[Congressional Record (Bound Edition), Volume 146 (2000), Part 11]
[House]
[Pages 15369-15373]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 15369]]

CONFERENCE REPORT ON H.R. 4810, MARRIAGE TAX RELIEF RECONCILIATION ACT 
                                OF 2000

  Mr. ARMEY (during the special order of Ms. Jackson-Lee of Texas), 
submitted the following conference report


and statement on the bill (H.R. 4810) to provide for reconciliation 
pursuant to section 103(a)(1) of the concurrent resolution on the 
budget for fiscal year 2001.

                  Conference Report (H. Rept. 106-765)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     4810), to provide for reconciliation pursuant to section 
     103(a)(1) of the concurrent resolution on the budget for 
     fiscal year 2001, having met, after full and free conference, 
     have agreed to recommend and do recommend to their respective 
     Houses as follows:
       That the House recede from its disagreement to the 
     amendment of the Senate and agree to the same with an 
     amendment as follows:
       In lieu of the matter proposed to be inserted by the Senate 
     amendment, insert the following:

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Marriage 
     Tax Relief Reconciliation Act of 2000''.
       (b) Section 15 Not To Apply.--No amendment made by this Act 
     shall be treated as a change in a rate of tax for purposes of 
     section 15 of the Internal Revenue Code of 1986.

     SEC. 2. ELIMINATION OF MARRIAGE PENALTY IN STANDARD 
                   DEDUCTION.

       (a) In General.--Paragraph (2) of section 63(c) of the 
     Internal Revenue Code of 1986 (relating to standard 
     deduction) is amended--
       (1) by striking ``$5,000'' in subparagraph (A) and 
     inserting ``200 percent of the dollar amount in effect under 
     subparagraph (C) for the taxable year'',
       (2) by adding ``or'' at the end of subparagraph (B),
       (3) by striking ``in the case of'' and all that follows in 
     subparagraph (C) and inserting ``in any other case.'', and
       (4) by striking subparagraph (D).
       (b) Technical Amendments.--
       (1) Subparagraph (B) of section 1(f)(6) of such Code is 
     amended by striking ``(other than with'' and all that follows 
     through ``shall be applied'' and inserting ``(other than with 
     respect to sections 63(c)(4) and 151(d)(4)(A)) shall be 
     applied''.
       (2) Paragraph (4) of section 63(c) of such Code is amended 
     by adding at the end the following flush sentence:
     ``The preceding sentence shall not apply to the amount 
     referred to in paragraph (2)(A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 3. PHASEOUT OF MARRIAGE PENALTY IN 15-PERCENT BRACKET.

       (a) In General.--Subsection (f) of section 1 of the 
     Internal Revenue Code of 1986 (relating to adjustments in tax 
     tables so that inflation will not result in tax increases) is 
     amended by adding at the end the following new paragraph:
       ``(8) Phaseout of marriage penalty in 15-percent bracket.--
       ``(A) In general.--With respect to taxable years beginning 
     after December 31, 1999, in prescribing the tables under 
     paragraph (1)--
       ``(i) the maximum taxable income in the lowest rate bracket 
     in the table contained in subsection (a) (and the minimum 
     taxable income in the next higher taxable income bracket in 
     such table) shall be the applicable percentage of the maximum 
     taxable income in the lowest rate bracket in the table 
     contained in subsection (c) (after any other adjustment under 
     this subsection), and
       ``(ii) the comparable taxable income amounts in the table 
     contained in subsection (d) shall be \1/2\ of the amounts 
     determined under clause (i).
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years beginning in calendarThe applicable percentage is--
      2000.........................................................170 
      2001.........................................................173 
      2002.........................................................178 
      2003.........................................................183 
      2004 and thereafter.........................................200. 

       ``(C) Rounding.--If any amount determined under 
     subparagraph (A)(i) is not a multiple of $50, such amount 
     shall be rounded to the next lowest multiple of $50.''.
       (b) Technical Amendments.--
       (1) Subparagraph (A) of section 1(f)(2) of such Code is 
     amended by inserting ``except as provided in paragraph (8),'' 
     before ``by increasing''.
       (2) The heading for subsection (f) of section 1 of such 
     Code is amended by inserting ``Phaseout of Marriage Penalty 
     in 15-Percent Bracket;'' before ``Adjustments''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 4. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

       (a) In General.--Paragraph (2) of section 32(b) of the 
     Internal Revenue Code of 1986 (relating to percentages and 
     amounts) is amended--
       (1) by striking ``Amounts.--The earned'' and inserting 
     ``Amounts.--
       ``(A) In general.--Subject to subparagraph (B), the 
     earned'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Joint returns.--In the case of a joint return, the 
     phaseout amount determined under subparagraph (A) shall be 
     increased by $2,000.''.
       (b) Inflation Adjustment.--Paragraph (1)(B) of section 
     32(j) of such Code (relating to inflation adjustments) is 
     amended to read as follows:
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined--
       ``(i) in the case of amounts in subsections (b)(2)(A) and 
     (i)(1), by substituting `calendar year 1995' for `calendar 
     year 1992' in subparagraph (B) of section 1(f)(3), and
       ``(ii) in the case of the $2,000 amount in subsection 
     (b)(2)(B), by substituting `calendar year 1999' for `calendar 
     year 1992' in subparagraph (B) of section 1(f)(3).''.
       (c) Rounding.--Section 32(j)(2)(A) of such Code (relating 
     to rounding) is amended by striking ``subsection (b)(2)'' and 
     inserting ``subparagraph (A) of subsection (b)(2) (after 
     being increased under subparagraph (B) thereof)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 5. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST 
                   REGULAR AND MINIMUM TAX LIABILITY.

       (a) In General.--Subsection (a) of section 26 of the 
     Internal Revenue Code of 1986 (relating to limitation based 
     on tax liability; definition of tax liability) is amended to 
     read as follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the sum of--
       ``(1) the taxpayer's regular tax liability for the taxable 
     year reduced by the foreign tax credit allowable under 
     section 27(a), and
       ``(2) the tax imposed for the taxable year by section 
     55(a).''.
       (b) Conforming Amendments.--
       (1) Subsection (d) of section 24 of such Code is amended by 
     striking paragraph (2) and by redesignating paragraph (3) as 
     paragraph (2).
       (2) Section 32 of such Code is amended by striking 
     subsection (h).
       (3) Section 904 of such Code is amended by striking 
     subsection (h) and by redesignating subsections (i), (j), and 
     (k) as subsections (h), (i), and (j), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 6. ESTIMATED TAX.

       The amendments made by this Act shall not be taken into 
     account under section 6654 of the Internal Revenue Code of 
     1986 (relating to failure to pay estimated tax) in 
     determining the amount of any installment required to be paid 
     before October 1, 2000.

     SEC. 7. COMPLIANCE WITH BUDGET ACT.

       (a) In General.--Except as provided in subsection (b), all 
     amendments made by this Act which are in effect on September 
     30, 2005, shall cease to apply as of the close of September 
     30, 2005.
       (b) Sunset for Certain Provisions Absent Subsequent 
     Legislation.--The amendments made by sections 2, 3, 4, and 5 
     of this Act shall not apply to any taxable year beginning 
     after December 31, 2004.
       And the Senate agree to the same.

     Bill Archer,
     Dick Armey,
                                Managers on the Part of the House.

     Bill Roth,
     Trent Lott,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and the Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill (H.R. 4810), to provide 
     for reconciliation pursuant to section 103(a)(1) of the 
     concurrent resolution on the budget for fiscal year 2001, 
     submit the following joint statement to the House and the 
     Senate in explanation of the effect of the action agreed upon 
     by the managers and recommended in the accompanying 
     conference report:
       The Senate amendment struck all of the House bill after the 
     enacting clause and inserted a substitute text.
       The House recedes from its disagreement to the amendment of 
     the Senate with an amendment that is a substitute for the 
     House bill and the Senate amendment. The differences between 
     the House bill, the Senate amendment, and the substitute 
     agreed to in conference are noted below, except for clerical 
     corrections, conforming changes made necessary by agreements 
     reached by the conferees, and minor drafting and clerical 
     changes.

                       I. EXPLANATION OF THE BILL

 A. Standard Deduction Tax Relief (Sec. 2 of the House Bill, Sec. 2 of 
             the Senate Amendment, and Sec. 63 of the Code)


                              present law

     Marriage penalty
       A married couple generally is treated as one tax unit that 
     must pay tax on the couple's total taxable income. Although 
     married couples may elect to file separate returns, the rate 
     schedules and other provisions are structured so that filing 
     separate returns usually results in a higher tax than filing 
     a joint return. Other rate schedules apply to single 
     individuals and to single heads of households.
       A ``marriage penalty'' exists when the combined tax 
     liability of a married couple filing a joint return is 
     greater than the sum

[[Page 15370]]

     of the tax liabilities of each individual computed as if they 
     were not married. A ``marriage bonus'' exists when the 
     combined tax liability of a married couple filing a joint 
     return is less than the sum of the tax liabilities of each 
     individual computed as if they were not married.
       While the size of any marriage penalty or bonus under 
     present law depends upon the individuals' incomes, number of 
     dependents, and itemized deductions, as a general rule 
     married couples whose incomes are split more evenly than 70-
     30 suffer a marriage penalty. Married couples whose incomes 
     are largely attributable to one spouse generally receive a 
     marriage bonus.
       Under present law, the amount of the standard deduction and 
     the tax bracket breakpoints follow certain customary ratios 
     across filing statuses. The standard deduction and tax 
     bracket breakpoints for single individuals are roughly 60 
     percent of those for married couples filing joint returns.\1\ 
     Thus, the sum of the standard deductions for two single 
     individuals exceeds the standard deduction for a married 
     couple filing a joint return.
---------------------------------------------------------------------------
     \1\ The beginning point of the 39.6 percent rate bracket is 
     the same for all taxpayers regardless of filing status.
---------------------------------------------------------------------------
     Basic standard deduction
       Taxpayers who do not itemize deductions may choose the 
     basic standard deduction (and additional standard deductions, 
     if applicable),\2\ which is subtracted from adjusted gross 
     income (``AGI'') in arriving at taxable income. The amount of 
     the basic standard deduction varies according to filing 
     status and is indexed for inflation. For 2000, the amount of 
     the basic standard deduction for each filing status is shown 
     in the following table:
---------------------------------------------------------------------------
     \2\ Additional standard deductions are allowed with respect 
     to any individual who is elderly (age 65 or over) or blind.
---------------------------------------------------------------------------


               Table 1.--Basic standard deduction amounts


                                                                  Basic
        Filing status                                standard deduction
Married, joint return............................................$7,350
Head of household return..........................................6,450
Single return.....................................................4,400
Married, separate return..........................................3,675

       For 2000, the basic standard deduction for joint returns is 
     1.67 times the basic standard deduction for single returns.


                               House Bill

       The House bill increases the basic standard deduction for a 
     married couple filing a joint return to twice the basic 
     standard deduction for a single individual. The basic 
     standard deduction for a married taxpayer filing a separate 
     return will continue to equal one-half of the basic standard 
     deduction for a married couple filing a joint return.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2000.


                            Senate Amendment

       The Senate amendment is the same as the House bill.


                          Conference Agreement

       The conference agreement follows the House bill and the 
     Senate amendment, with the modification that the provision is 
     effective for taxable years beginning after December 31, 
     1999. The agreement further provides that the provision 
     cannot be taken into account for estimated tax purposes prior 
     to October 1, 2000.

B. Expansion of the 15-Percent and 28-Percent Rate Brackets (Sec. 3(a) 
of the House Bill, Sec. 3(a) of the Senate Amendment, and Sec. 1 of the 
                                 Code)


                              Present Law

     Rate brackets
       To determine regular income tax liability, a taxpayer 
     generally must apply the tax rate schedules (or the tax 
     tables) to his or her taxable income. The rate schedules are 
     broken into several ranges of income, known as income 
     brackets, and the marginal tax rate increases as a taxpayer's 
     income increases. The income bracket amounts are indexed for 
     inflation. Separate rate schedules apply based on an 
     individual's filing status. In order to limit multiple uses 
     of a graduated rate schedule within a family, the net 
     unearned income of a child under age 14 may be taxed as if it 
     were the parent's income. For 2000, the individual regular 
     income tax rate schedules are shown below. These rates apply 
     to ordinary income; separate rates apply to capital gains.

         Table 2.--Federal individual income tax rates for 2000
 
          If taxable income is:               Then income tax equals:
 
                           Single individuals
 
$0-$26,250...............................  15 percent of taxable income.
$26,250-$63,550..........................  $3,937.50, plus 28% of the
                                            amount over $26,250.
$63,550-$132,600.........................  $14,381.50 plus 31% of the
                                            amount over $63,550.
$132,600-$288,350........................  $35,787 plus 36% of the
                                            amount over $132,600.
Over $288,350............................  $91,857 plus 39.6% of the
                                            amount over $288,350.
 
                           Heads of households
 
$0-$35,150...............................  15 percent of taxable income.
$35,150-$90,800..........................  $5,272.50 plus 28% of the
                                            amount over $35,150.
$90,800-$147,050.........................  $20,854.50 plus 31% of the
                                            amount over $90,800.
$147,050-$288,350........................  $38,292 plus 36% of the
                                            amount over $147,050.
Over $288,350............................  $89,160 plus 39.6% of the
                                            amount over $288,350.
 
              Married individuals filing joint returns \1\
 
$0-$43,850...............................  15 percent of taxable income.
$43,850-$105,950.........................  $6,577.50 plus 28% of the
                                            amount over $43,850.
$105,950-$161,450........................  $23,965.50 plus 31% of the
                                            amount over $105,950.
$161,450-$288,350........................  $41,170.40 plus 36% of the
                                            amount over $161,450.
Over $288,350............................  $86,854.50 plus 39% of the
                                            amount over $288,350.
 
 
\1\ Married individuals filing separate returns must apply a separate
  rate structure with tax rate brackets one-half the width of those for
  married individuals filing joint returns.

                               house bill

       The House bill increases the size of the 15-percent regular 
     income tax rate bracket for a married couple filing a joint 
     return to twice the size of the corresponding rate bracket 
     for a single individual. This increase is phased in over six 
     years as shown in the following table. Therefore, this 
     provision is fully effective (i.e., the size of the 15-
     percent regular income tax rate bracket for a married couple 
     filing a joint return will be twice the size of the 15-
     percent regular income tax rate bracket for a single 
     individual) for taxable years beginning after December 31, 
     2007.


 Joint return 15-percent rate bracket as a percentage of single return 
                                                             15-percent
        Taxable year                                       rate bracket
2003..............................................................170.3
2004..............................................................173.8
2005..............................................................183.5
2006..............................................................184.3
2007..............................................................187.9
2008 and thereafter...............................................200.0

       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2002.


                            senate amendment

       The Senate amendment increases the size of the 15-percent 
     and 28-percent regular income tax rate brackets for a married 
     couple filing a joint return to twice the size of the 
     corresponding rate brackets for a single individual. This 
     increase is phased in over six years as shown in the 
     following table. The Senate amendment is fully effective 
     (i.e., the size of the 15-percent and 28-percent regular 
     income tax rate brackets for a married couple filing a joint 
     return is twice the size of the corresponding regular income 
     tax rate brackets for a single individual) for taxable years 
     beginning after December 31, 2006.

[[Page 15371]]

Joint return 15-percent and 28-percent rate bracket as a percentage of 
                                       single return 15- and 28-percent
        Taxable year                                       rate bracket
2002..............................................................170.3
2003..............................................................173.8
2004..............................................................180.0
2005..............................................................183.2
2006..............................................................185.0
2007 and thereafter...............................................200.0

       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2001.


                          conference agreement

       The conference agreement follows the House bill, but with a 
     different phase-in, as described in the following table:


 Joint return 15-percent rate bracket as a percentage of single return 
                                                             15-percent
        Taxable year                                       rate bracket
2000..............................................................170.0
2001..............................................................173.0
2002..............................................................178.0
2003..............................................................183.0
2004 and thereafter...............................................200.0

       The agreement further provides that the provision cannot be 
     taken into account for estimated tax purposes prior to 
     October 1, 2000.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 1999.

  C. Allowance of Nonrefundable Personal Credits Against Regular and 
   Minimum Tax Liability (Sec. 3(b) of the House Bill, Sec. 5 of the 
         Senate Amendment, and Secs. 24, 26, and 32 of the Code


                              present Law

     Allow nonrefundable personal credits to offset both the 
         regular tax and the alternative minimum tax
       Present law provides for certain nonrefundable personal tax 
     credits (i.e., the dependent care credit, the credit for the 
     elderly and disabled, the adoption credit, the child credit, 
     the credit for interest on certain home mortgages, the HOPE 
     Scholarship and Lifetime Learning credits, and the D.C. 
     homebuyer's credit). Except for taxable years beginning 
     during 1998-2001, these credits are allowed only to the 
     extent that the individual's regular income tax liability 
     exceeds the individual's tentative minimum tax, determined 
     without regard to the minimum tax foreign tax credit. For 
     taxable years beginning during 1998 and 1999, these credits 
     are allowed to the extent of the full amount of the 
     individual's regular tax (without regard to the tentative 
     minimum tax). For taxable years beginning during 2000 and 
     2001, the nonrefundable personal credits may offset both the 
     regular tax and the minimum tax.\3\
---------------------------------------------------------------------------
     \3\ The foreign tax credit is allowed before the personal 
     credits in computing the regular tax for these years.
---------------------------------------------------------------------------
       An individual's tentative minimum tax is an amount equal to 
     (1) 26 percent of the first $175,000 ($87,500 in the case of 
     a married individual filing a separate return) of alternative 
     minimum taxable income (``AMTI'') in excess of a phased-out 
     exemption amount plus (2) 28 percent of the remaining AMTI, 
     if any. The maximum tax rates on net capital gain used in 
     computing the tentative minimum tax are the same as under the 
     regular tax. AMTI is the individual's taxable income adjusted 
     to take account of specified preferences and adjustments. The 
     exemption amounts are: (1) $45,000 in the case of married 
     individuals filing a joint return and surviving spouses; (2) 
     $33,750 in the case of other individuals; and (3) $22,500 in 
     the case of married individuals filing a separate return, 
     estates and trusts. The exemption amounts are phased out by 
     an amount equal to 25 percent of the amount by which the 
     individual's AMTI exceeds (1) $150,000 in the case of married 
     individuals filing a joint return and surviving spouses, (2) 
     $112,500 in the case of other unmarried individuals, and (3) 
     $75,000 in the case of married individuals filing separate 
     returns or an estate or a trust. These amounts are not 
     indexed for inflation.
     Reduction of refundable credits by alternative minimum tax
       Refundable credits may offset tax liability determined 
     under present-law tax rates and allow refunds to an 
     individual in excess of income tax liability. However, the 
     refundable child credit (beginning in taxable years beginning 
     after December 31, 2001) and the earned income credit are 
     reduced by the amount of the individual's alternative minimum 
     tax.


                               House Bill

     Allow nonrefundable personal credits to offset both the 
         regular tax and the alternative minimum tax
       No provision.
     Reduction of refundable credits by alternative minimum tax
       The House bill repeals the provisions that reduce the 
     refundable child credit and the earned income credit by the 
     amount of the individual's alternative minimum tax.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2001.


                            Senate Amendment

     Allow nonrefundable personal credits to offset both the 
         regular tax and the alternative minimum tax
       The Senate amendment permanently extends the present-law 
     temporary provision that allows the nonrefundable personal 
     credits to offset both the regular tax and the minimum 
     tax.\4\
---------------------------------------------------------------------------
     \4\ The foreign tax credit will continue to be allowed before 
     the personal credits in computing the regular tax.
---------------------------------------------------------------------------
     Reduction of refundable credits by alternative minimum tax
       The Senate amendment is the same as the House bill.
     Effective date
       The provisions are effective for taxable years beginning 
     after December 31, 2001.


                          Conference Agreement

     Allow nonrefundable personal credits to offset both the 
         regular tax and the alternative minimum tax
       The conference agreement follows the Senate amendment.
     Reduction of refundable credits by alternative minimum tax
       The conference agreement follows the House bill and the 
     Senate amendment.

D. Marriage Tax Relief Relating to the Earned Income Credit (Sec. 4 of 
  the House Bill, Sec. 4 of the Senate Amendment, and Sec. 32 of the 
                                 Code)


                              present law

       Certain eligible low-income workers are entitled to claim a 
     refundable earned income credit (``EIC'') on their income tax 
     returns.\5\ The amount of the EIC an eligible individual may 
     claim depends upon whether the individual has one, more than 
     one, or no qualifying children, and is determined by 
     multiplying the applicable credit rate by the individual's 
     earned income up to an earned income amount. The maximum 
     amount of the credit is the product of the credit rate and 
     the earned income amount. The credit is phased out above 
     certain income levels. For individuals with earned income (or 
     modified AGI, if greater) in excess of the beginning of the 
     phase-out range, the maximum credit amount is reduced by the 
     phase-out rate multiplied by earned income (or modified AGI, 
     if greater) in excess of the beginning of the phase-out 
     range. For individuals with earned income (or modified AGI, 
     if greater) in excess of the end of the phase-out range, no 
     credit is allowed. In the case of a married individual who 
     files a joint return. income for purposes of these tests is 
     the combined income of the couple.
---------------------------------------------------------------------------
     \5\ A refundable credit is a credit that not only reduces an 
     individual's tax liability but also allows refunds to the 
     individual of amounts in excess of income tax liability.
---------------------------------------------------------------------------
       The parameters of the EIC for 2000 are provided in the 
     following table:

            TABLE 3.--EARNED INCOME CREDIT PARAMETERS (2000)
------------------------------------------------------------------------
                                   Two or more      One           No
                                    qualifying   qualifying   qualifying
                                     children      child       children
------------------------------------------------------------------------
Credit rate (percent)............        40.00        34.00         7.65
Earned income amount.............       $9,720       $6,920       $4,610
Maximum credit...................       $3,888       $2,353         $353
Phase-out begins.................      $12,690      $12,690       $5,770
Phase-out rate (percent).........        21.06        15.98         7.65
Phase-out ends...................      $31,152      $27,413      $10,380
------------------------------------------------------------------------

                               house bill

       The House bill increases the beginning point of the phase-
     out range of the EIC for married couples filing a joint 
     return by $2,000. Because the rate of the phase-out range is 
     not changed by the House bill, the endpoint of the phase-out 
     range is also increased by $2,000. The effect of the increase 
     in the beginning of the phase-out range is to increase the 
     EIC for taxpayers in the phase-out range by an amount up to 
     $2,000 times the phase-out rate. For example, for couples 
     with two or more qualifying children, the maximum increase in 
     the EIC as a result of the provision will be $2,000 
     multiplied by 21.06 percent, or $421.20. The House bill also 
     expands the number of married couples eligible for the EIC. 
     Specifically, the $2,000 increase in the end of the phase-out 
     range will make married couples with earnings up to $2,000 
     beyond the present-law phase-out range eligible for the 
     credit. The beginning and ending points of the phase-out 
     range of the EIC (including the $2,000 increase for joint 
     returns) will continue to be indexed for inflation, as under 
     present law.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2000.


                            Senate Amendment

       The Senate amendment is the same as the House bill except 
     that the Senate amendment increases the beginning and ending 
     income levels of the phase-out of the EIC for married couples 
     filing a joint return by $2,500 rather than by $2,000.
       Effective date.--The provision is effective for taxable 
     years beginning after December 31, 2000.


                          Conference Agreement

       The conference agreement follows the House bill, with the 
     modification that the

[[Page 15372]]

     provision is effective for taxable years beginning after 
     December 31, 1999. The agreement further provides that the 
     provision cannot be taken into account for estimated tax 
     purposes prior to October 1, 2000.

   E. Compliance with Congressional Budget Act (Sec. 6 of the Senate 
                               amendment)


                              Present Law

       Reconciliation is a procedure under the Congressional 
     Budget Act of 1974 (``the Budget Act'') by which Congress 
     implements spending and tax policies contained in a budget 
     resolution. The Budget Act contains rules defining the scope 
     of items permitted to be considered under the budget 
     reconciliation process. One such rule, the so-called ``Byrd 
     rule,'' was incorporated into the Budget Act in 1990. The 
     Byrd rule, named after its principal sponsor, Senator Robert 
     C. Byrd, is contained in section 313 of the Budget Act. The 
     Byrd rule is generally interpreted to permit Members to make 
     a motion to strike extraneous provisions (those which are 
     unrelated to the deficit reduction goals of the 
     reconciliation process) from either a budget reconciliation 
     bill or a conference report on such a bill.
       Under the Byrd rule, a provision is considered to be 
     extraneous if it falls under one or more of the following six 
     definitions:
       (1) it does not produce a change in outlays or revenues;
       (2) it produces an outlay increase or revenue decrease when 
     the instructed committee is not in compliance with its 
     instructions;
       (3) it is outside of the jurisdiction of the committee that 
     submitted the title or provision for inclusion in the 
     reconciliation measure;
       (4) it produces a change in outlays or revenues which is 
     merely incidental to the non-budgetary components of the 
     provision;
       (5) it would increase the deficit for a fiscal year beyond 
     those covered by the reconciliation measure; and
       (6) it recommends changes in Social Security.


                               House Bill

       No provision.


                            Senate Amendment

       To ensure compliance with the Budget Act, the provision 
     provides that all provisions of, and amendments made by, the 
     Senate amendment shall cease to apply for taxable years 
     beginning after December 31, 2004.
       Effective date.--The provision is effective on date of 
     enactment.


                          Conference Agreement

       The conference agreement follows the Senate amendment.

                        II. COMPLEXITY ANALYSIS

       The following tax complexity analysis is provided pursuant 
     to section 4022(b) of the Internal Revenue Service Reform and 
     Restructuring Act of 1998, which requires the staff of the 
     Joint Committee on Taxation (in consultation with the 
     Internal Revenue Service (``IRS'') and the Treasury 
     Department) to provide a complexity analysis of tax 
     legislation reported by the House Committee on Ways and 
     Means, the Senate Committee on Finance, or a Conference 
     Report containing tax provisions. The complexity analysis is 
     required to report on the complexity and administrative 
     issues raised by provisions that directly or indirectly amend 
     the Internal Revenue Code and that have widespread 
     applicability to individuals or small businesses. For each 
     such provision identified by the staff of the Joint Committee 
     on Taxation, a summary description of the provision is 
     provided, along with an estimate of the number and the type 
     of affected taxpayers, and a discussion regarding the 
     relevant complexity and administrative issues. Time 
     constraints prevented the staff of the Joint Committee on 
     Taxation from consulting with the IRS regarding the 
     provisions in the conference agreement that has widespread 
     applicability.
     1. Standard deduction tax relief (sec. 2 of the conference 
         agreement)
     Summary description of provision
       For taxable years beginning after December 31, 1999, the 
     bill phases in an increase in the basic standard deduction 
     for a married couple filing a joint return until it is twice 
     the basic standard deduction for a single individual.
     Number of affected taxpayers
       It is estimated that the provision will affect 
     approximately 25 million individual tax returns.
     Discussion
       It is not anticipated that individuals will need to keep 
     additional records due to this provision. The higher basic 
     standard deduction should not result in an increase in 
     disputes with the IRS, nor will regulatory guidance be 
     necessary to implement this provision. In addition, the 
     provision should not increase individual's tax preparation 
     costs.
       Some taxpayers who currently itemize deductions may respond 
     to the provision by claiming the increased standard deduction 
     in lieu of itemizing. According to estimates by the staff of 
     the Joint Committee on Taxation, approximately three million 
     individual tax returns will realize greater tax savings from 
     the increased standard deduction than from itemizing their 
     deductions. In addition to the tax savings, such taxpayers 
     will no longer have to file Schedule A to Form 1040 or need 
     to engage in the record keeping inherent in itemizing below-
     the-line deductions. Moreover, by claiming the standard 
     deduction, such taxpayers may qualify to use simpler versions 
     of the Form 1040 (i.e., Form 1040EZ or Form 1040A) that are 
     not available to individuals who itemize their deductions. 
     These forms simplify the return preparation process by 
     eliminating from the Form 1040 those items that do not apply 
     to a particular taxpayer.
       This reduction in complexity and record keeping may also 
     result in a decline in the number of individuals using a tax 
     preparation service (or a decline in the cost of using such a 
     service). Furthermore, if the provision results in a taxpayer 
     qualifying to use one of the simpler versions of the Form 
     1040, the taxpayer may be eligible to file a paperless 
     Federal tax return by telephone. The provision also should 
     reduce the number of disputes between taxpayers and the IRS 
     regarding substantiation of itemized deductions.
     2. Expansion of the 15-percent rate bracket for married 
         couples filing a joint return (sec. 3 of the conference 
         agreement)
     Summary description of provision
       The provision increases the size of the 15-percent regular 
     income tax rate bracket for married couples filing a joint 
     return to twice the size of the corresponding rate brackets 
     for a single individual. This increase is phased in over five 
     years beginning for taxable years beginning after December 
     31, 1999. It is fully effective for taxable years beginning 
     after December 31, 2003.
     Number of affected taxpayers
       It is estimated that the provision will affect 
     approximately 21 million individual tax returns.
     Discussion
       It is not anticipated that individuals will need to keep 
     additional records due to this provision. The increased size 
     of the 15-percent regular income tax rate bracket for married 
     couples filing joint returns should not result in an increase 
     in disputes with the IRS, nor will regulatory guidance be 
     necessary to implement this provision.
     3. Interactive effect of the alternative minimum tax rules
       Both provisions (i.e., the standard deduction tax relief 
     and the expanded 15-percent rate bracket) are affected by the 
     alternative minimum tax (``AMT'') rules. Specifically, 
     because neither provision makes corresponding changes to the 
     alternative minimum tax regime other than the allowance of 
     the nonrefundable personal credits against the AMT, 
     additional individual taxpayers will need to make the 
     necessary calculations to determine the applicability of the 
     alternative minimum tax rules. It is estimated that for the 
     year 2005, less than two million additional individual income 
     tax returns with a benefit from the provisions will be 
     required to include a calculation of the tentative minimum 
     tax and file the appropriate alternative minimum tax forms. 
     By the year 2009, this number is expected to rise to over 
     seven million additional individual income tax returns. At 
     the same time, however, by 2009, there will be approximately 
     two million individual income tax returns that will be 
     relieved of the burden of the AMT calculations by virtue of 
     the extension of the nonrefundable personal credits against 
     the AMT.
       For taxpayers who have to calculate the tentative minimum 
     tax and file the appropriate alternative minimum tax forms, 
     it could be expected that the interaction of the provisions 
     with the alternative minimum tax rules would result in an 
     increase in tax preparation costs and in the number of 
     individuals using a tax preparation service.
     4. Sunset (sec. 7 of the conference agreement)

     Summary description of provision
       The provision sunsets the provisions and amendments made by 
     the bill for taxable years beginning after December 31, 2004.
     Number of affected taxpayers
       It is estimated that the provision would affect almost all 
     individuals affected by the other provisions of the bill.
     Discussion
       The provision would reverse any simplification achieved 
     under the other provisions of the bill. Specifically, two 
     categories of individuals would have additional record 
     keeping and tax return filing complexity. First, individuals 
     who, because of the bill changes, switch from itemizing 
     deductions to using the increased standard deduction would 
     likely revert to itemizing deductions when the increased 
     standard deduction sunsets. Second, individuals who are 
     relieved of the AMT calculations under the bill would be 
     required to make such AMT calculations after the sunset. The 
     sunset provision also can be expected to result in an 
     increase in the tax preparation cost of individuals using a 
     tax preparation service. In addition, the provision may 
     require the IRS to issue guidance regarding the termination 
     of the tax benefits as a result of the sunset.

[[Page 15373]]



                                   ESTIMATED REVENUE EFFECTS OF THE CONFERENCE AGREEMENT FOR H.R. 4810, THE ``MARRIAGE TAX RELIEF RECONCILIATION ACT OF 2000''
                                                                       [Fiscal years 2001-2010 \1\ in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Provision                      Effective             2001       2002       2003       2004       2005       2006       2007       2008       2009       2010     2001-05    2001-10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1. Standard deduction set at 2     tyba 12/31/99............     -9,873     -6,003     -6,383     -6,523     -1,959  .........  .........  .........  .........  .........    -30,741    -30,741
 times single for married filing
 jointly (sunset 12/31/04).
2. 15% rate bracket set at 2       tyba 12/31/99............     -4,146     -6,361     -9,718    -17,680     -6,277  .........  .........  .........  .........  .........    -44,182    -44,182
 times single for married filing
 jointly; 5-year phasein (sunset
 12/31/04).
3. Extension of AMT treatment of   typa 12/31/01............  .........       -343     -1,876     -2,875     -3,460  .........  .........  .........  .........  .........     -8,554     -8,554
 refundable and nonrefundable
 personal credit (sunset 12/31/
 04).
4. $2,000 increase to the          tyba 12/31/99............     -1,250     -1,281     -1,255     -1,268     -1,287  .........  .........  .........  .........  .........     -6,341     -6,341
 beginning and ending income
 levels for the EIC phaseout for
 married filing jointly (sunset
 12/31/04) \2\.
                                  --------------------------------------------------------------------------------------------------------------------------------------------------------------
      Net Total..................  .........................    -15,269    -13,988    -19,232    -28,346    -12,983  .........  .........  .........  .........  .........    -89,818    -89,818
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The provisions of the bill generally are effective to taxable years beginning after 12/31/99. The bill provides that these provisions can not be taken into account for estimated tax
  purposes before 10/1/00. Accordingly, the provisions result in little to no effect on receipts in fiscal year 2000.
\2\ Estimate includes the following effects on fiscal year outlays: 2001--1,073; 2002--1,109; 2003--1,078; 2004--1,082; 2005--1,097; 2006--....; 2007--....; 2008--....; 2009--....; 2010--....;
  2001-05--5,439; 2001-10--5,439.
 
Legend for ``Effective'' column: tyba=taxable years beginning after.
 
Note.--Details may not add to totals due to rounding.
Source: Joint Committee on Taxation.

     Bill Archer,
     Dick Armey,
                                Managers on the Part of the House.

     Bill Roth,
     Trent Lott,
     Managers on the Part of the Senate.

                          ____________________