[Congressional Record (Bound Edition), Volume 146 (2000), Part 4]
[Senate]
[Pages 5411-5415]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          AMENDMENTS SUBMITTED

                                 ______
                                 

                MARRIAGE TAX PENALTY RELIEF ACT OF 2000

                                 ______
                                 

                       DORGAN AMENDMENT NO. 3092

  (Ordered to lie on the table.)
  Mr. DORGAN submitted an amendment intended to be proposed by him to 
the bill (H.R. 6) to amend the Internal Revenue Code of 1986 to 
eliminate the marriage penalty by providing that the income tax rate 
bracket amounts, and the amount of the standard deduction, for joint 
returns shall be twice the amounts applicable to unmarried individuals; 
as follows:

       At the appropriate place, insert the following:

     SEC.   . TREATMENT OF CONSERVATION RESERVE PROGRAM PAYMENTS 
                   AS RENTALS FROM REAL ESTATE.

       (a) In General.--Section 1402(a)(1) of the Internal Revenue 
     Code of 1986 (defining net earnings from self-employment) is 
     amended by inserting ``and including payments under section 
     1233(2) of the Food Security Act of 1985 (16 U.S.C. 
     3833(2))'' after ``crop shares''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made before, on, or after the date of 
     the enactment of this Act.
                                 ______
                                 

                        SMITH AMENDMENT NO. 3093

  (Ordered to lie on the table.)
  Mr. SMITH of New Hampshire submitted an amendment intended to be 
proposed by him to the bill, H.R. 6, supra; as follows:

       Strike section 3 and insert:

     SEC. 3. ELIMINATION OF MARRIAGE PENALTY IN 15-PERCENT AND 28-
                   PERCENT RATE BRACKETS.

       (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) Elimination of marriage penalty in 15-percent and 28-
     percent rate brackets.--
       ``(A) In general.--With respect to taxable years beginning 
     after December 31, 2001, in prescribing the tables under 
     paragraph (1)--
       ``(i) the maximum taxable income amount in the 15-percent 
     rate bracket, the minimum and maximum taxable income amounts 
     in the 28-percent rate bracket, and the minimum taxable 
     income amount in the 31-percent rate bracket in the table 
     contained in subsection (a) shall be 200 percent of the 
     comparable taxable income amounts in the table contained in 
     subsection (c) (after any other adjustment under this 
     subsection), and

[[Page 5412]]

       ``(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) 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 ``Elimination of Marriage 
     Penalty in 15-Percent and 28-Percent Rate Brackets;'' before 
     ``Adjustments''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.
                                 ______
                                 

                 SCHUMER (AND BAYH) AMENDMENT NO. 3094

  (Ordered to lie on the table.)
  Mr. SCHUMER (for himself and Mr. Bayh) submitted an amendment 
intended to be proposed by them to the bill, H.R. 6, supra; as follows:

       At the appropriate place, insert the following:

     SEC. __. DEDUCTION FOR HIGHER EDUCATION EXPENSES AND CREDIT 
                   FOR INTEREST ON HIGHER EDUCATION LOANS.

       (a) Deduction Allowed.--
       (1) In general.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following:

     ``SEC. 222. HIGHER EDUCATION EXPENSES.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a deduction an amount equal to the 
     applicable dollar amount of the qualified higher education 
     expenses paid by the taxpayer during the taxable year.
       ``(2) Applicable dollar amount.--The applicable dollar 
     amount for any taxable year shall be determined as follows:

``Taxable year:                               Applicable dollar amount:
  2002......................................................$4,000 ....

  2003......................................................$8,000 ....

  2004 and thereafter......................................$12,000.....

       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph equals the amount which bears the same ratio 
     to the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $62,450 ($104,050 in the case of a joint return, 
     $89,150 in the case of a return filed by a head of household, 
     and $52,025 in the case of a return by a married individual 
     filing separately), bears to
       ``(B) $15,000.
       ``(3) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     the adjusted gross income of the taxpayer for the taxable 
     year determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after the application of sections 86, 135, 219, 220, 
     and 469.
     For purposes of the sections referred to in subparagraph (B), 
     adjusted gross income shall be determined without regard to 
     the deduction allowed under this section.
       ``(c) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees charged by an educational 
     institution and required for the enrollment or attendance 
     of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) any grandchild of the taxpayer,
     as an eligible student at an institution of higher education.
       ``(B) Eligible courses.--Amounts paid for qualified higher 
     education expenses of any individual shall be taken into 
     account under subsection (a) only to the extent such 
     expenses--
       ``(i) are attributable to courses of instruction for which 
     credit is allowed toward a baccalaureate degree by an 
     institution of higher education or toward a certificate of 
     required course work at a vocational school, and
       ``(ii) are not attributable to any graduate program of such 
     individual.
       ``(C) Exception for nonacademic fees.--Such term does not 
     include any student activity fees, athletic fees, insurance 
     expenses, or other expenses unrelated to a student's academic 
     course of instruction.
       ``(D) Eligible student.--For purposes of subparagraph (A), 
     the term `eligible student' means a student who--
       ``(i) meets the requirements of section 484(a)(1) of the 
     Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in 
     effect on the date of the enactment of this section, and
       ``(ii) is carrying at least one-half the normal full-time 
     work load for the course of study the student is pursuing, as 
     determined by the institution of higher education.
       ``(E) Identification requirement.--No deduction shall be 
     allowed under subsection (a) to a taxpayer with respect to an 
     eligible student unless the taxpayer includes the name, age, 
     and taxpayer identification number of such eligible student 
     on the return of tax for the taxable year.
       ``(2) Institution of higher education.--The term 
     `institution of higher education' means an institution 
     which--
       ``(A) is described in section 481 of the Higher Education 
     Act of 1965 (20 U.S.C. 1088), as in effect on the date of the 
     enactment of this section, and
       ``(B) is eligible to participate in programs under title IV 
     of such Act.
       ``(d) Special Rules.--
       ``(1) No double benefit.--
       ``(A) In general.--No deduction shall be allowed under 
     subsection (a) for any expense for which a deduction is 
     allowable to the taxpayer under any other provision of this 
     chapter unless the taxpayer irrevocably waives his right to 
     the deduction of such expense under such other provision.
       ``(B) Denial of deduction if credit elected.--No deduction 
     shall be allowed under subsection (a) for a taxable year with 
     respect to the qualified higher education expenses of an 
     individual if the taxpayer elects to have section 25A apply 
     with respect to such individual for such year.
       ``(C) Dependents.--No deduction shall be allowed under 
     subsection (a) to any individual with respect to whom a 
     deduction under section 151 is allowable to another taxpayer 
     for a taxable year beginning in the calendar year in which 
     such individual's taxable year begins.
       ``(D) Coordination with exclusions.--A deduction shall be 
     allowed under subsection (a) for qualified higher education 
     expenses only to the extent the amount of such expenses 
     exceeds the amount excludable under section 135 or 530(d)(2) 
     for the taxable year.
       ``(2) Limitation on taxable year of deduction.--
       ``(A) In general.--A deduction shall be allowed under 
     subsection (a) for qualified higher education expenses for 
     any taxable year only to the extent such expenses are in 
     connection with enrollment at an institution of higher 
     education during the taxable year.
       ``(B) Certain prepayments allowed.--Subparagraph (A) shall 
     not apply to qualified higher education expenses paid during 
     a taxable year if such expenses are in connection with an 
     academic term beginning during such taxable year or during 
     the first 3 months of the next taxable year.
       ``(3) Adjustment for certain scholarships and veterans 
     benefits.--The amount of qualified higher education expenses 
     otherwise taken into account under subsection (a) with 
     respect to the education of an individual shall be reduced 
     (before the application of subsection (b)) by the sum of the 
     amounts received with respect to such individual for the 
     taxable year as--
       ``(A) a qualified scholarship which under section 117 is 
     not includable in gross income,
       ``(B) an educational assistance allowance under chapter 30, 
     31, 32, 34, or 35 of title 38, United States Code, or
       ``(C) a payment (other than a gift, bequest, devise, or 
     inheritance within the meaning of section 102(a)) for 
     educational expenses, or attributable to enrollment at an 
     eligible educational institution, which is exempt from income 
     taxation by any law of the United States.
       ``(4) No deduction for married individuals filing separate 
     returns.--If the taxpayer is a married individual (within the 
     meaning of section 7703), this section shall apply only if 
     the taxpayer and the taxpayer's spouse file a joint return 
     for the taxable year.
       ``(5) Nonresident aliens.--If the taxpayer is a nonresident 
     alien individual for any portion of the taxable year, this 
     section shall apply only if such individual is treated as a 
     resident alien of the United States for purposes of this 
     chapter by reason of an election under subsection (g) or (h) 
     of section 6013.
       ``(6) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.''
       (2) Deduction allowed in computing adjusted gross income.--
     Section 62(a) of such Code is amended by inserting after 
     paragraph (17) the following:
       ``(18) Higher education expenses.--The deduction allowed by 
     section 222.''
       (3) Conforming amendment.--The table of sections for part 
     VII of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 222 and inserting the 
     following:

``Sec. 222. Higher education expenses.
``Sec. 223. Cross reference.''


[[Page 5413]]


       (4) Effective date.--The amendments made by this subsection 
     shall apply to payments made in taxable years beginning after 
     December 31, 2001.
       (b) Credit for Interest on Higher Education Loans.--
       (1) In general.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25A the following new section:

     ``SEC. 25B. INTEREST ON HIGHER EDUCATION LOANS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to the 
     interest paid by the taxpayer during the taxable year on any 
     qualified education loan.
       ``(b) Maximum Credit.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowed by subsection (a) for the taxable year shall 
     not exceed $1,200.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $50,000 ($80,000 in 
     the case of a joint return), the amount which would (but for 
     this paragraph) be allowable as a credit under this section 
     shall be reduced (but not below zero) by the amount which 
     bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income determined 
     without regard to sections 911, 931, and 933.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2003, the $50,000 and $80,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2002' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Credit.--No credit shall 
     be allowed by this section to an individual for the taxable 
     year if a deduction under section 151 with respect to such 
     individual is allowed to another taxpayer for the taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Credit Allowed.--A credit shall be 
     allowed under this section only with respect to interest paid 
     on any qualified education loan during the first 60 months 
     (whether or not consecutive) in which interest payments are 
     required. For purposes of this paragraph, any loan and all 
     refinancings of such loan shall be treated as 1 loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' has the meaning given such term by section 
     221(e)(1).
       ``(2) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No credit shall be allowed 
     under this section for any amount taken into account for any 
     deduction under any other provision of this chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''
       (2) Conforming amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Interest on higher education loans.''

       (3) Effective date.--The amendments made by this subsection 
     shall apply to any qualified education loan (as defined in 
     section 25B(e)(1) of the Internal Revenue Code of 1986, as 
     added by this subsection) incurred on, before, or after the 
     date of the enactment of this Act, but only with respect to 
     any loan interest payment due after December 31, 2002.
                                 ______
                                 

                     BAYH AMENDMENTS NOS. 3095-3096

  (Ordered to lie on the table.)
  Mr. BAYH submitted two amendments intended to be proposed by him to 
the bill, H.R. 6, supra; as follows:

                           Amendment No. 3095

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Targeted 
     Marriage Tax Penalty Relief Act of 2000''.
       (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) Section 15 Not To Apply.--No amendment made by section 
     2 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. MARRIAGE CREDIT.

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

     ``SEC. 25B. MARRIAGE CREDIT.

       ``(a) Allowance of Credit.--In the case of a joint return 
     under section 6013, there shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to the lesser of the amount determined under 
     subsection (b) or (c) for the taxable year.
       ``(b) Amount Under Subsection (b).--For purposes of 
     subsection (a), the amount under this subsection for any 
     taxable year with respect to a taxpayer is determined in 
     accordance with the following table:

``Taxable year:                                                 Amount:
  2001........................................................$500 ....

  2002........................................................$900 ....

  2003......................................................$1,300 ....

  2004 and thereafter.......................................$1,700.....


       ``(c) Determination of Amount.--
       ``(1) In general.--For purposes of subsection (a), the 
     amount determined under this subsection for any taxable year 
     with respect to a taxpayer is equal to the excess (if any) 
     of--
       ``(A) the joint tentative tax of such taxpayer for such 
     year, over
       ``(B) the combined tentative tax of such taxpayer for such 
     year.
       ``(2) Joint tentative tax.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The joint tentative tax of a taxpayer 
     for any taxable year is equal to the tax determined in 
     accordance with the table contained in section 1(a) on the 
     joint tentative taxable income of the taxpayer for such year.
       ``(B) Joint tentative taxable income.--For purposes of 
     subparagraph (A), the joint tentative taxable income of a 
     taxpayer for any taxable year is equal to the excess of--
       ``(i) the earned income (as defined in section 32(c)(2)), 
     and any income received as a pension or annuity which arises 
     from an employer-employee relationship (including any social 
     security benefit (as defined in section 86(d)(1)), of such 
     taxpayer for such year, over
       ``(ii) the sum of--

       ``(I) either--

       ``(aa) the standard deduction determined under section 
     63(c)(2)(A)(i) for such taxpayer for such year, or
       ``(bb) in the case of an election under section 63(e), the 
     total itemized deductions determined under section 63(d) for 
     such taxpayer for such year, and

       ``(II) the total exemption amount for such taxpayer for 
     such year determined under section 151.

       ``(3) Combined tentative tax.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The combined tentative tax of a taxpayer 
     for any taxable year is equal to the sum of the taxes 
     determined in accordance with the table contained in section 
     1(c) on the individual tentative taxable income of each 
     spouse for such year.
       ``(B) Individual tentative taxable income.--For purposes of 
     subparagraph (A), the individual tentative taxable income of 
     a spouse for any taxable year is equal to the excess of--
       ``(i) the earned income (as defined in section 32(c)(2)), 
     and any income received as a pension or annuity which arises 
     from an employer-employee relationship (including any social 
     security benefit (as defined in section 86(d)(1)), of such 
     spouse for such year, over
       ``(ii) the sum of--

       ``(I) either--

       ``(aa) the standard deduction determined under section 
     63(c)(2)(C) for such spouse for such year, or
       ``(bb) in the case of an election under section 63(e), one-
     half of the total itemized deductions determined under 
     paragraph (2)(B)(ii)(I)(bb) for such spouse for such year, 
     and

       ``(II) one-half of the total exemption amount determined 
     under paragraph (2)(B)(ii)(II) for such year.

       ``(d) Phaseout of Credit.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph is the amount which bears the same ratio to 
     the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's adjusted gross income for such taxable 
     year, over
       ``(ii) $120,000, bears to
       ``(B) $20,000.
       ``(e) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2004, the $1,700

[[Page 5414]]

     amount referred to in subsection (b) and the $120,000 amount 
     referred to in subsection (d)((2)(A)(ii) shall be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2003' for `1992'.
       ``(2) Rounding.--If the $1,700 amount (as so referred) and 
     the $120,000 amount (as so referred) as adjusted under 
     paragraph (1) is not a multiple of $25 and $50, respectively, 
     such amount shall be rounded to the nearest multiple of $25 
     and $50, respectively.''.
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Marriage credit.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 3. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

       (a) In General.--Section 32(b) (relating to percentages and 
     amounts) is amended--
       (1) by striking ``Percentages.--The credit'' in paragraph 
     (1) and inserting ``Percentages.--
       ``(A) In general.--Subject to subparagraph (B), the 
     credit'',
       (2) by adding at the end of paragraph (1) the following new 
     subparagraph:
       ``(B) Joint returns.--In the case of a joint return, the 
     phaseout percentage determined under subparagraph (A)--
       ``(i) in the case of an eligible individual with 1 
     qualifying child shall be decreased by 1.87 percentage 
     points, and
       ``(ii) in the case of an eligible individual with 2 or more 
     qualifying child shall be decreased by 2.01 percentage 
     points.'',
       (3) by striking ``amounts.--The earned'' in paragraph (2) 
     and inserting ``amounts.--
       ``(A) In general.--Subject to subparagraph (B), the 
     earned'', and
       (4) 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) (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) thereof, and
       ``(ii) in the case of the $2,000 amount in subsection 
     (b)(2)(B), by substituting `calendar year 2000' for `calendar 
     year 1992' in subparagraph (B) of such section 1.''.
       (c) Rounding.--Section 32(j)(2)(A) (relating to rounding) 
     is amended by striking ``subsection (b)(2)'' and inserting 
     ``subsection (b)(2)(A) (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, 
     2000.
                                  ____


                           Amendment No. 3096

       In lieu of the matter proposed to be inserted, insert the 
     following:

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Targeted 
     Marriage Tax Penalty Relief Act of 2000''.
       (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) Section 15 Not To Apply.--No amendment made by section 
     2 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. MARRIAGE CREDIT.

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

     ``SEC. 25B. MARRIAGE CREDIT.

       ``(a) Allowance of Credit.--In the case of a joint return 
     under section 6013, there shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to the lesser of the amount determined under 
     subsection (b) or (c) for the taxable year.
       ``(b) Amount Under Subsection (b).--For purposes of 
     subsection (a), the amount under this subsection for any 
     taxable year with respect to a taxpayer is determined in 
     accordance with the following table:

``Taxable year:                                                 Amount:
  2001........................................................$500 ....

  2002........................................................$900 ....

  2003......................................................$1,300 ....

  2004 and thereafter.......................................$1,700.....

       ``(c) Determination of Amount.--
       ``(1) In general.--For purposes of subsection (a), the 
     amount determined under this subsection for any taxable year 
     with respect to a taxpayer is equal to the excess (if any) 
     of--
       ``(A) the joint tentative tax of such taxpayer for such 
     year, over
       ``(B) the combined tentative tax of such taxpayer for such 
     year.
       ``(2) Joint tentative tax.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The joint tentative tax of a taxpayer 
     for any taxable year is equal to the tax determined in 
     accordance with the table contained in section 1(a) on the 
     joint tentative taxable income of the taxpayer for such year.
       ``(B) Joint tentative taxable income.--For purposes of 
     subparagraph (A), the joint tentative taxable income of a 
     taxpayer for any taxable year is equal to the excess of--
       ``(i) the earned income (as defined in section 32(c)(2)), 
     and any income received as a pension or annuity which arises 
     from an employer-employee relationship (including any social 
     security benefit (as defined in section 86(d)(1)), of such 
     taxpayer for such year, over
       ``(ii) the sum of--

       ``(I) either--

       ``(aa) the standard deduction determined under section 
     63(c)(2)(A)(i) for such taxpayer for such year, or
       ``(bb) in the case of an election under section 63(e), the 
     total itemized deductions determined under section 63(d) for 
     such taxpayer for such year, and

       ``(II) the total exemption amount for such taxpayer for 
     such year determined under section 151.

       ``(3) Combined tentative tax.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The combined tentative tax of a taxpayer 
     for any taxable year is equal to the sum of the taxes 
     determined in accordance with the table contained in section 
     1(c) on the individual tentative taxable income of each 
     spouse for such year.
       ``(B) Individual tentative taxable income.--For purposes of 
     subparagraph (A), the individual tentative taxable income of 
     a spouse for any taxable year is equal to the excess of--
       ``(i) the earned income (as defined in section 32(c)(2)), 
     and any income received as a pension or annuity which arises 
     from an employer-employee relationship (including any social 
     security benefit (as defined in section 86(d)(1)), of such 
     spouse for such year, over
       ``(ii) the sum of--

       ``(I) either--

       ``(aa) the standard deduction determined under section 
     63(c)(2)(C) for such spouse for such year, or
       ``(bb) in the case of an election under section 63(e), one-
     half of the total itemized deductions determined under 
     paragraph (2)(B)(ii)(I)(bb) for such spouse for such year, 
     and

       ``(II) one-half of the total exemption amount determined 
     under paragraph (2)(B)(ii)(II) for such year.

       ``(d) Phaseout of Credit.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph is the amount which bears the same ratio to 
     the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's adjusted gross income for such taxable 
     year, over
       ``(ii) $120,000, bears to
       ``(B) $20,000.
       ``(e) Inflation Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning after 2004, the $1,700 amount referred to in 
     subsection (b) and the $120,000 amount referred to in 
     subsection (d)((2)(A)(ii) shall be increased by an amount 
     equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2003' for `1992'.
       ``(2) Rounding.--If the $1,700 amount (as so referred) and 
     the $120,000 amount (as so referred) as adjusted under 
     paragraph (1) is not a multiple of $25 and $50, respectively, 
     such amount shall be rounded to the nearest multiple of $25 
     and $50, respectively.''.
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Marriage credit.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 3. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

       (a) In General.--Section 32(b) (relating to percentages and 
     amounts) is amended--
       (1) by striking ``Percentages.--The credit'' in paragraph 
     (1) and inserting ``Percentages.--
       ``(A) In general.--Subject to subparagraph (B), the 
     credit'',
       (2) by adding at the end of paragraph (1) the following new 
     subparagraph:
       ``(B) Joint returns.--In the case of a joint return, the 
     phaseout percentage determined under subparagraph (A)--

[[Page 5415]]

       ``(i) in the case of an eligible individual with 1 
     qualifying child shall be decreased by 1.87 percentage 
     points, and
       ``(ii) in the case of an eligible individual with 2 or more 
     qualifying child shall be decreased by 2.01 percentage 
     points.'',
       (3) by striking ``amounts.--The earned'' in paragraph (2) 
     and inserting ``amounts.--
       ``(A) In general.--Subject to subparagraph (B), the 
     earned'', and
       (4) 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) (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) thereof, and
       ``(ii) in the case of the $2,000 amount in subsection 
     (b)(2)(B), by substituting `calendar year 2000' for `calendar 
     year 1992' in subparagraph (B) of such section 1.''.
       (c) Rounding.--Section 32(j)(2)(A) (relating to rounding) 
     is amended by striking ``subsection (b)(2)'' and inserting 
     ``subsection (b)(2)(A) (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, 
     2000.

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