[Congressional Record Volume 144, Number 141 (Friday, October 9, 1998)]
[Senate]
[Pages S12205-S12208]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               FINANCIAL SERVICES COMPETITION ACT OF 1998

                                 ______
                                 

                        LOTT AMENDMENT NO. 3804

  Mr. LOTT proposed an amendment to the motion to recommit proposed by 
him to the bill (H.R. 10) to enhance competition in the financial 
services industry by providing a prudential framework for the 
affiliation of banks, securities firms, and other financial service 
providers, and for other purposes; as follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; AMENDMENT TO 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Parent and 
     Student Savings Account PLUS Act''.
       (b) Amendment to 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 for this Act 
     is as follows:

Sec. 1. Short title; amendment to 1986 Code; table of contents.

                 TITLE I--TAX INCENTIVES FOR EDUCATION

Sec. 101. Modifications to education individual retirement accounts.
Sec. 102. Exclusion from gross income of education distributions from 
              qualified State tuition programs.
Sec. 103. Extension of exclusion for employer-provided educational 
              assistance.
Sec. 104. Additional increase in arbitrage rebate exception for 
              governmental bonds used to finance education facilities.
Sec. 105. Exclusion of certain amounts received under the National 
              Health Corps Scholarship program.

                           TITLE II--REVENUE

Sec. 201. Clarification of deduction for deferred compensation.
Sec. 202. Modification to foreign tax credit carryback and carryover 
              periods.

                 TITLE I--TAX INCENTIVES FOR EDUCATION

     SEC. 101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT 
                   ACCOUNTS.

       (a) Tax-Free Expenditures for Elementary and Secondary 
     School Expenses.--

[[Page S12206]]

       (1) In general.--Section 530(b)(2) (defining qualified 
     higher education expenses) is amended to read as follows:
       ``(2) Qualified education expenses.--
       ``(A) In general.--The term `qualified education expenses' 
     means--
       ``(i) qualified higher education expenses (as defined in 
     section 529(e)(3)), and
       ``(ii) qualified elementary and secondary education 
     expenses (as defined in paragraph (4)).

     Such expenses shall be reduced as provided in section 
     25A(g)(2).
       ``(B) Qualified state tuition programs.--Such term shall 
     include amounts paid or incurred to purchase tuition credits 
     or certificates, or to make contributions to an account, 
     under a qualified State tuition program (as defined in 
     section 529(b)) for the benefit of the beneficiary of the 
     account.''
       (2) Qualified elementary and secondary education 
     expenses.--Section 530(b) (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(4) Qualified elementary and secondary education 
     expenses.--
       ``(A) In general.--The term `qualified elementary and 
     secondary education expenses' means--
       ``(i) expenses for tuition, fees, academic tutoring, 
     special needs services, books, supplies, computer equipment 
     (including related software and services), and other 
     equipment which are incurred in connection with the 
     enrollment or attendance of the designated beneficiary of the 
     trust as an elementary or secondary school student at a 
     public, private, or religious school, or
       ``(ii) expenses for room and board, uniforms, 
     transportation, and supplementary items and services 
     (including extended day programs) which are required or 
     provided by a public, private, or religious school in 
     connection with such enrollment or attendance.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A)(i) in 
     connection with education provided by homeschooling if the 
     requirements of any applicable State or local law are met 
     with respect to such education.
       ``(C) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.''
       (3) Special rules for applying exclusion to elementary and 
     secondary expenses.--Section 530(d)(2) (relating to 
     distributions for qualified higher education expenses) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Special rules for elementary and secondary 
     expenses.--
       ``(i) In general.--The aggregate amount of qualified 
     elementary and secondary education expenses taken into 
     account for purposes of this paragraph with respect to any 
     education individual retirement account for all taxable years 
     shall not exceed the sum of the aggregate contributions to 
     such account for taxable years beginning after December 31, 
     1998, and before January 1, 2003, and earnings on such 
     contributions.
       ``(ii) Special operating rules.--For purposes of clause 
     (i)--

       ``(I) the trustee of an education individual retirement 
     account shall keep separate accounts with respect to 
     contributions and earnings described in clause (i), and
       ``(II) if there are distributions in excess of qualified 
     elementary and secondary education expenses for any taxable 
     year, such excess distributions shall be allocated first to 
     contributions and earnings not described in clause (i).''

       (4) Conforming amendments.--Subsections (b)(1) and (d)(2) 
     of section 530 are each amended by striking ``higher'' each 
     place it appears in the text and heading thereof.
       (b) Maximum Annual Contributions.--
       (1) In general.--Section 530(b)(1)(A)(iii) (defining 
     education individual retirement account) is amended by 
     striking ``$500'' and inserting ``the contribution limit for 
     such taxable year''.
       (2) Contribution limit.--Section 530(b) (relating to 
     definitions and special rules), as amended by subsection 
     (a)(2), is amended by adding at the end the following new 
     paragraph:
       ``(5) Contribution limit.--The term `contribution limit' 
     means $500 ($2,000 in the case of any taxable year beginning 
     after December 31, 1998, and ending before January 1, 
     2003).''
       (3) Conforming amendments.--
       (A) Section 530(d)(4)(C) is amended by striking ``$500'' 
     and inserting ``the contribution limit for such taxable 
     year''.
       (B) Section 4973(e)(1)(A) is amended by striking ``$500'' 
     and inserting ``the contribution limit (as defined in section 
     530(b)(5)) for such taxable year''.
       (c) Waiver of Age Limitations for Children With Special 
     Needs.--Section 530(b)(1) (defining education individual 
     retirement account) is amended by adding at the end the 
     following flush sentence:

     ``The age limitations in the preceding sentence shall not 
     apply to any designated beneficiary with special needs (as 
     determined under regulations prescribed by the Secretary).''
       (d) Corporations Permitted To Contribute to Accounts.--
     Section 530(c)(1) (relating to reduction in permitted 
     contributions based on adjusted gross income) is amended by 
     striking ``The maximum amount which a contributor'' and 
     inserting ``In the case of a contributor who is an 
     individual, the maximum amount the contributor''.
       (e) No Double Benefit.--Section 530(d)(2) (relating to 
     distributions for qualified education expenses), as amended 
     by subsection (a)(3), is amended by adding at the end the 
     following new subparagraph:
       ``(E) Disallowance of excluded amounts as credit or 
     deduction.--No deduction or credit shall be allowed to the 
     taxpayer under any other section of this chapter for any 
     qualified education expenses to the extent taken into account 
     in determining the amount of the exclusion under this 
     paragraph.''
       (f) Technical Corrections.--
       (1)(A) Section 530(b)(1)(E) (defining education individual 
     retirement account) is amended to read as follows:
       ``(E) Any balance to the credit of the designated 
     beneficiary on the date on which the beneficiary attains age 
     30 shall be distributed within 30 days after such date to the 
     beneficiary or, if the beneficiary dies before attaining age 
     30, shall be distributed within 30 days after the date of 
     death to the estate of such beneficiary.''
       (B) Section 530(d) (relating to tax treatment of 
     distributions) is amended by adding at the end the following 
     new paragraph:
       ``(8) Deemed distribution on required distribution date.--
     In any case in which a distribution is required under 
     subsection (b)(1)(E), any balance to the credit of a 
     designated beneficiary as of the close of the 30-day period 
     referred to in such subsection for making such distribution 
     shall be deemed distributed at the close of such period.''
       (2)(A) Section 530(d)(1) is amended by striking ``section 
     72(b)'' and inserting ``section 72''.
       (B) Section 72(e) (relating to amounts not received as 
     annuities) is amended by inserting after paragraph (8) the 
     following new paragraph:
       ``(9) Extension of paragraph (2)(b) to qualified state 
     tuition programs and educational individual retirement 
     accounts.--Notwithstanding any other provision of this 
     subsection, paragraph (2)(B) shall apply to amounts received 
     under a qualified State tuition program (as defined in 
     section 529(b)) or under an education individual retirement 
     account (as defined in section 530(b)). The rule of paragraph 
     (8)(B) shall apply for purposes of this paragraph.''
       (3) Section 530(d)(4)(B) (relating to exceptions) is 
     amended by striking ``or'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``, or'', and by adding at the end the following new clause:
       ``(iv) an amount which is includible in gross income solely 
     because the taxpayer elected under paragraph (2)(C) to waive 
     the application of paragraph (2) for the taxable year.''
       (g) 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, 1998.
       (2) Technical corrections.--The amendments made by 
     subsection (f) shall take effect as if included in the 
     amendments made by section 213 of the Taxpayer Relief Act of 
     1997.

     SEC. 102. EXCLUSION FROM GROSS INCOME OF EDUCATION 
                   DISTRIBUTIONS FROM QUALIFIED STATE TUITION 
                   PROGRAMS.

       (a) In General.--Section 529(c)(3)(B) (relating to 
     distributions) is amended to read as follows:
       ``(B) Distributions for qualified higher education 
     expenses.--
       ``(i) In general.--No amount shall be includible in gross 
     income under subparagraph (A) if the qualified higher 
     education expenses of the designated beneficiary during the 
     taxable year are not less than the aggregate distributions 
     during the taxable year.
       ``(ii) Distributions in excess of expenses.--If such 
     aggregate distributions exceed such expenses during the 
     taxable year, the amount otherwise includible in gross income 
     under subparagraph (A) shall be reduced by the amount which 
     bears the same ratio to the amount so includible (without 
     regard to this subparagraph) as such expenses bear to such 
     aggregate distributions.
       ``(iii) Election to waive exclusion.--A taxpayer may elect 
     to waive the application of this subparagraph for any taxable 
     year.
       ``(iv) In-kind distributions.--Any benefit furnished to a 
     designated beneficiary under a qualified State tuition 
     program shall be treated as a distribution to the beneficiary 
     for purposes of this paragraph.
       ``(v) Disallowance of excluded amounts as credit or 
     deduction.--No deduction or credit shall be allowed to the 
     taxpayer under any other section of this chapter for any 
     qualified higher education expenses to the extent taken into 
     account in determining the amount of the exclusion under this 
     paragraph.''
       (b) Definition of Qualified Higher Education Expenses.--
     Section 529(e)(3)(A) (defining qualified higher education 
     expenses) is amended to read as follows:
       ``(A) In general.--The term `qualified higher education 
     expenses' means expenses for tuition, fees, academic 
     tutoring, special needs services, books, supplies, computer 
     equipment (including related software and services), and 
     other equipment which are incurred in connection with the 
     enrollment or attendance of the designated beneficiary at an 
     eligible educational institution.''
       (c) Coordination With Education Credits.--Section 25A(e)(2) 
     (relating to coordination with exclusions) is amended--
       (1) by inserting ``a qualified State tuition program or'' 
     before ``an education individual retirement account'', and
       (2) by striking ``section 530(d)(2)'' and inserting 
     ``section 529(c)(3)(B) or 530(d)(2)''.
       (d) Technical Correction.--Section 529(c)(3)(A) is amended 
     by striking ``section 72(b)'' and inserting ``section 72''.
       (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, 1998.
       (2) Technical correction.--The amendment made by subsection 
     (d) shall take effect as if included in the amendments made 
     by section 211 of the Taxpayer Relief Act of 1997.

[[Page S12207]]

     SEC. 103. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED 
                   EDUCATIONAL ASSISTANCE.

       (a) In General.--Section 127(d) (relating to termination of 
     exclusion for educational assistance programs) is amended by 
     striking ``May 31, 2000'' and inserting ``December 31, 
     2002''.
       (b) Repeal of Limitation on Graduate Education.--The last 
     sentence of section 127(c)(1) (defining educational 
     assistance) is amended by striking ``, and such term also 
     does not include any payment for, or the provision of any 
     benefits with respect to, any graduate level course of a kind 
     normally taken by an individual pursuing a program leading to 
     a law, business, medical, or other advanced academic or 
     professional degree''.
       (c) Effective Dates.--
       (1) Extension.--The amendment made by subsection (a) shall 
     apply to expenses paid with respect to courses beginning 
     after May 31, 2000.
       (2) Graduate education.--The amendment made by subsection 
     (b) shall apply to expenses paid with respect to courses 
     beginning after December 31, 1997.

     SEC. 104. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION 
                   FOR GOVERNMENTAL BONDS USED TO FINANCE 
                   EDUCATION FACILITIES.

       (a) In General.--Section 148(f)(4)(D)(vii) (relating to 
     increase in exception for bonds financing public school 
     capital expenditures) is amended by striking ``$5,000,000'' 
     the second place it appears and inserting ``$10,000,000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to obligations issued after December 31, 1998.

     SEC. 105. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE 
                   NATIONAL HEALTH CORPS SCHOLARSHIP PROGRAM.

       (a) In General.--Section 117(c) (relating to the exclusion 
     from gross income amounts received as a qualified 
     scholarship) is amended--
       (1) by striking ``Subsections (a)'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2), 
     subsections (a)''; and
       (2) by adding at the end the following new paragraph:
       ``(2) National health corps scholarship program.--Paragraph 
     (1) shall not apply to any amount received by an individual 
     under the National Health Corps Scholarship Program under 
     section 338A(g)(1)(A) of the Public Health Service Act.''
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to amounts received in taxable years beginning 
     after December 31, 1993.

                           TITLE II--REVENUE

     SEC. 201. CLARIFICATION OF DEDUCTION FOR DEFERRED 
                   COMPENSATION.

       (a) In General.--Section 404(a) (relating to deduction for 
     contributions of an employer to an employee's trust or 
     annuity plan and compensation under a deferred-payment plan) 
     is amended by adding at the end the following new paragraph:
       ``(11) Determinations relating to deferred compensation.--
       ``(A) In general.--For purposes of determining under this 
     section--
       ``(i) whether compensation of an employee is deferred 
     compensation, and
       ``(ii) when deferred compensation is paid,

     no amount shall be treated as received by the employee, or 
     paid, until it is actually received by the employee.
       ``(B) Exception.--Subparagraph (A) shall not apply to 
     severance pay.''
       (b) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to taxable years ending after the date of the enactment 
     of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer required by the amendment made by subsection (a) to 
     change its method of accounting for its first taxable year 
     ending after the date of the enactment of this Act--
       (A) such change shall be treated as initiated by the 
     taxpayer,
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury, and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code of 1986 shall be taken into account in 
     such first taxable year.

     SEC. 202. MODIFICATION TO FOREIGN TAX CREDIT CARRYBACK AND 
                   CARRYOVER PERIODS.

       (a) In General.--Section 904(c) (relating to limitation on 
     credit) is amended--
       (1) by striking ``in the second preceding taxable year,'', 
     and
       (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
     or seventh''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to credits arising in taxable years beginning 
     after December 31, 1999.
                                 ______
                                 

                        LOTT AMENDMENT NO. 3805

  Mr. LOTT proposed an amendment to amendment No. 3804 proposed by him 
to the bill, H.R. 10, supra; as follows:

       At the end of the Instructions, add the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Marriage Tax Elimination 
     Act''.

     SEC. 2. COMBINED RETURN TO WHICH UNMARRIED RATES APPLY.

       (a) In General.--Subpart B of part II of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 (relating to 
     income tax returns) is amended by inserting after section 
     6013 the following new section:

     ``SEC. 6013A. COMBINED RETURN WITH SEPARATE RATES.

       ``(a) General Rule.--A husband and wife may make a combined 
     return of income taxes under subtitle A under which--
       ``(1) a separate taxable income is determined for each 
     spouse by applying the rules provided in this section, and
       ``(2) the tax imposed by section 1 is the aggregate amount 
     resulting from applying the separate rates set forth in 
     section 1(c) to each such taxable income.
       ``(b) Treatment of Income.--For purposes of this section--
       ``(1) earned income (within the meaning of section 911(d)), 
     and any income received as a pension or annuity which arises 
     from an employer-employee relationship, shall be treated as 
     the income of the spouse who rendered the services, and
       ``(2) income from property shall be divided between the 
     spouses in accordance with their respective ownership rights 
     in such property.
       ``(c) Treatment of Deductions.--For purposes of this 
     section--
       ``(1) except as otherwise provided in this subsection, the 
     deductions allowed by section 62(a) shall be allowed to the 
     spouse treated as having the income to which such deductions 
     relate,
       ``(2) the deduction for retirement savings described in 
     paragraph (7) of section 62(a) shall be allowed to the spouse 
     for whose benefit the savings are maintained,
       ``(3) the deduction for alimony described in paragraph (10) 
     of section 62(a) shall be allowed to the spouse who has the 
     liability to pay the alimony,
       ``(4) the deduction referred to in paragraph (16) of 
     section 62(a) (relating to contributions to medical savings 
     accounts) shall be allowed to the spouse with respect to 
     whose employment or self-employment such account relates,
       ``(5) the deductions allowable by section 151 (relating to 
     personal exemptions) shall be determined by requiring each 
     spouse to claim 1 personal exemption,
       ``(6) section 63 shall be applied as if such spouses were 
     not married, and
       ``(7) each spouse's share of all other deductions 
     (including the deduction for personal exemptions under 
     section 151(c)) shall be determined by multiplying the 
     aggregate amount thereof by the fraction--
       ``(A) the numerator of which is such spouse's adjusted 
     gross income, and
       ``(B) the denominator of which is the combined adjusted 
     gross incomes of the 2 spouses.

     Any fraction determined under paragraph (7) shall be rounded 
     to the nearest percentage point.
       ``(d) Treatment of Credits.--Credits shall be determined 
     (and applied against the joint liability of the couple for 
     tax) as if the spouses had filed a joint return.
       ``(e) Treatment as Joint Return.--Except as otherwise 
     provided in this section or in the regulations prescribed 
     hereunder, for purposes of this title (other than sections 1 
     and 63(c)) a combined return under this section shall be 
     treated as a joint return.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section.''.
       (b) Unmarried Rate Made Applicable.--So much of subsection 
     (c) of section 1 of such Code as precedes the table is 
     amended to read as follows:
       ``(c) Separate or Unmarried Return Rate.--There is hereby 
     imposed on the taxable income of every individual (other than 
     a married individual (as defined in section 7703) filing a 
     joint return or a separate return, a surviving spouse as 
     defined in section 2(a), or a head of household as defined in 
     section 2(b)) a tax determined in accordance with the 
     following table:''.
       (c) Basic Standard Deduction for Unmarried Individuals Made 
     Applicable.--Subparagraph (C) of section 63(c)(2) of such 
     Code is amended to read as follows:
       ``(C) $3,000 in the case of an individual who is not--
       ``(i) a married individual filing a joint return or a 
     separate return,
       ``(ii) a surviving spouse, or
       ``(iii) a head of household, or''.
       (d) Clerical Amendment.--The table of sections for subpart 
     B of part II of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6013 
     the following:

``Sec. 6013A. Combined return with separate rates.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning January 1, 2000.
                                 ______
                                 

                        LOTT AMENDMENT NO. 3806

  Mr. LOTT proposed an amendment to amendment No. 3805 proposed by him 
to the bill, H.R. 10, supra; as follows:

       Strike all after the first word and insert the following:

     SHORT TITLE.

       This Act may be cited as the ``Marriage Tax Elimination 
     Act''.

     SEC. 2. COMBINED RETURN TO WHICH UNMARRIED RATES APPLY.

       (a) In General.--Subpart B of part II of subchapter A of 
     chapter 61 of the Internal Revenue Code of 1986 (relating to 
     income tax returns) is amended by inserting after section 
     6013 the following new section:

[[Page S12208]]

     ``SEC. 6013A. COMBINED RETURN WITH SEPARATE RATES.

       ``(a) General Rule.--A husband and wife may make a combined 
     return of income taxes under subtitle A under which--
       ``(1) a separate taxable income is determined for each 
     spouse by applying the rules provided in this section, and
       ``(2) the tax imposed by section 1 is the aggregate amount 
     resulting from applying the separate rates set forth in 
     section 1(c) to each such taxable income.
       ``(b) Treatment of Income.--For purposes of this section--
       ``(1) earned income (within the meaning of section 911(d)), 
     and any income received as a pension or annuity which arises 
     from an employer-employee relationship, shall be treated as 
     the income of the spouse who rendered the services, and
       ``(2) income from property shall be divided between the 
     spouses in accordance with their respective ownership rights 
     in such property.
       ``(c) Treatment of Deductions.--For purposes of this 
     section--
       ``(1) except as otherwise provided in this subsection, the 
     deductions allowed by section 62(a) shall be allowed to the 
     spouse treated as having the income to which such deductions 
     relate,
       ``(2) the deduction for retirement savings described in 
     paragraph (7) of section 62(a) shall be allowed to the spouse 
     for whose benefit the savings are maintained,
       ``(3) the deduction for alimony described in paragraph (10) 
     of section 62(a) shall be allowed to the spouse who has the 
     liability to pay the alimony,
       ``(4) the deduction referred to in paragraph (16) of 
     section 62(a) (relating to contributions to medical savings 
     accounts) shall be allowed to the spouse with respect to 
     whose employment or self-employment such account relates,
       ``(5) the deductions allowable by section 151 (relating to 
     personal exemptions) shall be determined by requiring each 
     spouse to claim 1 personal exemption,
       ``(6) section 63 shall be applied as if such spouses were 
     not married, and
       ``(7) each spouse's share of all other deductions 
     (including the deduction for personal exemptions under 
     section 151(c)) shall be determined by multiplying the 
     aggregate amount thereof by the fraction--
       ``(A) the numerator of which is such spouse's adjusted 
     gross income, and
       ``(B) the denominator of which is the combined adjusted 
     gross incomes of the 2 spouses.

     Any fraction determined under paragraph (7) shall be rounded 
     to the nearest percentage point.
       ``(d) Treatment of Credits.--Credits shall be determined 
     (and applied against the joint liability of the couple for 
     tax) as if the spouses had filed a joint return.
       ``(e) Treatment as Joint Return.--Except as otherwise 
     provided in this section or in the regulations prescribed 
     hereunder, for purposes of this title (other than sections 1 
     and 63(c)) a combined return under this section shall be 
     treated as a joint return.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section.''.
       (b) Unmarried Rate Made Applicable.--So much of subsection 
     (c) of section 1 of such Code as precedes the table is 
     amended to read as follows:
       ``(c) Separate or Unmarried Return Rate.--There is hereby 
     imposed on the taxable income of every individual (other than 
     a married individual (as defined in section 7703) filing a 
     joint return or a separate return, a surviving spouse as 
     defined in section 2(a), or a head of household as defined in 
     section 2(b)) a tax determined in accordance with the 
     following table:''.
       (c) Basic Standard Deduction for Unmarried Individuals Made 
     Applicable.--Subparagraph (C) of section 63(c)(2) of such 
     Code is amended to read as follows:
       ``(C) $3,000 in the case of an individual who is not--
       ``(i) a married individual filing a joint return or a 
     separate return,
       ``(ii) a surviving spouse, or
       ``(iii) a head of household, or''.
       (d) Clerical Amendment.--The table of sections for subpart 
     B of part II of subchapter A of chapter 61 of such Code is 
     amended by inserting after the item relating to section 6013 
     the following:

``Sec. 6013A. Combined return with separate rates.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

                          ____________________