[Congressional Record Volume 158, Number 107 (Tuesday, July 17, 2012)]
[Senate]
[Pages S5087-S5089]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID:
  S. 3393. A bill to amend the Internal Revenue Code of 1986 to provide 
tax relief to middle-class families; read the first time.
  Mr. REID. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record as follows:

                                S. 3393

       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:

[[Page S5088]]

       ``(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''.

[[Page S5089]]

       (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:

$155,800, plus 37 percent of the excess of such amount over $500,000...
$248,300, plus 39 percent of the excess of such amount over $750,000...
$345,800, plus 41 percent of the excess of such amount over $1,000,000.
$448,300, plus 43 percent of the excess of such amount over $1,250,000.
$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).

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