[House Report 106-493]
[From the U.S. Government Publishing Office]






106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-493

=======================================================================



 
                MARRIAGE TAX PENALTY RELIEF ACT OF 2000

                                _______
                                

February 7, 2000.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                         [To accompany H.R. 6]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred 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, having considered the same, report 
favorably thereon with amendments and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
  I. Summary and Background......................................     3
          A. Purpose and Summary.................................     3
          B. Background and Need for Legislation.................     4
          C. Legislative History.................................     4
 II. Explanation of the Bill.....................................     5
          A. Standard Deduction Tax Relief (sec. 2)..............     5
          B. Expansion of the 15-Percent Rate Bracket and Repeal 
              of Reduction of Refundable Tax Credits (sec. 3)....     7
          C. Marriage Penalty Relief Relating to the Earned 
              Income Credit (sec. 4).............................     8
III. Votes of the Committee......................................    10
 IV. Budget Effects of the Bill..................................    10
          A. Committee Estimates of Budgetary Effects............    10
          B. Budget Authority and Tax Expenditures...............    11
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    11
  V. Other Matters To Be Discussed Under the Rules of the House..    15
          A. Committee Oversight Findings and Recommendations....    15
          B. Summary of Findings and Recommendations of the 
              Committee on Government Reform and Oversight.......    15
          C. Constitutional Authority Statement..................    15
          D. Information Relating to Unfunded Mandates...........    15
          E. Applicability of House Rule XXI5(b).................    15
          F. Tax Complexity Analysis.............................    16
 VI. Changes in Existing Law Made by the Bill as Reported........    19
VII. Dissenting Views............................................    24

  The amendments are as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE, ETC.

  (a) Short Title.--This Act may be cited as the ``Marriage Tax Penalty 
Relief 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, 2000.

SEC. 3. PHASEOUT OF MARRIAGE PENALTY IN 15-PERCENT BRACKET; REPEAL OF 
                    REDUCTION OF REFUNDABLE TAX CREDITS.

  (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, 2002, 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
                                                         The applicable
                  in calendar year--
                                                        percentage is--
                  2003.....................................      170.3 
                  2004.....................................      173.8 
                  2005.....................................      183.5 
                  2006.....................................      184.3 
                  2007.....................................      187.9 
                  2008 and thereafter......................     200.0. 

                  ``(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) Repeal of Reduction of Refundable Tax Credits.--
          (1) Subsection (d) of section 24 of such Code is amended by 
        striking paragraph (2) and redesignating paragraph (3) as 
        paragraph (2).
          (2) Section 32 of such Code is amended by striking subsection 
        (h).
  (c) 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''.
  (d) Effective Dates.--
          (1) In general.--Except as provided by paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 2002.
          (2) Repeal of reduction of refundable tax credits.--The 
        amendments made by subsection (b) shall apply to taxable years 
        beginning after December 31, 2001.

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) 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) of such Code (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.

  Amend the title so as to read:

    A bill to amend the Internal Revenue Code of 1986 to reduce 
the marriage penalty by providing for adjustments to the 
standard deduction, 15-percent rate bracket, and earned income 
credit and to repeal the reduction of the refundable tax 
credits.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary


                                Purpose

    The bill, H.R. 6, as amended (``The Marriage Tax Penalty 
Relief Act of 2000'') provides tax relief to married couples.
    The bill provides net tax reductions of over $50 billion 
over fiscal years 2000-2005. This will provide needed tax 
relief for married couples by reducing the marriage tax penalty 
while strengthening the financial resources of the American 
family and fostering economic prosperity into the 21st century.

                                Summary

Marriage penalty relief provisions

    Standard deduction tax relief.--The bill increases the 
basic standard deduction for a married couple filing a joint 
return to twice the basic standard deduction for an unmarried 
individual for taxable years beginning after December 31, 2000.
    Expansion of the 15-percent rate bracket and repeal of 
reduction of refundable credits.--The 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 an unmarried individual. This 
increase is phased in over six years effective for taxable 
years beginning after December 31, 2002. It is fully effective 
for taxable years beginning after December 31, 2007. The 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 for taxable years beginning 
after December 31, 2001.
    Marriage penalty relief relating to the earned income 
credit.--The bill increases the beginning point of the phase-
out range of the earned income credit for a married couple 
filing a joint return by $2,000. This provision is effective 
for taxable years beginning after December 31, 2000.

                 B. Background and Need for Legislation

    The provisions approved by the Committee reflect the need 
for tax relief for married couples (e.g., the provisions will 
reduce the increase in tax liability that can occur under 
present law when two individuals marry). The estimated revenue 
effects of the provisions comply with the most recent 
Congressional Budget Office revisions of budget surplus 
projections, and represent a prudent first step in reducing 
overall levels of Federal taxation.

                         C. Legislative History


                            Committee Action

    The Committee on Ways and Means marked up the provisions of 
the bill on February 2, 2000, and approved the provisions, as 
amended, on February 2, 2000, by a rollcall vote of 23 yeas and 
16 nays, with a quorum present.

                           Committee Hearings

    The following Committee and Subcommittee hearings related 
to provisions in the bill were held during the 106th Congress.

Full Committee hearings

    Tax-related hearings were held by the full Committee as 
follows:
          Outlook for the state of the U.S. economy (January 
        20, 1999).
          President's fiscal year 2000 budget (February 4, 
        1999).
          Revenue provisions in President's fiscal year 2000 
        budget (March 10, 1999).
          Reducing the tax burden: Providing tax relief to 
        strengthen the family and sustain a strong economy 
        (June 23, 1999).

Subcommittee hearings

    The Oversight Subcommittee held tax-related hearings as 
follows:
          Impact of complexity in the tax Code on individual 
        taxpayers and small businesses (May 25, 1999).

                      II. EXPLANATION OF THE BILL


A. Standard Deduction Tax Relief (Sec. 2 of the Bill 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 persons 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 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 size 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 filers are roughly 60 percent of those 
for joint filers.1 Thus, two unmarried individuals 
have standard deductions whose sum exceeds the standard 
deduction for a married couple filing a joint return.
---------------------------------------------------------------------------
    \1\ This is not true for the 39.6-percent rate. The beginning point 
of this rate bracket is the same for all taxpayers regardless of filing 
status.
---------------------------------------------------------------------------

Basic standard deduction 2
---------------------------------------------------------------------------

    \2\ Additional standard deductions are allowed with respect to any 
individual who is elderly (age 65 or over) or blind.
---------------------------------------------------------------------------
    Taxpayers who do not itemize deductions may choose the 
basic standard deduction (and additional standard deductions, 
if applicable), which is subtracted from adjusted gross income 
(``AGI'') in arriving at taxable income. The size of the basic 
standard deduction varies according to filing status and is 
indexed for inflation. For 2000, the size of the basic standard 
deduction for each filing status is shown in the following 
table:

Table 1.--Basic Standard Deduction Amounts

                                                           Filing status
                                                          Basic 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 
projected to be 1.67 times the basic standard deduction for 
single returns.

                           Reasons for Change

    The Committee is concerned about the inequity of the 
marriage penalty created by the present-law income tax. The 
Committee believes that relief from the marriage tax penalty is 
needed because the marriage tax penalty may undermine respect 
for the family and may discourage family formation. Any attempt 
to address the marriage tax penalty involves the balancing of 
several competing principles, including equal tax treatment of 
married couples with equal incomes and the determination of 
equitable relative tax burdens of single individuals and 
married couples with equal incomes. The Committee believes that 
an increase in the standard deduction for married couples 
filing a joint return in conjunction with the other provisions 
of the bill is a responsible first step towards removing the 
marriage tax penalty. When fully effective, it provides tax 
relief to approximately 25 million joint returns, including 
more than six million returns filed by senior 
citizens.3 Approximately three million couples who 
currently itemize their deductions will realize the 
simplification benefits of using the basic standard 
deduction.4
---------------------------------------------------------------------------
    \3\ Source: Joint Committee on Taxation staff projections of the 
number of tax returns affected.
    \4\ Source: Joint Committee on Taxation staff projections of the 
number of tax returns affected.
---------------------------------------------------------------------------

                        Explanation of Provision

    The bill increases the basic standard deduction for a 
married couple filing a joint return to twice the basic 
standard deduction for an unmarried individual beginning in 
2001. The basic standard deduction for a married taxpayer 
filing separately will continue to equal one-half of the basic 
standard deduction for a married couple filing jointly.

                             Effective Date

    The provision is effective for taxable years beginning 
after December 31, 2000.

B. Expansion of the 15-Percent Rate Bracket and Repeal of Reduction of 
 Refundable Tax Credits (Sec. 3 of the Bill and Secs. 1, 24, and 32 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 5
 
$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......................  $41,170.50 plus 36% of the
                                          amount over $161,450
Over $288,350..........................  $86,854.50 plus 39.6% of the
                                          amount over $288,350
------------------------------------------------------------------------

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 an individual's alternative minimum tax.
---------------------------------------------------------------------------
    \5\ Married individuals filing separately must apply a separate 
rate structure with tax rate brackets one-half the width of those for 
married individuals filing joint returns.
---------------------------------------------------------------------------

                           Reasons for Change

    The Committee believes that the expansion of the 15-percent 
rate bracket for married couples filing joint returns, in 
conjunction with the other provisions of the bill, will further 
alleviate the effects of the marriage tax penalty in the Code. 
These provisions significantly reduce the most widely 
applicable marriage penalties in the Code. When fully 
effective, this provision provides tax relief to approximately 
21 million joint returns, including more than four million 
returns filed by senior citizens.6
---------------------------------------------------------------------------
    \6\ Source: Joint Committee on Taxation staff projections of the 
number of tax returns affected.
---------------------------------------------------------------------------
    The Committee believes that families should be able to use 
the refundable credits without limitation by reason of the 
minimum tax. In addition, eliminating the reduction of the 
refundable credits by the minimum tax will result in 
significant simplification.

                        Explanation of Provision

Rate brackets

    The 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 
an unmarriedindividual. 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 an 
unmarried individual) for taxable years beginning after December 31, 
2007.

                                                           Percentage of
                                                              15-percent
                                                        rate bracket for
        Taxable year                               unmarried individuals
2003.............................................................. 170.3
2004.............................................................. 173.8
2005.............................................................. 183.5
2006.............................................................. 184.3
2007.............................................................. 187.9
2008 and thereafter............................................... 200.0

Reduction of refundable credits by alternative minimum tax

    The bill repeals the provisions that reduce the refundable 
child credit and the earned income credit by the amount of an 
individual's alternative minimum tax.

                             Effective Date

    The provision relating to the 15-percent rate bracket is 
effective for taxable years beginning after December 31, 2002. 
The repeal of the present-law reduction in the child credit and 
the earned income credit is effective for taxable years 
beginning after December 31, 2001.

C. Marriage Penalty Relief Relating to the Earned Income Credit (Sec. 4 
                  of the Bill 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 
return. A refundable credit is a credit that not only reduces 
an individual's tax liability but allows refunds to the 
individual of amounts in excess of income tax liability. The 
amount of the credit 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 
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 the 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, the income for purposes of 
these tests is the combined income of the couple.
    The parameters of the credit for 2000 are provided in the 
following table.

                                TABLE 3.--EARNED INCOME CREDIT PARAMETERS (2000)
----------------------------------------------------------------------------------------------------------------
                                                                    Two or more
                                                                    qualifying    One qualifying   No 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
----------------------------------------------------------------------------------------------------------------

                           Reasons for Change

    The Committee believes that the present-law EIC phase-out 
ranges unfairly penalizes some individuals because they receive 
a smaller EIC when they marry than if they had not married. 
Reducing this inequity will provide relief to almost one 
million married couples.

                        Explanation of Provision

    The 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 bill, the end-point 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 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.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of the bill, H.R. 6.

                       motion to report the bill

    The bill, H.R. 6, as amended, was ordered favorably 
reported by a roll call vote of 23 yeas to 13 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
            Representatives                 Yea       Nay            Representatives             Yea       Nay
----------------------------------------------------------------------------------------------------------------
Mr. Archer.............................        X   ........  Mr. Rangel.....................  ........        X
Mr. Crane..............................        X   ........  Mr. Stark......................  ........        X
Mr. Thomas.............................        X   ........  Mr. Matsui.....................  ........        X
Mr. Shaw...............................        X   ........  Mr. Coyne......................  ........        X
Mrs. Johnson...........................        X   ........  Mr. Levin......................  ........        X
Mr. Houghton...........................        X   ........  Mr. Cardin.....................  ........        X
Mr. Herger.............................        X   ........  Mr. McDermott..................  ........        X
Mr. McCrery............................        X   ........  Mr. Kleczka....................  ........        X
Mr. Camp...............................        X   ........  Mr. Lewis (GA).................  ........        X
Mr. Ramstad............................        X   ........  Mr. Neal.......................  ........  ........
Mr. Nussle.............................        X   ........  Mr. McNulty....................  ........  ........
Mr. Johnson............................        X   ........  Mr. Jefferson..................  ........  ........
Ms. Dunn...............................        X   ........  Mr. Tanner.....................  ........        X
Mr. Collins............................        X   ........  Mr. Becerra....................  ........        X
Mr. Portman............................        X   ........  Mrs. Thurman...................  ........        X
Mr. English............................        X   ........  Mr. Doggett....................  ........        X
Mr. Watkins............................        X   ........
Mr. Hayworth...........................        X   ........
Mr. Weller.............................        X   ........
Mr. Hulshof............................        X   ........
Mr. McInnis............................        X   ........
Mr. Lewis (KY).........................        X   ........
Mr. Foley..............................        X   ........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made concerning the effects on the budget of the revenue 
provisions of the bill, H.R. 6, as reported.
    The bill is estimated to have the following effects on 
budget receipts for fiscal years 2000-2005:

     ESTIMATED BUDGET EFFECTS OF H.R. 6, THE ``MARRIAGE TAX PENALTY RELIEF ACT OF 2000,'' AS REPORTED BY THE
                               COMMITTEE ON WAYS AND MEANS, Fiscal Years 2000-2005
                                            [In billions of dollars]
----------------------------------------------------------------------------------------------------------------
           Provision                  Effective        2000    2001    2002    2003     2004     2005    2000-05
----------------------------------------------------------------------------------------------------------------
1. Standard deduction set at 2   tyba 12/31/00        ......    -4.1    -6.0    -6.4     -6.5     -6.8     -29.8
 times single for married
 filing jointly.
2. 15% rate bracket set at 2     tyba 12/31/02 &      ......  ......   (\1\)    -1.8     -4.3     -9.7     -15.9
 times single for married         tyba 12/31/01
 filing jointly, phased in over
 6 years; repeal AMT reductions
 of refundable credits.
3. $2,000 increase to the        tyba 12/31/00        ......  -(\1\)    -1.2    -1.2     -1.2     -1.3      -5.0
 beginning and ending income
 levels for the EIC phaseout
 for married filing jointly.\2\
                                --------------------------------------------------------------------------------
      Net total................  ...................  ......    -4.1    -7.2    -9.4    -12.0    -17.8     -50.7
----------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding.
 
Legend for ``Effective'' column: type=taxable years beginning after.
 
\1\ Loss of less than $50 million.
\2\ Estimate includes the following effects on fiscal year outlays: 2000--not available; 2001--less than $50
  million; 2002--$1.1 billion; 2003--$1.1 billion; 2004--$1.1 billion; 2005--$1.1 billion; 2002--05--$4.3
  billion.

    B. Statement Regarding New Budget Authority and Tax Expenditures


                            budget authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

                            tax expenditures

    In compliance with clause 2(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
revenue-reducing income tax provisions involve increased tax 
expenditures. (See amounts in table in Part IV.A., above.)

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the Congressional Budget Office (``CBO''), the 
following statement by CBO is provided.
                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 7, 2000.
Hon. Bill Archer,
Chairman, Committee on Ways and Means, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6, the Marriage 
Tax Elimination Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Hester 
Grippando.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 6--Marriage Tax Elimination Act of 2000

    Summary: H.R. 6 would increase the basic standard deduction 
for a married couple filing a joint return to twice that of a 
taxpayer filing a single return. The bill would also expand, 
over a six-year phase-in period, the 15-percent regular income 
tax rate bracket for a married couple filing a joint return to 
twice the size of the corresponding bracket for an individual 
filing a single return. In addition, H.R. 6 would repeal the 
provision in current law that offsets the refundable child 
credit and earned income credit (EIC) by the amount of the 
alternative minimum tax (AMT). Finally, the bill would increase 
by $2,000 the beginning and ending income levels for the EIC 
phase-out for married couples filing jointly.
    The Joint Committee on Taxation (JCT) estimates that H.R. 6 
would decrease revenues by $4 billion in 2001, by $46 billion 
over the 2001-2005 period, and by $173 billion over the 2001-
2010 period. In addition, JCT estimates that the bill would 
increase direct spending--the outlay effect of the EIC 
changes--by $5 million in 2001, by $4 billion over the 2001-
2005 period, and by $10 billion over the 2001-2010 period. 
Because the bill would affect receipts and direct spending, 
pay-as-you-go procedures would apply.
    H.R. 6 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 6 is shown in the following table. JCT 
provided all revenue and outlay estimates of provisions in H.R. 
6.

----------------------------------------------------------------------------------------------------------------
                                                              By fiscal year, in millions of dollars--
                                                   -------------------------------------------------------------
                                                      2000      2001      2002      2003       2004       2005
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES
 
Increase standard deduction for joint filers......         0    -4,105    -6,003    -6,383     -6,523     -6,793
Increase size of 15% tax rate bracket for joint            0         0       -37    -1,816     -4,348     -9,697
 filers; repeal AMT reductions of refundable
 credits..........................................
Increase beginning and ending income levels for            0        -1      -166      -172       -181       -184
 the EIC phaseout for joint filers................
                                                   -------------------------------------------------------------
      Total revenues..............................         0    -4,106    -6,206    -8,371    -11,052    -16,674
 
                                           CHANGES IN DIRECT SPENDING
 
Increase beginning and ending income levels for            0         5     1,082     1,051      1,055      1,076
 the EIC phaseout for joint filers................
----------------------------------------------------------------------------------------------------------------
Source: Joint Committee on Taxation.

    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the current year, the budget year, and the 
succeeding four years are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          By fiscal year, in millions of dollars--
                                   ---------------------------------------------------------------------------------------------------------------------
                                      2000      2001      2002       2003       2004       2005       2006       2007       2008       2009       2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts...............         0    -4,106    -6,206     -8,371    -11,052    -16,674    -19,371    -21,435    -26,963    -29,133    -29,308
Changes in outlays................         0         5     1,082      1,051      1,055      1,076      1,085      1,104      1,101      1,093      1,083
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 6 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. Estimates of mandates were provided by JCT.
    Estimate prepared by: Hester Grippando.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis; G. Thomas Woodward, Assistant 
Director for Tax Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was a result of the Committee's 
oversight review concerning the tax burden on individual 
taxpayers that the Committee concluded that it is appropriate 
and timely to enact the revenue provisions included in the bill 
as reported.

    B. Summary of Findings and Recommendations of the Committee on 
                           Government Reform

    With respect to clause 3(c)(4) of rule XII of the Rules of 
the House of Representatives, the Committee advises that no 
oversight findings or recommendations have been submitted to 
this Committee by the Committee on Government Reform with 
respect to the provisions contained in the bill.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives (relating to Constitutional 
Authority), the Committee states that the Committee's action in 
reporting this bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have Power To lay 
and collect Taxes, Duties, Imposts and Excises . . .''), and 
from the 16th Amendment to the Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, and tribal 
governments.

                 E. Applicability of House Rule XXI5(b)

    Rule XXI5(b) of the Rules of the House of Representatives 
provides, in part, that ``No bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase shall be considered as passed or agreed to unless 
determined by a vote of not less than three-fifths of the 
Members.'' The Committee has carefully reviewed the provisions 
of the bill, and states that the provisions of the bill do not 
involve any Federal income tax rate increase within the meaning 
of the rule.

                       F. Tax 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.
    Following the analysis of the staff of the Joint Committee 
on Taxation are the comments of the IRS regarding each of the 
provisions included in the complexity analysis, including a 
discussion of the likely effect on IRS forms and any expected 
impact on the IRS.

         1. Standard deduction tax relief (sec. 2 of the bill)

Summary description of provision

    The bill increases the basic standard deduction for a 
married couple filing a joint return to twice the basic 
standard deduction for an unmarried individual for taxable 
years beginning after December 31, 2000.

Number of affected taxpayers

    It is estimated that the provision will affect 
approximately twenty five 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 individuals' 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 willrealize 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 (sec. 3 of the bill)

Summary description of provision

    The provision increases the size of the 15-percent regular 
income tax rate bracket for married couple filing a joint 
return to twice the size of the corresponding rate bracket for 
an unmarried individual. This increase is phased-in over six 
years beginning for taxable years beginning after December 31, 
2002. It is fully effective for taxable years beginning after 
December 31, 2007.

Number of affected taxpayers

    It is estimated that the provision will affect 
approximately twenty one 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 rules. Specifically, because neither 
provision makes corresponding changes to the alternative 
minimum tax regime, 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, more than two million 
additional individual income tax returns who 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. For these taxpayers, 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.
                        Department of the Treasury,
                                  Internal Revenue Service,
                                  Washington, DC, February 4, 2000.
Ms. Lindy L. Paull,
Chief of Staff, Joint Committee on Taxation,
Washington, DC.
    Dear Ms. Paull: Attached are the combined comments of the 
Internal Revenue Service and the Treasury Department on the two 
provisions from the Committee on Ways and Means' markup of 
``The Marriage Tax Penalty Relief Act of 2000'' that you 
identified for complexity analysis in your letter of January 
31, 2000. Our comments are based on the description of those 
provisions in JCX-3-00, Joint Committee on Taxation, 
Description of the Marriage Tax Penalty Relief Act of 2000, 
January 31, 2000.
    Due to the short turnaround time, our comments are 
provisional and subject to change upon a more complete and in-
depth analysis of the provisions.
            Sincerely,
                                               Charles O. Rossotti.
    Attachment.

Complexity Analysis of Provisions From the Marriage Tax Penalty Relief 
                                  Act


                           standard deduction

    Provision: Increase the standard deduction for a married 
couple filing a joint return to twice the basic standard 
deduction for an unmarried individual (effective for taxable 
years beginning after December 31, 2000).
    IRS and Treasury Comments:
    The increase in the basic standard deduction for married 
taxpayers would be incorporated in the 2001 instructions for 
Forms 1040, 1040A, and 1040EZ, and on the 2001 Forms 1040, 
1040A, 1040EZ, and 1040-ES. No new forms would be required.
    Programming changes would be required to reflect the 
increased standard deduction for married taxpayers. Currently, 
IRS tax computation programs are updated annually to 
incorporate mandated inflation adjustments. Programming changes 
necessitated by this provision would be included during that 
process.
    The provision would increase the number of alternative 
minimum tax (AMT) filers, and would also cause additional 
taxpayers to perform AMT calculations only to determine that 
they do not have any AMT liability. Treasury estimates that for 
tax year 2001, the provision would cause an additional 100,000 
taxpayers to incur AMT liability. Treasury also estimates that 
for tax year 2010, the provision, together with the provision 
to increase the width of the 15-percent income tax rate bracket 
for married persons, would increase the number of individuals 
incurring liability due to the AMT by more than 8 million--
about a 50 percent increase. (A permanent extension of the 
current law provision which permits certain personal tax 
credits to offset AMT liability would increase the 8 million 
number to about 9 million.)

                        15-percent rate bracket

    Provision: Increase 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 
an unmarried individual (phased in over 6 years beginning in 
2003).
    IRS and Treasury Comments:
    The increase in the width of the 15-percent bracket for 
married taxpayers would be incorporated into the tax tables and 
the tax rate schedules shown in the instructions for Form 1040, 
1040A, 1040EZ, and 1040NR, and on Form 1040-ES, for each year 
during the phase-in period (2003-2008). No new forms would be 
required.
    Programming changes would be required to reflect the wider 
15-percent rate bracket for married taxpayers for each of the 6 
tax years in the phase-in period. Currently, IRS tax 
computation programs are updated annually to incorporate 
mandated inflation adjustments. Programming changes 
necessitated by this provision would be included during that 
process.
    The provision would increase the number of AMT filers, and 
would also cause additional taxpayers to perform AMT 
calculations only to determine that they do not have any AMT 
liability. See comments on standard deduction for Treasury's 
estimate of the combined impact of this provision and the 
increase in the standard deduction on AMT filing for tax year 
2010.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                     INTERNAL REVENUE CODE OF 1986


Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter A--Determination of Tax Liability

           *       *       *       *       *       *       *


PART I--TAX ON INDIVIDUALS

           *       *       *       *       *       *       *



SEC. 1. TAX IMPOSED.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Phaseout of Marriage Penalty in 15-Percent Bracket; 
Adjustments in Tax Tables so That Inflation Will Not Result in 
Tax Increases.--
          (1) * * *
          (2) Method of prescribing tables.--The table which 
        under paragraph (1) is to apply in lieu of the table 
        contained in subsection (a), (b), (c), (d), or (e), as 
        the case may be, with respect to taxable years 
        beginning in any calendar year shall be prescribed--
                  (A) except as provided in paragraph (8), by 
                increasing the minimum and maximum dollar 
                amounts for each rate bracket for which a tax 
                is imposed under such table by the cost-of-
                living adjustment for such calendar year,

           *       *       *       *       *       *       *

          (6) Rounding.--
                  (A) * * *
                  (B) Table for married individuals filing 
                separately.--In the case of a married 
                individual filing a separate return, 
                subparagraph (A) [(other than with respect to 
                subsection (c)(4) of section 63 (as it applies 
                to subsections (c)(5)(A) and (f) of such 
                section) and section 151(d)(4)(A)) shall be 
                applied] (other than with respect to sections 
                63(c)(4) and 151(d)(4)(A)) shall be applied by 
                substituting ``$25'' for ``$50'' each place it 
                appears.

           *       *       *       *       *       *       *

          (8) Phaseout of marriage penalty in 15-percent 
        bracket.--
                  (A) In general.--With respect to taxable 
                years beginning after December 31, 2002, 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                       The applicable
          in calendar year--                             percentage is--
          2003................................................    170.3 
          2004................................................    173.8 
          2005................................................    183.5 
          2006................................................    184.3 
          2007................................................    187.9 
          2008 and thereafter.................................   200.0. 

                  (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.

           *       *       *       *       *       *       *


PART IV--CREDITS AGAINST TAX

           *       *       *       *       *       *       *


Subpart A--Nonrefundable Personal Credits

           *       *       *       *       *       *       *


SEC. 24. CHILD TAX CREDIT.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Additional Credit for Families With 3 or More Children.--
          (1) * * *
          [(2) Reduction of credit to taxpayer subject to 
        alternative minimum tax.--For taxable years beginning 
        after December 31, 2000, the credit determined under 
        this subsection for the taxable year shall be reduced 
        by the excess (if any) of--
                  [(A) the amount of tax imposed by section 55 
                (relating to alternative minimum tax) with 
                respect to such taxpayer for such taxable year, 
                over
                  [(B) the amount of the reduction under 
                section 32(h) with respect to such taxpayer for 
                such taxable year.
          [(3) Social security taxes.--For purposes of 
        paragraph (1)--
                  [(A) In general.--The term ``social security 
                taxes'' means, with respect to any taxpayer for 
                any taxable year--
                          [(i) the amount of the taxes imposed 
                        by sections 3101 and 3201(a) on amounts 
                        received by the taxpayer during the 
                        calendar year in which the taxable year 
                        begins,
                          [(ii) 50 percent of the taxes imposed 
                        by section 1401 on the self-employment 
                        income of the taxpayer for the taxable 
                        year, and
                          [(iii) 50 percent of the taxes 
                        imposed by section 3211(a)(1) on 
                        amounts received by the taxpayer during 
                        the calendar year in which the taxable 
                        year begins.
                  [(B) Coordination with special refund of 
                social security taxes.--The term ``social 
                security taxes'' shall not include any taxes to 
                the extent the taxpayer is entitled to a 
                special refund of such taxes under section 
                6413(c).
                  [(C) Special rule.--Any amounts paid pursuant 
                to an agreement under section 3121(l) (relating 
                to agreements entered into by American 
                employers with respect to foreign affiliates) 
                which are equivalent to the taxes referred to 
                in subparagraph (A)(i) shall be treated as 
                taxes referred to in such subparagraph.]
          [(3)] (2) Social security taxes.--For purposes of 
        paragraph (1)--
                  (A) * * *

           *       *       *       *       *       *       *


Subpart C--Refundable Credits

           *       *       *       *       *       *       *



SEC. 32. EARNED INCOME.

  (a) * * *
  (b) Percentages and Amounts.--For purposes of subsection 
(a)--
          (1) * * *
          (2) [Amounts.--The earned] Amounts.--
                  (A) In general.--Subject to subparagraph (B), 
                the earned income amount and the phaseout 
                amount shall be determined as follows:

           *       *       *       *       *       *       *

                  (B) Joint returns.--In the case of a joint 
                return, the phaseout amount determined under 
                subparagraph (A) shall be increased by $2,000.

           *       *       *       *       *       *       *

  [(h) Reduction of Credit to Taxpayers Subject to Alternative 
Minimum Tax.--The credit allowed under this section for the 
taxable year shall be reduced by the amount of tax imposed by 
section 55 (relating to alternative minimum tax) with respect 
to such taxpayer for such taxable year.]

           *       *       *       *       *       *       *

  (j) Inflation Adjustments.--
          (1) In general.--In the case of any taxable year 
        beginning after 1996, each of the dollar amounts in 
        subsections (b)(2) and (i)(1) 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, determined by 
                substituting ``calendar year 1995'' for 
                ``calendar year 1992'' in subparagraph (B) 
                thereof.]
                  (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.
          (2) Rounding.--
                  (A) In general.--If any dollar amount in 
                [subsection (b)(2)] subsection (b)(2)(A) (after 
                being increased under subparagraph (B) 
                thereof), after being increased under paragraph 
                (1), is not a multiple of $10, such dollar 
                amount shall be rounded to the nearest multiple 
                of $10.
                  (B) Disqualified income threshold amount.--If 
                the dollar amount in subsection (i)(1), after 
                being increased under paragraph (1), is not a 
                multiple of $50, such amount shall be rounded 
                to the next lowest multiple of $50.

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


  PART I--DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE 
INCOME, ETC.

           *       *       *       *       *       *       *


SEC. 63. TAXABLE INCOME DEFINED.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Standard Deduction.--For purposes of this subtitle--
          (1) * * *
          (2) Basic standard deduction.--For purposes of 
        paragraph (1), the basic standard deduction is--
                  (A) [$5,000] 200 percent of the dollar amount 
                in effect under subparagraph (C) for the 
                taxable year in the case of--
                          (i) a joint return, or
                          (ii) a surviving spouse (as defined 
                        in section 2(a)),
                  (B) $4,400 in the case of a head of household 
                (as defined in section 2(b)), or
                  (C) $3,000 [in the case of an individual who 
                is not married and who is not a surviving 
                spouse or head of household, or] in any other 
                case.
                  [(D) $2,500 in the case of a married 
                individual filing a separate return.]

           *       *       *       *       *       *       *

          (4) Adjustments for inflation.--In the case of any 
        taxable year beginning in a calendar year after 1988, 
        each dollar amount contained in paragraph (2) or (5) or 
        subsection (f) shall be increased by an amount equal 
        to--
                  (A) * * *

           *       *       *       *       *       *       *

        The preceding sentence shall not apply to the amount 
        referred to in paragraph (2)(A).

           *       *       *       *       *       *       *


                         VII. DISSENTING VIEWS

    The Democratic Members of this Committee strongly support 
marriage penalty relief. It had been our hope that this 
Committee, on a bipartisan basis, would seek a solution to that 
problem. Instead, we are being asked to vote for a bill 
developed without consultation with us or the Administration, a 
bill that was announced to the Committee Members in a partisan 
press conference. We cannot vote for this technically flawed 
bill because we do not know how it, in its current state, will 
fit in the budget picture. And, we have no idea where the 
resources will be found to fix the technical flaws of the bill.
    Quite simply, the Republican Members of this Committee have 
reported out a bill without any knowledge as to whether that 
bill would permit us to pay down the National debt by 2013 as 
proposed by the President, extend the solvency of the Medicare 
and Social Security systems, provide a prescription drug 
benefit for the elderly, or enact other priority items with 
broad bipartisan support. This Committee simply does not know 
the consequences of its action today and therefore we must 
oppose the Committee bill.
    The partisan nature of the bill was made clear in the press 
release announcing its details. It described marriage penalty 
relief as ``the best Valentine's Day present we could give to 
millions of couples.'' The Republican Leadership has decided to 
use this marriage penalty legislation as a political stunt, not 
as an attempt to reach a bipartisan solution to this issue. 
Again they have chosen confrontation rather than legislation.
    Last year the House Republican Leadership decided to pursue 
an irresponsible tax reduction agenda. Their legislation was 
vetoed by the President, and there was such broad public 
support for that veto that they did not even attempt to 
override it. This year their strategy is to enact that 
irresponsible agenda in approximately $200 billion increments. 
Again, they will fail because the American public first wants 
action on a Patient's Bill of Rights, preservation and 
protection of the Medicare and Social Security systems, 
reduction in the public debt, a prescription drug benefit for 
the elderly, education initiatives, and an increase in the 
minimum wage. The public has made it clear, they first want 
action on these issues of concern.
    When Members of Congress engage in political stunts, quite 
often the resulting legislation is flawed. That is the case 
with the Committee bill today. It fails to make needed 
adjustments to the individual alternative minimum tax. As a 
result, the bill will not reduce the marriage penalty for 
millions of American families. It simply will change the name 
of the tax that they must pay.
    According to preliminary Treasury Department estimates, the 
Committee bill will result in an approximately $65 billion 
increase in minimum tax liabilities over the next 10 years. 
That means that the big print of the Committee bill promises 
approximately $250 billion in tax relief but it utilizes the 
small print of the minimum tax to take back almost $65 billion 
of that promised relief. The Committee Republicans use this 
device to reduce the cost of their bill even though they loudly 
and publicly call for the repeal of the minimum tax.
    Using the minimum tax to reduce the cost of the bill will 
have uneven effects. Married couples without children and 
living in States with low State and local tax burdens probably 
will receive most, if not all, of the promised relief. However, 
taxpayers with children and taxpayers claiming large State and 
local tax deductions probably will be denied much of the 
promised relief. This is because personal exemptions and State 
and local tax deductions are not allowed against the minimum 
tax. According to preliminary Treasury Department estimates, in 
the year 2010 (2 years after the Committee bill is fully 
effective), 45 percent of American families with two children 
already will pay the minimum tax. None of those families will 
receive any benefit from the Committee bill no matter how large 
their marriage tax penalty. Under the Committee bill, the 
percentage of families with two children liable for the minimum 
tax will increase to 53 percent in the year 2010. That means 
that less than half the families with two children ultimately 
will receive the tax benefits promised by the Chairman.
    It is true that the flaws of the Committee bill could be 
remedied but at a fairly significant cost. The Joint Tax 
Committee has estimated that an amendment to the Committee bill 
that would extend the current law waiver of the AMT limits on 
nonrefundable credits and that would ensure the benefits of the 
Committee bill are not denied by the minimum tax, would cost 
approximately $81 billion over 10 years. That amendment would 
increase the cost of the Committee bill approximately 90 
percent in the year 2010, from $28.7 to almost $52 billion.
    During Committee consideration of this legislation there 
was a long discussion on the impact of this bill on a married 
couple in Congressman Jerry Weller's district. This family 
includes two school teachers with one child. The parents have a 
combined income of $50,000 per year. Republican Members of the 
Committee stated that it is the type of taxpayer who will 
receive large benefits from the bill. The opposite is true. 
This couple would receive at most $218 in annual tax relief 
because all of their taxable income is currently taxed at 15 
percent, in the lowest Federal tax bracket. If this couple own 
their own home and itemize their mortgage interest deductions, 
they will receive absolutely no benefit from the Committee bill 
at their current income level. In all likelihood, faster 
repayment of the National debt, which could potentially lower 
interest rates, would be far more beneficial to this couple 
than the Committee bill.
    This Committee traditionally has taken great care in the 
crafting of the legislation it reports. Quite often, this 
Committee has been called upon to examine proposals with broad 
political support to make sure that those proposals, if 
enacted, would not have unintended or unfair consequences. 
Performing that function has not always made the Committee on 
Ways and Means popular with the other Members of the House, but 
it has been the responsibility of this Committee. The 
legislation reported by the Committee today is inconsistent 
with that tradition, and we are unable to support it.

                                   C.B. Rangel.
                                   Pete Stark.
                                   Robert T. Matsui.
                                   William J. Coyne.
                                   Sander M. Levin.
                                   Ben Cardin.
                                   Jim McDermott.
                                   Jerry Kleczka.
                                   William J. Jefferson.
                                   Richard E. Neal.
                                   Xavier Becerra.
                                   John Lewis.
                                   John Tanner.
                                   Lloyd Doggett.
                                   Karen L. Thurman.
                                   Michael R. McNulty.

                                


