 25D 
        the following new item:

``Sec. 25E. Personal credit.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.

SEC. 6. REPEAL OF STANDARD DEDUCTION, CERTAIN PERSONAL EXEMPTIONS, AND 
              ITEMIZED DEDUCTIONS OTHER THAN THE MORTGAGE INTEREST 
              DEDUCTION AND CHARITABLE CONTRIBUTION DEDUCTION.

    (a) Repeal of Standard Deduction and Itemized Deductions.--
            (1) In general.--Section 63 of the Internal Revenue Code of 
        1986 is amended by striking subsections (b) through (g) and 
        inserting the following:
    ``(b) Itemized Deductions Not Allowed for Individuals.--
            ``(1) In general.--In the case of an individual, no 
        deduction shall be allowed for any itemized deduction.
            ``(2) Itemized deductions.--For purposes of this subtitle, 
        the term `itemized deductions' means the deductions allowable 
        under this chapter other than--
                    ``(A) the deduction for qualified residence 
                interest (as defined in section 163(h)(3)),
                    ``(B) the deduction allowed under section 170, and
                    ``(C) any other deductions allowable in arriving at 
                adjusted gross income.''.
            (2) Conforming amendment.--Subsection (a) of section 63 is 
        amended by striking ``(other than the standard deduction)''.
    (b) Repeal of Personal Exemptions for Taxpayer and Spouse.--Section 
151 of such Code is amended by striking subsection (b).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2013.

SEC. 7. MODIFICATIONS TO MORTGAGE INTEREST DEDUCTION.

    (a) In General.--Clause (ii) of section 163(h)(3)(B) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking ``$1,000,000 ($500,000 in the case of a 
        married individual filing a separate return'' and inserting 
        ``$300,000'', and
            (2) by striking ``$1,000,000'' in the heading and inserting 
        ``$300,000''.
    (b) Effective Date.--The amendments made by this section shall 
apply to indebtedness incurred in taxable years beginning after 
December 31, 2013.

SEC. 8. REPEAL OF ADDITIONAL HEALTH TAXES.

    (a) Repeal of Additional Hospital Insurance Tax on High-Income 
Taxpayers.--
            (1) FICA.--
                    (A) In general.--Section 3101(b) of the Internal 
                Revenue Code of 1986 is amended to read as follows:
    ``(b) Hospital Insurance.--In addition to the tax imposed by the 
preceding subsection, there is hereby imposed on the income of every 
individual a tax equal to 1.45 percent of the wages (as defined in 
section 3121(a)) received by him with respect to employment (as defined 
in section 3121(b)).''.
                    (B) Conforming amendments.--
                            (i) Section 3102 of such Code is amended by 
                        striking subsection (f).
                            (ii) Section 6654 of the Internal Revenue 
                        Code of 1986 is amended by striking subsection 
                        (m) and by redesignating subsections (n) as 
                        subsection (m).
            (2) SECA.--
                    (A) In general.--Section 1401(b) of the Internal 
                Revenue Code of 1986 is amended to read as follows:
    ``(b) Hospital Insurance.--In addition to the tax imposed by the 
preceding subsection, there is hereby imposed for each taxable year, on 
the self-employment income of every individual, a tax equal to 2.90 
percent of the amount of the self-employment income for such taxable 
year.''.
                    (B) Conforming amendments.--
                            (i) Section 164(f) of such Code is amended 
                        by striking ``(other than the taxes imposed by 
                        section 1402(b)(2))''.
                            (ii) Section 1402(a)(12)(B) of such Code is 
                        amended by striking ``(determined without 
                        regard to the rate imposed under paragraph (2) 
                        of section 1401(b))''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to remuneration received, and taxable 
        years beginning after, December 31, 2013.
    (b) Repeal of Unearned Income Medicare Contribution.--
            (1) In general.--Subtitle A of the Internal Revenue Code of 
        1986 is amended by striking chapter 2A.
            (2) Conforming amendments.--
                    (A) Section 6654 of the Internal Revenue Code of 
                1986 is amended--
                            (i) in subsection (a), by striking ``the 
                        tax under chapter 2, and the tax under chapter 
                        2A'' and inserting ``and the tax imposed under 
                        chapter 2'', and
                            (ii) in subsection (f)--
                                    (I) by striking paragraph (3) and 
                                redesignating paragraph (4) as 
                                paragraph (3), and
                                    (II) by striking ``plus'' at the 
                                end of paragraph (2) and inserting 
                                ``minus''.
                    (B) The table of chapters for subchapter A of 
                chapter 1 of such Code is amended by striking the item 
                relating to chapter 2A.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2013.

SEC. 9. TECHNICAL AND CONFORMING AMENDMENTS.

    The Secretary of the Treasury or the Secretary's delegate shall, 
not later than 90 days after the date of the enactment of this Act, 
submit to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate a draft of 
any technical and conforming changes in the Internal Revenue Code of 
1986 which are necessary to reflect throughout such Code the purposes 
of the provisions of, and amendments made by, this Act.
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