[Congressional Record Volume 144, Number 41 (Thursday, April 2, 1998)]
[Senate]
[Page S3126]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. D'AMATO:
  S. 1911. A bill to amend the Internal Revenue Code of 1986 to provide 
a $500 nonrefundable credit to individuals for the payment of real 
estate taxes; to the Committee on Finance.


            THE WORKING MIDDLE-CLASS TAX RELIEF ACT OF 1998

  Mr. D'AMATO. Mr. President, last year, the Congress delivered some 
long-overdue and much-deserved tax relief to the American people. The 
Taxpayer Relief Act of 1997 provided the first middle-class tax cut in 
16 years.

  The tax cuts we passed last year are making a difference in the 
monthly budgets of working middle-class families. But we can and we 
must do more. These families still send too much of their hard-earned 
money to Washington. And between federal, state, and local taxes, the 
average American's tax bill is nearly 35 percent of their total income. 
In fact, most Americans spend more time working to pay their tax bills 
than they spend working to provide food, clothing, and shelter 
combined. We absolutely must continue our efforts to reduce the tax 
burden.
  One area that escaped our tax-cutting efforts last year was the 
enormous property tax bills paid by homeowners. Last year, hardworking 
Americans paid about $209 billion in real-estate property taxes. This 
was more than one-and-one-half times what individuals paid in state 
income taxes.
  In addition, property tax rates have increased almost twice as fast 
as inflation. Property taxes are spiraling out of control, and the time 
has come to give homeowners some real relief.
  Homeownership is the American dream, but that dream now comes with a 
tax bill that puts a heavy burden on working families. This property 
tax bill also provides a disincentive to any young couple considering 
purchasing a home. We in Washington should change that equation--we 
should be doing everything we can to encourage and assist 
homeownership.
  Today, I am introducing the ``Working Middle-Class Tax Relief Act of 
1998.'' This bill will allow homeowners to take a federal tax credit 
for the first $500 of property taxes paid on their personal residence. 
The Working Middle Class Tax Relief Act will provide real help to 
working families who are struggling to make ends meet, and it will send 
a strong message that homeownership can become a reality for all 
Americans.
  Here are a few examples of how my bill works. Under current law, 
there are nearly 36 million taxpayers who do not get any savings on 
property taxes because they don't file an itemized federal tax return. 
Under my bill, every dollar of property tax that they pay, up to $500, 
will come back to them in the form of federal tax savings.
  Of course, millions of other Americans do itemize. Take, for example, 
a typical family of four with a taxable income of $42,000, and a 
property tax bill of $3,000. Under current law they receive a $450 
federal tax benefit. By turning the first $500 of property taxes into a 
tax credit, my legislation would give this typical family an additional 
$425 savings, for a total tax benefit of $875.
  This savings to homeowners could cut their property tax bill by one-
third or more, and in some cases wipe it out all together. This 
legislation will let working families keep more of their money. That's 
the way it should be. After all, the American people know how to manage 
their own money much better than Washington does.
  The Working Middle-Class Tax Relief Act is real savings for the 66 
million Americans who have realized the dream of owning a home, and it 
will help millions more achieve that dream.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1911

       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 ``Working Middle Class Tax 
     Relief Act of 1998''.

     SEC. 2. NONREFUNDABLE TAX CREDIT FOR REAL ESTATE TAXES ON 
                   PRINCIPAL RESIDENCE.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25A the following:

     ``SEC. 25B. REAL ESTATE TAXES ON PRINCIPAL RESIDENCE.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter for the taxable year an amount equal to the lesser 
     of--
       ``(1) the applicable dollar amount, or
       ``(2) the amount allowable as a deduction under section 164 
     (determined without regard to subsection (c)(3) thereof) for 
     State, local, and foreign real property taxes paid or accrued 
     by the taxpayer on property for periods the property was 
     owned and used by the taxpayer as the taxpayer's principal 
     residence.
       ``(b) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable dollar amount.--The applicable dollar 
     amount shall be determined in accordance with the following 
     table:


``For taxable years                                          The dollar
  beginning in:                                              amount is:
  1999........................................................$100 ....

  2000........................................................ 200 ....

  2001........................................................ 300 ....

  2002........................................................ 400 ....

  2003 and thereafter......................................... 500.....

       ``(2) Principal residence.--The term `principal residence' 
     has the meaning given such term by section 121, except that 
     the period for which a dwelling unit is treated as a 
     principal residence of the taxpayer shall include the 30-day 
     period ending on the first day on which it would (but for 
     this paragraph) be treated as the taxpayer's principal 
     residence.
       ``(3) Joint return required.--Rules similar to the rules of 
     paragraphs (2), (3), and (4) of section 21(e) shall apply.
       ``(4) Ownership and use.--Rules similar to the rules of 
     paragraphs (1), (2), (3), (4), and (7) of section 121(d) 
     shall apply.''
       (b) Denial of Double Benefit.--Section 164(c) of the 
     Internal Revenue Code of 1986 (relating to deduction denied 
     in case of certain taxes) is amended by adding at the end the 
     following:
       ``(3) Taxes on real property to the extent of the amount of 
     the credit allowed under section 25B.''
       (c) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to section 25A the following:

``Sec. 25B. Real estate taxes on principal residence.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______