[House Report 114-657]
[From the U.S. Government Publishing Office]


114th Congress   }                                       {      Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                       {     114-657

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



 
         HALT TAX INCREASES ON THE MIDDLE CLASS AND SENIORS ACT

                                _______
                                

  July 5, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Brady of Texas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3590]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3590) to amend the Internal Revenue Code of 1986 to 
repeal the increase in the income threshold used in determining 
the deduction for medical care, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Halt Tax Increases on the Middle Class 
and Seniors Act''.

SEC. 2. REPEAL OF INCREASE IN INCOME THRESHOLD FOR DETERMINING MEDICAL 
                    CARE DEDUCTION.

  (a) In General.--Section 213(a) of the Internal Revenue Code of 1986 
is amended by striking ``10 percent'' and inserting ``7.5 percent''.
  (b) Conforming Amendments.--
          (1) Section 213 of such Code is amended by striking 
        subsection (f).
          (2) Section 56(b)(1)(B) of such Code is amended by striking 
        ``without regard to subsection (f) of such section'' and 
        inserting ``by substituting `10 percent' for `7.5 percent'''.
  (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 2015.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     2
 II. EXPLANATION OF THE BILL..........................................3
          A. Repeal of Increase in Income Threshold for Medical 
              Expense Deduction (sec. 2 of the bill and sec. 213 
              of the Code).......................................     3
III. VOTES OF THE COMMITTEE...........................................4
 IV. BUDGET EFFECTS OF THE BILL.......................................4
          A. Committee Estimate of Budgetary Effects Fiscal Years     4
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     6
          C. Cost Estimate Prepared by the Cogressional Budget 
              Office.............................................     6
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......7
          A. Committee Oversight Findings and Recommendations....     7
          B. Statement of General Performance Goals and 
              Objectives.........................................     7
          C. Information Relating to Unfunded Mandates...........     7
          D. Applicability of House Rule XXI 5(b)................     8
          E. Tax Complexity Analysis.............................     8
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................     8
          G. Duplication of Federal Programs.....................     8
          H. Disclosure of Directed Rule Makings.................     9
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............9
VII. DISSENTING VIEWS................................................41

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    The bill, H.R. 3590, as reported by the Committee on Ways 
and Means, repeals the increase in the income threshold used to 
determine eligibility for the tax deduction for medical care 
expenses.

                 B. Background and Need for Legislation

    Under current law, qualified medical expenses are 
deductible by an individual, as an itemized deduction, to the 
extent the expenses exceed a floor measured as a percentage of 
adjusted gross income (``AGI''). The President's health care 
law, the Affordable Care Act (``ACA''), increased the AGI floor 
from 7.5 percent of AGI to 10 percent of AGI. Taxpayers aged 65 
and older are able to continue to use the 7.5 percentage floor 
through tax year 2016. Beginning in tax year 2017, however, all 
Americans will be subject to the 10 percent AGI threshold.
    The bill would provide relief for Americans with expensive 
medical bills by repealing an Obamacare tax hike and 
reinstating the previous threshold of 7.5 percent of AGI for 
all ages. This change is especially important for seniors 
because, according to the AARP, 56 percent of all returns 
claiming the deduction had at least one member of the household 
age 65 or older.

                         C. Legislative History


Background

    H.R. 3590 was introduced on September 22, 2015 and was 
referred to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 3590, the 
``Halt Tax Increases on the Middle Class and Seniors Act'' on 
June 15, 2016, and ordered the bill, as amended, favorably 
reported (with a quorum being present).

Committee hearings

    The issue of tax pertaining to health care and the ACA has 
been discussed at two Ways and Means hearings during the 114th 
Congress:
         Full Committee Hearing on the Tax Treatment of 
        Health Care (April 14, 2016);
         Subcommittee on Health Member Day Hearing on 
        Tax-Related Proposals to Improve Health Care (May 17, 
        2016).

                      II. EXPLANATION OF THE BILL


A. Repeal of Increase in Income Threshold for Medical Expense Deduction 
             (sec. 2 of the bill and sec. 213 of the Code)


                              PRESENT LAW

    Individuals may claim an itemized deduction for 
unreimbursed medical expenses, but only to the extent that such 
expenses exceed 10-percent of AGI.\1\ For taxable years 
beginning before January 1, 2017, the 10-percent threshold is 
reduced to 7.5 percent in the case of taxpayers who have 
attained the age of 65 before the close of the taxable year. In 
the case of married taxpayers, the 7.5 percent threshold 
applies if either spouse has obtained the age of 65 before the 
close of the taxable year. For these taxpayers, during these 
years, the threshold is 10 percent for AMT purposes.
---------------------------------------------------------------------------
    \1\Sec. 213. The threshold was amended by the Patient Protection 
and Affordable Care Act (Pub. L. No. 111-118). For taxable years 
beginning before January 1, 2013, the threshold was 7.5 percent for 
purposes of the regular tax and 10 percent for alternative minimum tax 
(``AMT'') purposes.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee believes that individuals with high health 
care costs should not be subject to a tax increase after 2016. 
Furthermore, the Committee believes that the ten-percent AGI 
threshold currently applicable to taxpayers under age 65 is too 
high and does not allow individuals with normal medical 
expenses to benefit from the deduction. Thus, the Committee 
believes that it is appropriate to lower permanently the AGI 
threshold back to the pre-2013 level of 7.5 percent for all 
taxpayers.

                        EXPLANATION OF PROVISION

    The provision permanently lowers the adjusted gross income 
threshold from 10 percent to 7.5 percent for all taxpayers, 
regardless of age. Under the provision, the threshold continues 
to be 10 percent for AMT purposes.

                             EFFECTIVE DATE

    The provision is effective for taxable years beginning 
after December 31, 2015.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 3590, the ``Halt Tax Increases on the 
Middle Class and Seniors Act'' on June 15, 2016.

                       Motion to Report the Bill

    The bill, H.R. 3590, as amended, was ordered favorably 
reported to the House of Representatives by a roll call vote of 
24 yeas to 11 nays (with a quorum being present).

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Brady......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Nunes......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Lewis........  ........        X   .........
Mr. Reichert...................  ........  ........  .........  Mr. Neal.........  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Larson.......        X   ........  .........
Mr. Smith (NE).................        X   ........  .........  Mr. Blumenauer...  ........  ........  .........
Ms. Jenkins....................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Mr. Pascrell.....        X   ........
Mr. Marchant...................        X   ........  .........  Mr. Crowley......  ........  ........  .........
Ms. Black......................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Reed.......................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Young......................        X   ........  .........
Mr. Kelly......................        X   ........  .........
Mr. Renacci....................        X   ........  .........
Mr. Meehan.....................        X   ........  .........
Ms. Noem.......................        X   ........  .........
Mr. Holding....................        X   ........  .........
Mr. Smith (MO).................  ........  ........  .........
Mr. Dold.......................        X   ........  .........
Mr. Rice.......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 3590, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal budget receipts for fiscal years 2017-2026.

                                                                      FISCAL YEARS
                                                                  [millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
    2017         2018         2019         2020         2021         2022         2023         2024         2025         2026       2017-21     2017-26
--------------------------------------------------------------------------------------------------------------------------------------------------------
    -1,570       -2,494       -2,756       -2,972       -3,205       -3,436       -3,687       -3,948       -4,216       -4,413     -12,998    -32,697
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTE: Details do not add to totals due to rounding.

    Pursuant to clause 8 of rule XIII of the Rules of the House 
of Representatives, the following statement is made by the 
Joint Committee on Taxation with respect to the provisions of 
the bill amending the Internal Revenue Code of 1986: The gross 
budgetary effect (before incorporating macroeconomic effects) 
in any fiscal year is less than 0.25 percent of the current 
projected gross domestic product of the United States for that 
fiscal year; therefore, the bill is not ``major legislation'' 
for purposes of requiring that the estimate include the 
budgetary effects of changes in economic output, employment, 
capital stock and other macroeconomic variables.

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. The 
Committee further states that the revenue-reducing tax 
provisions involve increased tax expenditures. See amounts 
shown in the 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 CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                                Congressional Budget Office
                                     Washington, DC, June 30, 2016.
Hon. Kevin Brady,
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. 3590, the Halt Tax 
Increases on the Middle Class and Seniors Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Peter 
Huether.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 3590--Halt Tax Increases on the Middle Class and Seniors Act

    Under current law, individuals may generally claim an 
itemized deduction for unreimbursed medical expenses to the 
extent that such expenses exceed a threshold of 10 percent of 
adjusted gross income (AGI). For taxpayers 65 years of age or 
older, the threshold is generally 7.5 percent in 2016, but it 
rises to 10 percent thereafter. Regardless of the age of the 
taxpayer, the threshold is 10 percent for the purposes of the 
alternative minimum tax (AMT). H.R. 3590 would amend the 
Internal Revenue Code to permanently lower the threshold from 
10 percent to 7.5 percent of AGI under the regular income tax, 
regardless of the age of the taxpayer, effective for tax years 
beginning after December 31, 2015. H.R. 3590 maintains the 
threshold at its current-law level of 10 percent for AMT 
purposes.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that enacting H.R. 3590 would reduce revenues by 
$32.7 billion over the 2016-2026 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
revenues or direct spending. The net changes in revenues that 
are subject to those pay-as-you-go procedures are shown in the 
following table.
    CBO and JCT estimate that enacting the bill would increase 
net direct spending or on-budget deficits by more than $5 
billion in at least one of the four 10-year periods beginning 
in 2027.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Peter Huether. 
The estimate was approved by Mark Booth, Unit Chief, Revenue 
Estimating.

           CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3590, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON JUNE 15, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                                                                                                                        2016-     2016-
                                               2016    2017    2018    2019    2020    2021    2022    2023    2024    2025    2026     2021      2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICIT
 
Statutory Pay-As-You-Go Effects.............       0   1,570   2,494   2,756   2,972   3,205   3,436   3,687   3,948   4,216   4,413    12,998   32,697
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.
Note: Components may not sum to total because of rounding.

     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 as a result of the 
Committee's review of the provisions of H.R. 3590 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 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, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    The following statement is made pursuant to clause 3(h)(1) 
of rule XIII of the Rules of the House of Representatives. 
Section 4022(b) of the Internal Revenue Service Restructuring 
and Reform Act of 1998 (``IRS Reform Act'') requires the staff 
of the Joint Committee on Taxation (in consultation with the 
Internal Revenue Service and the Treasury Department) to 
provide a tax complexity analysis. The complexity analysis is 
required for all legislation reported by the Senate Committee 
on Finance, the House Committee on Ways and Means, or any 
committee of conference if the legislation includes a provision 
that directly or indirectly amends the Internal Revenue Code of 
1986 and has widespread applicability to individuals or small 
businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Internal Revenue 
Code of 1986 and that have ``widespread applicability'' to 
individuals or small businesses, within the meaning of the 
rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(g)(2) of H. Res. 5 (114th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(i) of H. Res. 5 (114th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

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


  A. Text of Existing Law Amended or Repealed by the Bill, as Reported

    In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(A) of rule XIII of the 
Rules of the House of Representatives, the text of each section 
proposed to be amended or repealed by the bill, as reported, is 
shown below:

                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter A--Determination of Tax Liability

           *       *       *       *       *       *       *


PART VI--ALTERNATIVE MINIMUM TAX

           *       *       *       *       *       *       *



SEC. 56. ADJUSTMENTS IN COMPUTING ALTERNATIVE MINIMUM TAXABLE INCOME.

  (a) Adjustments Applicable to All Taxpayers.--In determining 
the amount of the alternative minimum taxable income for any 
taxable year the following treatment shall apply (in lieu of 
the treatment applicable for purposes of computing the regular 
tax):
          (1) Depreciation.--
                  (A) In general.--
                          (i) Property other than certain 
                        personal property.--Except as provided 
                        in clause (ii), the depreciation 
                        deduction allowable under section 167 
                        with respect to any tangible property 
                        placed in service after December 31, 
                        1986, shall be determined under the 
                        alternative system of section 168(g). 
                        In the case of property placed in 
                        service after December 31, 1998, the 
                        preceding sentence shall not apply but 
                        clause (ii) shall continue to apply.
                          (ii) 150-percent declining balance 
                        method for certain property.--The 
                        method of depreciation used shall be--
                                  (I) the 150 percent declining 
                                balance method,
                                  (II) switching to the 
                                straight line method for the 
                                1st taxable year for which 
                                using the straight line method 
                                with respect to the adjusted 
                                basis as of the beginning of 
                                the year will yield a higher 
                                allowance.
                        The preceding sentence shall not apply 
                        to any section 1250 property (as 
                        defined in section 1250(c)) (and the 
                        straight line method shall be used for 
                        such section 1250 property)or to any 
                        other property if the depreciation 
                        deduction determined under section 168 
                        with respect to such other property for 
                        purposes of the regular tax is 
                        determined by using the straight line 
                        method.
                  (B) Exception for certain property.--This 
                paragraph shall not apply to property described 
                in paragraph (1), (2), (3), or (4) of section 
                168(f), or in section 168(e)(3)(C)(iv).
                  (C) Coordination with transitional rules.--
                          (i) In general.--This paragraph shall 
                        not apply to property placed in service 
                        after December 31, 1986, to which the 
                        amendments made by section 201 of the 
                        Tax Reform Act of 1986 do not apply by 
                        reason of section 203, 204, or 251(d) 
                        of such Act.
                          (ii) Treatment of certain property 
                        placed in service before 1987.--This 
                        paragraph shall apply to any property 
                        to which the amendments made by section 
                        201 of the Tax Reform Act of 1986 apply 
                        by reason of an election under section 
                        203(a)(1)(B) of such Act without regard 
                        to the requirement of subparagraph (A) 
                        that the property be placed in service 
                        after December 31, 1986.
                  (D) Normalization rules.--With respect to 
                public utility property described in section 
                168(i)(10), the Secretary shall prescribe the 
                requirements of a normalization method of 
                accounting for this section.
          (2) Mining exploration and development costs.--
                  (A) In general.--With respect to each mine or 
                other natural deposit (other than an oil, gas, 
                or geothermal well) of the taxpayer, the amount 
                allowable as a deduction under section 616(a) 
                or 617(a) (determined without regard to section 
                291(b)) in computing the regular tax for costs 
                paid or incurred after December 31, 1986, shall 
                be capitalized and amortized ratably over the 
                10-year period beginning with the taxable year 
                in which the expenditures were made.
                  (B) Loss allowed.--If a loss is sustained 
                with respect to any property described in 
                subparagraph (A), a deduction shall be allowed 
                for the expenditures described in subparagraph 
                (A) for the taxable year in which such loss is 
                sustained in an amount equal to the lesser of--
                          (i) the amount allowable under 
                        section 165(a) for the expenditures if 
                        they had remained capitalized, or
                          (ii) the amount of such expenditures 
                        which have not previously been 
                        amortized under subparagraph (A).
          (3) Treatment of certain long-term contracts.--In the 
        case of any long-term contract entered into by the 
        taxpayer on or after March 1, 1986, the taxable income 
        from such contract shall be determined under the 
        percentage of completion method of accounting (as 
        modified by section 460(b)). For purposes of the 
        preceding sentence, in the case of a contract described 
        in section 460(e)(1), the percentage of the contract 
        completed shall be determined under section 460(b)(1) 
        by using the simplified procedures for allocation of 
        costs prescribed under section 460(b)(3). The first 
        sentence of this paragraph shall not apply to any home 
        construction contract (as defined in section 
        460(e)(6)).
          (4) Alternative tax net operating loss deduction.--
        The alternative tax net operating loss deduction shall 
        be allowed in lieu of the net operating loss deduction 
        allowed under section 172.
          (5) Pollution control facilities.--In the case of any 
        certified pollution control facility placed in service 
        after December 31, 1986, the deduction allowable under 
        section 169 (without regard to section 291) shall be 
        determined under the alternative system of section 
        168(g). In the case of such a facility placed in 
        service after December 31, 1998, such deduction shall 
        be determined under section 168 using the straight line 
        method.
          (6) Adjusted basis.--The adjusted basis of any 
        property to which paragraph (1) or (5) applies (or with 
        respect to which there are any expenditures to which 
        paragraph (2) or subsection (b)(2) applies) shall be 
        determined on the basis of the treatment prescribed in 
        paragraph (1), (2), or (5), or subsection (b)(2), 
        whichever applies.
          (7) Section 87 not applicable.--Section 87 (relating 
        to alcohol fuel credit) shall not apply.
  (b) Adjustments Applicable to Individuals.--In determining 
the amount of the alternative minimum taxable income of any 
taxpayer (other than a corporation), the following treatment 
shall apply (in lieu of the treatment applicable for purposes 
of computing the regular tax):
          (1) Limitation on deductions.--
                  (A) In general.--No deduction shall be 
                allowed--
                          (i) for any miscellaneous itemized 
                        deduction (as defined in section 
                        67(b)), or
                          (ii) for any taxes described in 
                        paragraph (1), (2), or (3) of section 
                        164(a) or clause (ii) of section 
                        164(b)(5)(A).
                Clause (ii) shall not apply to any amount 
                allowable in computing adjusted gross income.
                  (B) Medical expenses.--In determining the 
                amount allowable as a deduction under section 
                213, subsection (a) of section 213 shall be 
                applied without regard to subsection (f) of 
                such section.
                  (C) Interest.--In determining the amount 
                allowable as a deduction for interest, 
                subsections (d) and (h) of section 163 shall 
                apply, except that--
                          (i) in lieu of the exception under 
                        section 163(h)(2)(D), the term 
                        ``personal interest'' shall not include 
                        any qualified housing interest (as 
                        defined in subsection (e)),
                          (ii) interest on any specified 
                        private activity bond (and any amount 
                        treated as interest on a specified 
                        private activity bond under section 
                        57(a)(5)(B)), and any deduction 
                        referred to in section 57(a)(5)(A), 
                        shall be treated as includible in gross 
                        income (or as deductible) for purposes 
                        of applying section 163(d),
                          (iii) in lieu of the exception under 
                        section 163(d)(3)(B)(i), the term 
                        ``investment interest'' shall not 
                        include any qualified housing interest 
                        (as defined in subsection (e)), and
                          (iv) the adjustments of this section 
                        and sections 57 and 58 shall apply in 
                        determining net investment income under 
                        section 163(d).
                  (D) Treatment of certain recoveries.--No 
                recovery of any tax to which subparagraph 
                (A)(ii) applied shall be included in gross 
                income for purposes of determining alternative 
                minimum taxable income.
                  (E) Standard deduction and deduction for 
                personal exemptions not allowed.--The standard 
                deduction under section 63(c), the deduction 
                for personal exemptions under section 151, and 
                the deduction under section 642(b) shall not be 
                allowed. The preceding sentence shall not apply 
                to so much of the standard deduction as is 
                determined under subparagraphs (D) and (E) of 
                section 63(c)(1).
                  (F) Section 68 not applicable.--Section 68 
                shall not apply.
          (2) Circulation and research and experimental 
        expenditures.--
                  (A) In general.--The amount allowable as a 
                deduction under section 173 or 174(a) in 
                computing the regular tax for amounts paid or 
                incurred after December 31, 1986, shall be 
                capitalized and--
                          (i) in the case of circulation 
                        expenditures described in section 173, 
                        shall be amortized ratably over the 3-
                        year period beginning with the taxable 
                        year in which the expenditures were 
                        made, or
                          (ii) in the case of research and 
                        experimental expenditures described in 
                        section 174(a), shall be amortized 
                        ratably over the 10-year period 
                        beginning with the taxable year in 
                        which the expenditures were made.
                  (B) Loss allowed.--If a loss is sustained 
                with respect to any property described in 
                subparagraph (A), a deduction shall be allowed 
                for the expenditures described in subparagraph 
                (A) for the taxable year in which such loss is 
                sustained in an amount equal to the lesser of--
                          (i) the amount allowable under 
                        section 165(a) for the expenditures if 
                        they had remained capitalized, or
                          (ii) the amount of such expenditures 
                        which have not previously been 
                        amortized under subparagraph (A).
                  (C) Special rule for personal holding 
                companies.--In the case of circulation 
                expenditures described in section 173, the 
                adjustments provided in this paragraph shall 
                apply also to a personal holding company (as 
                defined in section 542).
                  (D) Exception for certain research and 
                experimental expenditures.--If the taxpayer 
                materially participates (within the meaning of 
                section 469(h)) in an activity, this paragraph 
                shall not apply to any amount allowable as a 
                deduction under section 174(a) for expenditures 
                paid or incurred in connection with such 
                activity.
          (3) Treatment of incentive stock options.--Section 
        421 shall not apply to the transfer of stock acquired 
        pursuant to the exercise of an incentive stock option 
        (as defined in section 422). Section 422(c)(2) shall 
        apply in any case where the disposition and the 
        inclusion for purposes of this part are within the same 
        taxable year and such section shall not apply in any 
        other case. The adjusted basis of any stock so acquired 
        shall be determined on the basis of the treatment 
        prescribed by this paragraph.
  (c) Adjustments Applicable to Corporations.--In determining 
the amount of the alternative minimum taxable income of a 
corporation, the following treatment shall apply:
          (1) Adjustment for adjusted current earnings.--
        Alternative minimum taxable income shall be adjusted as 
        provided in subsection (g).
          (2) Merchant marine capital construction funds.--In 
        the case of a capital construction fund established 
        under chapter 535 of title 46, United States Code--
                  (A) subparagraphs (A), (B), and (C) of 
                section 7518(c)(1) (and the corresponding 
                provisions of such chapter 535) shall not apply 
                to--
                          (i) any amount deposited in such fund 
                        after December 31, 1986, or
                          (ii) any earnings (including gains 
                        and losses) after December 31, 1986, on 
                        amounts in such fund, and
                  (B) no reduction in basis shall be made under 
                section 7518(f) (or the corresponding 
                provisions of such chapter 535) with respect to 
                the withdrawal from the fund of any amount to 
                which subparagraph (A) applies.
        For purposes of this paragraph, any withdrawal of 
        deposits or earnings from the fund shall be treated as 
        allocable first to deposits made before (and earnings 
        received or accrued before) January 1, 1987.
          (3) Special deduction for certain organizations not 
        allowed.--The deduction determined under section 833(b) 
        shall not be allowed.
  (d) Alternative Tax Net Operating Loss Deduction Defined.--
          (1) In general.--For purposes of subsection (a)(4), 
        the term ``alternative tax net operating loss 
        deduction'' means the net operating loss deduction 
        allowable for the taxable year under section 172, 
        except that--
                  (A) the amount of such deduction shall not 
                exceed the sum of--
                          (i) the lesser of--
                                  (I) the amount of such 
                                deduction attributable to net 
                                operating losses (other than 
                                the deduction described in 
                                clause (ii)(I)), or
                                  (II) 90 percent of 
                                alternative minimum taxable 
                                income determined without 
                                regard to such deduction and 
                                the deduction under section 
                                199, plus
                          (ii) the lesser of--
                                  (I) the amount of such 
                                deduction attributable to an 
                                applicable net operating loss 
                                with respect to which an 
                                election is made under section 
                                172(b)(1)(H), or
                                  (II) alternative minimum 
                                taxable income determined 
                                without regard to such 
                                deduction and the deduction 
                                under section 199 reduced by 
                                the amount determined under 
                                clause (i), and
                  (B) in determining the amount of such 
                deduction--
                          (i) the net operating loss (within 
                        the meaning of section 172(c)) for any 
                        loss year shall be adjusted as provided 
                        in paragraph (2), and
                          (ii) appropriate adjustments in the 
                        application of section 172(b)(2) shall 
                        be made to take into account the 
                        limitation of subparagraph (A).
          (2) Adjustments to net operating loss computation.--
                  (A) Post-1986 loss years.--In the case of a 
                loss year beginning after December 31, 1986, 
                the net operating loss for such year under 
                section 172(c) shall--
                          (i) be determined with the 
                        adjustments provided in this section 
                        and section 58, and
                          (ii) be reduced by the items of tax 
                        preference determined under section 57 
                        for such year.
                An item of tax preference shall be taken into 
                account under clause (ii) only to the extent 
                such item increased the amount of the net 
                operating loss for the taxable year under 
                section 172(c).
                  (B) Pre-1987 years.--In the case of loss 
                years beginning before January 1, 1987, the 
                amount of the net operating loss which may be 
                carried over to taxable years beginning after 
                December 31, 1986, for purposes of paragraph 
                (2), shall be equal to the amount which may be 
                carried from the loss year to the first taxable 
                year of the taxpayer beginning after December 
                31, 1986.
  (e) Qualified Housing Interest.--For purposes of this part--
          (1) In general.--The term ``qualified housing 
        interest'' means interest which is qualified residence 
        interest (as defined in section 163(h)(3)) and is paid 
        or accrued during the taxable year on indebtedness 
        which is incurred in acquiring, constructing, or 
        substantially improving any property which--
                  (A) is the principal residence (within the 
                meaning of section 121) of the taxpayer at the 
                time such interest accrues, or
                  (B) is a qualified dwelling which is a 
                qualified residence (within the meaning of 
                section 163(h)(4)).
        Such term also includes interest on any indebtedness 
        resulting from the refinancing of indebtedness meeting 
        the requirements of the preceding sentence; but only to 
        the extent that the amount of the indebtedness 
        resulting from such refinancing does not exceed the 
        amount of the refinanced indebtedness immediately 
        before the refinancing.
          (2) Qualified dwelling.--The term ``qualified 
        dwelling'' means any--
                  (A) house,
                  (B) apartment,
                  (C) condominium, or
                  (D) mobile home not used on a transient basis 
                (within the meaning of section 
                7701(a)(19)(C)(v)),
        including all structures or other property appurtenant 
        thereto.
          (3) Special rule for indebtedness incurred before 
        July 1, 1982.--The term ``qualified housing interest'' 
        includes interest which is qualified residence interest 
        (as defined in section 163(h)(3)) and is paid or 
        accrued on indebtedness which--
                  (A) was incurred by the taxpayer before July 
                1, 1982, and
                  (B) is secured by property which, at the time 
                such indebtedness was incurred, was--
                          (i) the principal residence (within 
                        the meaning of section 121) of the 
                        taxpayer, or
                          (ii) a qualified dwelling used by the 
                        taxpayer (or any member of his family 
                        (within the meaning of section 
                        267(c)(4))).
  (g) Adjustments Based on Adjusted Current Earnings.--
          (1) In general.--The alternative minimum taxable 
        income of any corporation for any taxable year shall be 
        increased by 75 percent of the excess (if any) of--
                  (A) the adjusted current earnings of the 
                corporation, over
                  (B) the alternative minimum taxable income 
                (determined without regard to this subsection 
                and the alternative tax net operating loss 
                deduction).
          (2) Allowance of negative adjustments.--
                  (A) In general.--The alternative minimum 
                taxable income for any corporation of any 
                taxable year, shall be reduced by 75 percent of 
                the excess (if any) of--
                          (i) the amount referred to in 
                        subparagraph (B) of paragraph (1), over
                          (ii) the amount referred to in 
                        subparagraph (A) of paragraph (1).
                  (B) Limitation.--The reduction under 
                subparagraph (A) for any taxable year shall not 
                exceed the excess (if any) of--
                          (i) the aggregate increases in 
                        alternative minimum taxable income 
                        under paragraph (1) for prior taxable 
                        years, over
                          (ii) the aggregate reductions under 
                        subparagraph (A) of this paragraph for 
                        prior taxable years.
          (3) Adjusted current earnings.--For purposes of this 
        subsection, the term ``adjusted current earnings'' 
        means the alternative minimum taxable income for the 
        taxable year--
                  (A) determined with the adjustments provided 
                in paragraph (4), and
                  (B) determined without regard to this 
                subsection and the alternative tax net 
                operating loss deduction.
          (4) Adjustments.--In determining adjusted current 
        earnings, the following adjustments shall apply:
                  (A) Depreciation.--
                          (i) Property placed in service after 
                        1989.--The depreciation deduction with 
                        respect to any property placed in 
                        service in a taxable year beginning 
                        after 1989 shall be determined under 
                        the alternative system of section 
                        168(g). The preceding sentence shall 
                        not apply to any property placed in 
                        service after December 31, 1993, and 
                        the depreciation deduction with respect 
                        to such property shall be determined 
                        under the rules of subsection 
                        (a)(1)(A).
                          (ii) Property to which new ACRS 
                        system applies.--In the case of any 
                        property to which the amendments made 
                        by section 201 of the Tax Reform Act of 
                        1986 apply and which is placed in 
                        service in a taxable year beginning 
                        before 1990, the depreciation deduction 
                        shall be determined--
                                  (I) by taking into account 
                                the adjusted basis of such 
                                property (as determined for 
                                purposes of computing 
                                alternative minimum taxable 
                                income) as of the close of the 
                                last taxable year beginning 
                                before January 1, 1990, and
                                  (II) by using the straight-
                                line method over the remainder 
                                of the recovery period 
                                applicable to such property 
                                under the alternative system of 
                                section 168(g).
                          (iii) Property to which original ACRS 
                        system applies.--In the case of any 
                        property to which section 168 (as in 
                        effect on the day before the date of 
                        the enactment of the Tax Reform Act of 
                        1986 and without regard to subsection 
                        (d)(1)(A)(ii) thereof) applies and 
                        which is placed in service in a taxable 
                        year beginning before 1990, the 
                        depreciation deduction shall be 
                        determined--
                                  (I) by taking into account 
                                the adjusted basis of such 
                                property (as determined for 
                                purposes of computing the 
                                regular tax) as of the close of 
                                the last taxable year beginning 
                                before January 1, 1990, and
                                  (II) by using the straight 
                                line method over the remainder 
                                of the recovery period which 
                                would apply to such property 
                                under the alternative system of 
                                section 168(g).
                          (iv) Property placed in service 
                        before 1981.--In the case of any 
                        property not described in clause (i), 
                        (ii), or (iii), the amount allowable as 
                        depreciation or amortization with 
                        respect to such property shall be 
                        determined in the same manner as for 
                        purposes of computing taxable income.
                          (v) Special rule for certain 
                        property.--In the case of any property 
                        described in paragraph (1), (2), (3), 
                        or (4) of section 168(f), the amount of 
                        depreciation allowable for purposes of 
                        the regular tax shall be treated as the 
                        amount allowable under the alternative 
                        system of section 168(g).
                  (B) Inclusion of items included for purposes 
                of computing earnings and profits.--
                          (i) In general.--In the case of any 
                        amount which is excluded from gross 
                        income for purposes of computing 
                        alternative minimum taxable income but 
                        is taken into account in determining 
                        the amount of earnings and profits--
                                  (I) such amount shall be 
                                included in income in the same 
                                manner as if such amount were 
                                includible in gross income for 
                                purposes of computing 
                                alternative minimum taxable 
                                income, and
                                  (II) the amount of such 
                                income shall be reduced by any 
                                deduction which would have been 
                                allowable in computing 
                                alternative minimum taxable 
                                income if such amount were 
                                includible in gross income.
                        The preceding sentence shall not apply 
                        in the case of any amount excluded from 
                        gross income under section 108 (or the 
                        corresponding provisions of prior law) 
                        or under section 139A or 1357. In the 
                        case of any insurance company taxable 
                        under section 831(b), this clause shall 
                        not apply to any amount not described 
                        in section 834(b).
                          (ii) Inclusion of buildup in life 
                        insurance contracts.--In the case of 
                        any life insurance contract--
                                  (I) the income on such 
                                contract (as determined under 
                                section 7702(g)) for any 
                                taxable year shall be treated 
                                as includible in gross income 
                                for such year, and
                                  (II) there shall be allowed 
                                as a deduction that portion of 
                                any premium which is 
                                attributable to insurance 
                                coverage.
                          (iii) Tax exempt interest on certain 
                        housing bonds.--Clause (i) shall not 
                        apply in the case of any interest on a 
                        bond to which section 57(a)(5)(C)(iii) 
                        applies.
                          (iv) Tax exempt interest on bonds 
                        issued in 2009 and 2010.--
                                  (I) In general.--Clause (i) 
                                shall not apply in the case of 
                                any interest on a bond issued 
                                after December 31, 2008, and 
                                before January 1, 2011.
                                  (II) Treatment of refunding 
                                bonds.--For purposes of 
                                subclause (I), a refunding bond 
                                (whether a current or advance 
                                refunding) shall be treated as 
                                issued on the date of the 
                                issuance of the refunded bond 
                                (or in the case of a series of 
                                refundings, the original bond).
                                  (III) Exception for certain 
                                refunding bonds.--Subclause 
                                (II) shall not apply to any 
                                refunding bond which is issued 
                                to refund any bond which was 
                                issued after December 31, 2003, 
                                and before January 1, 2009.
                  (C) Disallowance of items not deductible in 
                computing earnings and profits.--
                          (i) In general.--A deduction shall 
                        not be allowed for any item if such 
                        item would not be deductible for any 
                        taxable year for purposes of computing 
                        earnings and profits.
                          (ii) Special rule for certain 
                        dividends.--
                                  (I) In general.--Clause (i) 
                                shall not apply to any 
                                deduction allowable under 
                                section 243 or 245 for any 
                                dividend which is a 100-percent 
                                dividend or which is received 
                                from a 20-percent owned 
                                corporation (as defined in 
                                section 243(c)(2)), but only to 
                                the extent such dividend is 
                                attributable to income of the 
                                paying corporation which is 
                                subject to tax under this 
                                chapter (determined after the 
                                application of sections 30A, 
                                936 (including subsections 
                                (a)(4), (i) and (j) thereof) 
                                and 921 (as in effect before 
                                its repeal by the FSC Repeal 
                                and Extraterritorial Income 
                                Exclusion Act of 2000)).
                                  (II) 100-percent dividend.--
                                For purposes of subclause (I), 
                                the term ``100 percent 
                                dividend'' means any dividend 
                                if the percentage used for 
                                purposes of determining the 
                                amount allowable as a deduction 
                                under section 243 or 245 with 
                                respect to such dividend is 100 
                                percent.
                          (iii) Treatment of taxes on dividends 
                        from 936 corporations.--
                                  (I) In general.--For purposes 
                                of determining the alternative 
                                minimum foreign tax credit, 75 
                                percent of any withholding or 
                                income tax paid to a possession 
                                of the United States with 
                                respect to dividends received 
                                from a corporation eligible for 
                                the credit provided by section 
                                936 shall be treated as a tax 
                                paid to a foreign country by 
                                the corporation receiving the 
                                dividend.
                                  (II) Limitation.--If the 
                                aggregate amount of the 
                                dividends referred to in 
                                subclause (I) for any taxable 
                                year exceeds the excess 
                                referred to in paragraph (1), 
                                the amount treated as tax paid 
                                to a foreign country under 
                                subclause (I) shall not exceed 
                                the amount which would be so 
                                treated without regard to this 
                                subclause multiplied by a 
                                fraction the numerator of which 
                                is the excess referred to in 
                                paragraph (1) and the 
                                denominator of which is the 
                                aggregate amount of such 
                                dividends.
                                  (III) Treatment of taxes 
                                imposed on 936 corporation.--
                                For purposes of this clause, 
                                taxes paid by any corporation 
                                eligible for the credit 
                                provided by section 936 to a 
                                possession of the United States 
                                shall be treated as a 
                                withholding tax paid with 
                                respect to any dividend paid by 
                                such corporation to the extent 
                                such taxes would be treated as 
                                paid by the corporation 
                                receiving the dividend under 
                                rules similar to the rules of 
                                section 902 (and the amount of 
                                any such dividend shall be 
                                increased by the amount so 
                                treated).
                                  (IV) Separate application of 
                                foreign tax credit 
                                limitations.--In determining 
                                the alternative minimum foreign 
                                tax credit, section 904(d) 
                                shall be applied as if 
                                dividends from a corporation 
                                eligible for the credit 
                                provided by section 936 were a 
                                separate category of income 
                                referred to in a subparagraph 
                                of section 904(d)(1).
                                  (V) Coordination with 
                                limitation on 936 credit.--Any 
                                reference in this clause to a 
                                dividend received from a 
                                corporation eligible for the 
                                credit provided by section 936 
                                shall be treated as a reference 
                                to the portion of any such 
                                dividend for which the 
                                dividends received deduction is 
                                disallowed under clause (i) 
                                after the application of clause 
                                (ii)(I).
                                  (VI) Application to section 
                                30A corporations.--References 
                                in this clause to section 936 
                                shall be treated as including 
                                references to section 30A.
                          (iv) Special rule for certain 
                        dividends received by certain 
                        cooperatives.--In the case of an 
                        organization to which part I of 
                        subchapter T (relating to tax treatment 
                        of cooperatives) applies which is 
                        engaged in the marketing of 
                        agricultural or horticultural products, 
                        clause (i) shall not apply to any 
                        amount allowable as a deduction under 
                        section 245(c).
                          (v) Deduction for domestic 
                        production.--Clause (i) shall not apply 
                        to any amount allowable as a deduction 
                        under section 199.
                          (vi) Special rule for certain 
                        distributions from controlled foreign 
                        corporations.--Clause (i) shall not 
                        apply to any deduction allowable under 
                        section 965.
                  (D) Certain other earnings and profits 
                adjustments.--
                          (i) Intangible drilling costs.--The 
                        adjustments provided in section 
                        312(n)(2)(A) shall apply in the case of 
                        amounts paid or incurred in taxable 
                        years beginning after December 31, 
                        1989. In the case of a taxpayer other 
                        than an integrated oil company (as 
                        defined in section 291(b)(4)), in the 
                        case of any oil or gas well, this 
                        clause shall not apply in the case of 
                        amounts paid or incurred in taxable 
                        years beginning after December 31, 
                        1992.
                          (ii) Certain amortization provisions 
                        not to apply.--Sections 173 and 248 
                        shall not apply to expenditures paid or 
                        incurred in taxable years beginning 
                        after December 31, 1989.
                          (iii) LIFO inventory adjustments.--
                        The adjustments provided in section 
                        312(n)(4) shall apply, but only with 
                        respect to taxable years beginning 
                        after December 31, 1989.
                          (iv) Installment sales.--In the case 
                        of any installment sale in a taxable 
                        year beginning after December 31, 1989, 
                        adjusted current earnings shall be 
                        computed as if the corporation did not 
                        use the installment method. The 
                        preceding sentence shall not apply to 
                        the applicable percentage (as 
                        determined under section 453A) of the 
                        gain from any installment sale with 
                        respect to which section 453A(a)(1) 
                        applies.
                  (E) Disallowance of loss on exchange of debt 
                pools.--No loss shall be recognized on the 
                exchange of any pool of debt obligations for 
                another pool of debt obligations having 
                substantially the same effective interest rates 
                and maturities.
                  (F) Depletion.--
                          (i) In general.--The allowance for 
                        depletion with respect to any property 
                        placed in service in a taxable year 
                        beginning after December 31, 1989, 
                        shall be cost depletion determined 
                        under section 611.
                          (ii) Exception for independent oil 
                        and gas producers and royalty owners.--
                        Clause (i) (and subparagraph (C)(i)) 
                        shall not apply to any deduction for 
                        depletion computed in accordance with 
                        section 613A(c).
                  (G) Treatment of certain ownership changes.--
                If--
                          (i) there is an ownership change 
                        (within the meaning of section 382) in 
                        a taxable year beginning after 1989 
                        with respect to any corporation, and
                          (ii) there is a net unrealized built-
                        in loss (within the meaning of section 
                        382(h)) with respect to such 
                        corporation,
                then the adjusted basis of each asset of such 
                corporation (immediately after the ownership 
                change) shall be its proportionate share 
                (determined on the basis of respective fair 
                market values) of the fair market value of the 
                assets of such corporation (determined under 
                section 382(h)) immediately before the 
                ownership change.
                  (H) Adjusted basis.--The adjusted basis of 
                any property with respect to which an 
                adjustment under this paragraph applies shall 
                be determined by applying the treatment 
                prescribed in this paragraph.
                  (I) Treatment of charitable contributions.--
                Notwithstanding subparagraphs (B) and (C), no 
                adjustment related to the earnings and profits 
                effects of any charitable contribution shall be 
                made in computing adjusted current earnings.
          (5) Other definitions.--For purposes of paragraph 
        (4)--
                  (A) Earnings and profits.--The term 
                ``earnings and profits'' means earnings and 
                profits computed for purposes of subchapter C.
                  (B) Treatment of alternative minimum taxable 
                income.--The treatment of any item for purposes 
                of computing alternative minimum taxable income 
                shall be determined without regard to this 
                subsection.
          (6) Exception for certain corporations.--This 
        subsection shall not apply to any S corporation, 
        regulated investment company, real estate investment 
        trust, or REMIC.

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS

           *       *       *       *       *       *       *



SEC. 213. MEDICAL, DENTAL, ETC., EXPENSES.

  (a) Allowance of Deduction.--There shall be allowed as a 
deduction the expenses paid during the taxable year, not 
compensated for by insurance or otherwise, for medical care of 
the taxpayer, his spouse, or a dependent (as defined in section 
152, determined without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B) thereof), to the extent that such expenses exceed 
10 percent of adjusted gross income.
  (b) Limitation With Respect to Medicine and Drugs.--An amount 
paid during the taxable year for medicine or a drug shall be 
taken into account under subsection (a) only if such medicine 
or drug is a prescribed drug or is insulin.
  (c) Special Rule for Decedents.--
          (1) Treatment of expenses paid after death.--For 
        purposes of subsection (a), expenses for the medical 
        care of the taxpayer which are paid out of his estate 
        during the 1-year period beginning with the day after 
        the date of his death shall be treated as paid by the 
        taxpayer at the time incurred.
          (2) Limitation.--Paragraph (1) shall not apply if the 
        amount paid is allowable under section 2053 as a 
        deduction in computing the taxable estate of the 
        decedent, but this paragraph shall not apply if (within 
        the time and in the manner and form prescribed by the 
        Secretary) there is filed--
                  (A) a statement that such amount has not been 
                allowed as a deduction under section 2053, and
                  (B) a waiver of the right to have such amount 
                allowed at any time as a deduction under 
                section 2053.
  (d) Definitions.--For purposes of this section--
          (1) The term ``medical care'' means amounts paid--
                  (A) for the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or for the 
                purpose of affecting any structure or function 
                of the body,
                  (B) for transportation primarily for and 
                essential to medical care referred to in 
                subparagraph (A),
                  (C) for qualified long-term care services (as 
                defined in section 7702B(c)), or
                  (D) for insurance (including amounts paid as 
                premiums under part B of title XVIII of the 
                Social Security Act, relating to supplementary 
                medical insurance for the aged) covering 
                medical care referred to in subparagraphs (A) 
                and (B) or for any qualified long- term care 
                insurance contract (as defined in section 
                7702B(b)).
        In the case of a qualified long-term care insurance 
        contract (as defined in section 7702B(b)), only 
        eligible long-term care premiums (as defined in 
        paragraph (10)) shall be taken into account under 
        subparagraph (D).
          (2) Amounts paid for certain lodging away from home 
        treated as paid for medical care
          Amounts paid for lodging (not lavish or extravagant 
        under the circumstances) while away from home primarily 
        for and essential to medical care referred to in 
        paragraph (1)(A) shall be treated as amounts paid for 
        medical care if--
                  (A) the medical care referred to in paragraph 
                (1)(A) is provided by a physician in a licensed 
                hospital (or in a medical care facility which 
                is related to, or the equivalent of, a licensed 
                hospital), and
                  (B) there is no significant element of 
                personal pleasure, recreation, or vacation in 
                the travel away from home.
        The amount taken into account under the preceding 
        sentence shall not exceed $50 for each night for each 
        individual.
          (3) Prescribed drug
          The term ``prescribed drug'' means a drug or 
        biological which requires a prescription of a physician 
        for its use by an individual.
          (4) Physician
          The term ``physician'' has the meaning given to such 
        term by section 1861(r) of the Social Security Act (42 
        U.S.C. 1395x(r)).
          (5) Special rule in the case of child of divorced 
        parents, etc.
          Any child to whom section 152(e) applies shall be 
        treated as a dependent of both parents for purposes of 
        this section.
          (6) In the case of an insurance contract under which 
        amounts are payable for other than medical care 
        referred to in subparagraphs (A), (B), and (C) of 
        paragraph (1)--
                  (A) no amount shall be treated as paid for 
                insurance to which paragraph (1)(D) applies 
                unless the charge for such insurance is either 
                separately stated in the contract, or furnished 
                to the policyholder by the insurance company in 
                a separate statement,
                  (B) the amount taken into account as the 
                amount paid for such insurance shall not exceed 
                such charge, and
                  (C) no amount shall be treated as paid for 
                such insurance if the amount specified in the 
                contract (or furnished to the policyholder by 
                the insurance company in a separate statement) 
                as the charge for such insurance is 
                unreasonably large in relation to the total 
                charges under the contract.
          (7) Subject to the limitations of paragraph (6), 
        premiums paid during the taxable year by a taxpayer 
        before he attains the age of 65 for insurance covering 
        medical care (within the meaning of subparagraphs (A), 
        (B), and (C) of paragraph (1)) for the taxpayer, his 
        spouse, or a dependent after the taxpayer attains the 
        age of 65 shall be treated as expenses paid during the 
        taxable year for insurance which constitutes medical 
        care if premiums for such insurance are payable (on a 
        level payment basis) under the contract for a period of 
        10 years or more or until the year in which the 
        taxpayer attains the age of 65 (but in no case for a 
        period of less than 5 years).
          (8) The determination of whether an individual is 
        married at any time during the taxable year shall be 
        made in accordance with the provisions of section 
        6013(d) (relating to determination of status as husband 
        and wife).
          (9) Cosmetic surgery.--
                  (A) In general.--The term ``medical care'' 
                does not include cosmetic surgery or other 
                similar procedures, unless the surgery or 
                procedure is necessary to ameliorate a 
                deformity arising from, or directly related to, 
                a congenital abnormality, a personal injury 
                resulting from an accident or trauma, or 
                disfiguring disease.
                  (B) Cosmetic surgery defined.--For purposes 
                of this paragraph, the term ``cosmetic 
                surgery'' means any procedure which is directed 
                at improving the patient's appearance and does 
                not meaningfully promote the proper function of 
                the body or prevent or treat illness or 
                disease.
          (10) Eligible long-term care premiums.--
                  (A) In general.--For purposes of this 
                section, the term ``eligible long-term care 
                Premiums'' means the amount paid during a 
                taxable year for any qualified long-term care 
                insurance contract (as defined in section 
                7702B(b)) covering an individual, to the extent 
                such amount does not exceed the limitation 
                determined under the following table:


 
------------------------------------------------------------------------
 In the case of an individual with
an attained age before the close of           The limitation is:
        the taxable year of:
------------------------------------------------------------------------
40 or less                           $200
More than 40 but not more than 50    375
More than 50 but not more than 60    750
More than 60 but not more than 70    2,000
More than 70                         2,500
------------------------------------------------------------------------

                  (B) Indexing.--
                          (i) In general.--In the case of any 
                        taxable year beginning in a calendar 
                        year after 1997, each dollar amount 
                        contained in subparagraph (A) shall be 
                        increased by the medical care cost 
                        adjustment of such amount for such 
                        calendar year. If any increase 
                        determined under the preceding sentence 
                        is not a multiple of $10, such increase 
                        shall be rounded to the nearest 
                        multiple of $10.
                          (ii) Medical care cost adjustment.--
                        For purposes of clause (i), the medical 
                        care cost adjustment for any calendar 
                        year is the percentage (if any) by 
                        which--
                                  (I) the medical care 
                                component of the Consumer Price 
                                Index (as defined in section 
                                1(f)(5)) for August of the 
                                preceding calendar year, 
                                exceeds
                                  (II) such component for 
                                August of 1996.
                        The Secretary shall, in consultation 
                        with the Secretary of Health and Human 
                        Services, prescribe an adjustment which 
                        the Secretary determines is more 
                        appropriate for purposes of this 
                        paragraph than the adjustment described 
                        in the preceding sentence, and the 
                        adjustment so prescribed shall apply in 
                        lieu of the adjustment described in the 
                        preceding sentence.
          (11) Certain payments to relatives treated as not 
        paid for medical care --An amount paid for a qualified 
        long-term care service (as defined in section 7702B(c)) 
        provided to an individual shall be treated as not paid 
        for medical care if such service is provided--
                  (A) by the spouse of the individual or by a 
                relative (directly or through a partnership, 
                corporation, or other entity) unless the 
                service is provided by a licensed professional 
                with respect to such service, or
                  (B) by a corporation or partnership which is 
                related (within the meaning of section 267(b) 
                or 707(b)) to the individual.
        For purposes of this paragraph, the term ``relative'' 
        means an individual bearing a relationship to the 
        individual which is described in any of subparagraphs 
        (A) through (G) of section 152(d)(2). This paragraph 
        shall not apply for purposes of section 105(b) with 
        respect to reimbursements through insurance.
  (e) Exclusion of Amounts Allowed for Care of Certain 
Dependents.--Any expense allowed as a credit under section 21 
shall not be treated as an expense paid for medical care.
  (f) Special Rule for 2013, 2014, 2015, and 2016.--In the case 
of any taxable year beginning after December 31, 2012, and 
ending before January 1, 2017, subsection (a) shall be applied 
with respect to a taxpayer by substituting ``7.5 percent'' for 
``10 percent'' if such taxpayer or such taxpayer's spouse has 
attained age 65 before the close of such taxable year.

           *       *       *       *       *       *       *


      B. Changes in Existing Law Proposed by the Bill, as Reported

    In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed 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):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e)(1)(B) of rule XIII of the 
Rules of the House of Representatives, changes in existing law 
proposed 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, and 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 VI--ALTERNATIVE MINIMUM TAX

           *       *       *       *       *       *       *



SEC. 56. ADJUSTMENTS IN COMPUTING ALTERNATIVE MINIMUM TAXABLE INCOME.

  (a) Adjustments Applicable to All Taxpayers.--In determining 
the amount of the alternative minimum taxable income for any 
taxable year the following treatment shall apply (in lieu of 
the treatment applicable for purposes of computing the regular 
tax):
          (1) Depreciation.--
                  (A) In general.--
                          (i) Property other than certain 
                        personal property.--Except as provided 
                        in clause (ii), the depreciation 
                        deduction allowable under section 167 
                        with respect to any tangible property 
                        placed in service after December 31, 
                        1986, shall be determined under the 
                        alternative system of section 168(g). 
                        In the case of property placed in 
                        service after December 31, 1998, the 
                        preceding sentence shall not apply but 
                        clause (ii) shall continue to apply.
                          (ii) 150-percent declining balance 
                        method for certain property.--The 
                        method of depreciation used shall be--
                                  (I) the 150 percent declining 
                                balance method,
                                  (II) switching to the 
                                straight line method for the 
                                1st taxable year for which 
                                using the straight line method 
                                with respect to the adjusted 
                                basis as of the beginning of 
                                the year will yield a higher 
                                allowance.
                        The preceding sentence shall not apply 
                        to any section 1250 property (as 
                        defined in section 1250(c)) (and the 
                        straight line method shall be used for 
                        such section 1250 property)or to any 
                        other property if the depreciation 
                        deduction determined under section 168 
                        with respect to such other property for 
                        purposes of the regular tax is 
                        determined by using the straight line 
                        method.
                  (B) Exception for certain property.--This 
                paragraph shall not apply to property described 
                in paragraph (1), (2), (3), or (4) of section 
                168(f), or in section 168(e)(3)(C)(iv).
                  (C) Coordination with transitional rules.--
                          (i) In general.--This paragraph shall 
                        not apply to property placed in service 
                        after December 31, 1986, to which the 
                        amendments made by section 201 of the 
                        Tax Reform Act of 1986 do not apply by 
                        reason of section 203, 204, or 251(d) 
                        of such Act.
                          (ii) Treatment of certain property 
                        placed in service before 1987.--This 
                        paragraph shall apply to any property 
                        to which the amendments made by section 
                        201 of the Tax Reform Act of 1986 apply 
                        by reason of an election under section 
                        203(a)(1)(B) of such Act without regard 
                        to the requirement of subparagraph (A) 
                        that the property be placed in service 
                        after December 31, 1986.
                  (D) Normalization rules.--With respect to 
                public utility property described in section 
                168(i)(10), the Secretary shall prescribe the 
                requirements of a normalization method of 
                accounting for this section.
          (2) Mining exploration and development costs.--
                  (A) In general.--With respect to each mine or 
                other natural deposit (other than an oil, gas, 
                or geothermal well) of the taxpayer, the amount 
                allowable as a deduction under section 616(a) 
                or 617(a) (determined without regard to section 
                291(b)) in computing the regular tax for costs 
                paid or incurred after December 31, 1986, shall 
                be capitalized and amortized ratably over the 
                10-year period beginning with the taxable year 
                in which the expenditures were made.
                  (B) Loss allowed.--If a loss is sustained 
                with respect to any property described in 
                subparagraph (A), a deduction shall be allowed 
                for the expenditures described in subparagraph 
                (A) for the taxable year in which such loss is 
                sustained in an amount equal to the lesser of--
                          (i) the amount allowable under 
                        section 165(a) for the expenditures if 
                        they had remained capitalized, or
                          (ii) the amount of such expenditures 
                        which have not previously been 
                        amortized under subparagraph (A).
          (3) Treatment of certain long-term contracts.--In the 
        case of any long-term contract entered into by the 
        taxpayer on or after March 1, 1986, the taxable income 
        from such contract shall be determined under the 
        percentage of completion method of accounting (as 
        modified by section 460(b)). For purposes of the 
        preceding sentence, in the case of a contract described 
        in section 460(e)(1), the percentage of the contract 
        completed shall be determined under section 460(b)(1) 
        by using the simplified procedures for allocation of 
        costs prescribed under section 460(b)(3). The first 
        sentence of this paragraph shall not apply to any home 
        construction contract (as defined in section 
        460(e)(6)).
          (4) Alternative tax net operating loss deduction.--
        The alternative tax net operating loss deduction shall 
        be allowed in lieu of the net operating loss deduction 
        allowed under section 172.
          (5) Pollution control facilities.--In the case of any 
        certified pollution control facility placed in service 
        after December 31, 1986, the deduction allowable under 
        section 169 (without regard to section 291) shall be 
        determined under the alternative system of section 
        168(g). In the case of such a facility placed in 
        service after December 31, 1998, such deduction shall 
        be determined under section 168 using the straight line 
        method.
          (6) Adjusted basis.--The adjusted basis of any 
        property to which paragraph (1) or (5) applies (or with 
        respect to which there are any expenditures to which 
        paragraph (2) or subsection (b)(2) applies) shall be 
        determined on the basis of the treatment prescribed in 
        paragraph (1), (2), or (5), or subsection (b)(2), 
        whichever applies.
          (7) Section 87 not applicable.--Section 87 (relating 
        to alcohol fuel credit) shall not apply.
  (b) Adjustments Applicable to Individuals.--In determining 
the amount of the alternative minimum taxable income of any 
taxpayer (other than a corporation), the following treatment 
shall apply (in lieu of the treatment applicable for purposes 
of computing the regular tax):
          (1) Limitation on deductions.--
                  (A) In general.--No deduction shall be 
                allowed--
                          (i) for any miscellaneous itemized 
                        deduction (as defined in section 
                        67(b)), or
                          (ii) for any taxes described in 
                        paragraph (1), (2), or (3) of section 
                        164(a) or clause (ii) of section 
                        164(b)(5)(A).
                Clause (ii) shall not apply to any amount 
                allowable in computing adjusted gross income.
                  (B) Medical expenses.--In determining the 
                amount allowable as a deduction under section 
                213, subsection (a) of section 213 shall be 
                applied [without regard to subsection (f) of 
                such section] by substituting ``10 percent'' 
                for ``7.5 percent''.
                  (C) Interest.--In determining the amount 
                allowable as a deduction for interest, 
                subsections (d) and (h) of section 163 shall 
                apply, except that--
                          (i) in lieu of the exception under 
                        section 163(h)(2)(D), the term 
                        ``personal interest'' shall not include 
                        any qualified housing interest (as 
                        defined in subsection (e)),
                          (ii) interest on any specified 
                        private activity bond (and any amount 
                        treated as interest on a specified 
                        private activity bond under section 
                        57(a)(5)(B)), and any deduction 
                        referred to in section 57(a)(5)(A), 
                        shall be treated as includible in gross 
                        income (or as deductible) for purposes 
                        of applying section 163(d),
                          (iii) in lieu of the exception under 
                        section 163(d)(3)(B)(i), the term 
                        ``investment interest'' shall not 
                        include any qualified housing interest 
                        (as defined in subsection (e)), and
                          (iv) the adjustments of this section 
                        and sections 57 and 58 shall apply in 
                        determining net investment income under 
                        section 163(d).
                  (D) Treatment of certain recoveries.--No 
                recovery of any tax to which subparagraph 
                (A)(ii) applied shall be included in gross 
                income for purposes of determining alternative 
                minimum taxable income.
                  (E) Standard deduction and deduction for 
                personal exemptions not allowed.--The standard 
                deduction under section 63(c), the deduction 
                for personal exemptions under section 151, and 
                the deduction under section 642(b) shall not be 
                allowed. The preceding sentence shall not apply 
                to so much of the standard deduction as is 
                determined under subparagraphs (D) and (E) of 
                section 63(c)(1).
                  (F) Section 68 not applicable.--Section 68 
                shall not apply.
          (2) Circulation and research and experimental 
        expenditures.--
                  (A) In general.--The amount allowable as a 
                deduction under section 173 or 174(a) in 
                computing the regular tax for amounts paid or 
                incurred after December 31, 1986, shall be 
                capitalized and--
                          (i) in the case of circulation 
                        expenditures described in section 173, 
                        shall be amortized ratably over the 3-
                        year period beginning with the taxable 
                        year in which the expenditures were 
                        made, or
                          (ii) in the case of research and 
                        experimental expenditures described in 
                        section 174(a), shall be amortized 
                        ratably over the 10-year period 
                        beginning with the taxable year in 
                        which the expenditures were made.
                  (B) Loss allowed.--If a loss is sustained 
                with respect to any property described in 
                subparagraph (A), a deduction shall be allowed 
                for the expenditures described in subparagraph 
                (A) for the taxable year in which such loss is 
                sustained in an amount equal to the lesser of--
                          (i) the amount allowable under 
                        section 165(a) for the expenditures if 
                        they had remained capitalized, or
                          (ii) the amount of such expenditures 
                        which have not previously been 
                        amortized under subparagraph (A).
                  (C) Special rule for personal holding 
                companies.--In the case of circulation 
                expenditures described in section 173, the 
                adjustments provided in this paragraph shall 
                apply also to a personal holding company (as 
                defined in section 542).
                  (D) Exception for certain research and 
                experimental expenditures.--If the taxpayer 
                materially participates (within the meaning of 
                section 469(h)) in an activity, this paragraph 
                shall not apply to any amount allowable as a 
                deduction under section 174(a) for expenditures 
                paid or incurred in connection with such 
                activity.
          (3) Treatment of incentive stock options.--Section 
        421 shall not apply to the transfer of stock acquired 
        pursuant to the exercise of an incentive stock option 
        (as defined in section 422). Section 422(c)(2) shall 
        apply in any case where the disposition and the 
        inclusion for purposes of this part are within the same 
        taxable year and such section shall not apply in any 
        other case. The adjusted basis of any stock so acquired 
        shall be determined on the basis of the treatment 
        prescribed by this paragraph.
  (c) Adjustments Applicable to Corporations.--In determining 
the amount of the alternative minimum taxable income of a 
corporation, the following treatment shall apply:
          (1) Adjustment for adjusted current earnings.--
        Alternative minimum taxable income shall be adjusted as 
        provided in subsection (g).
          (2) Merchant marine capital construction funds.--In 
        the case of a capital construction fund established 
        under chapter 535 of title 46, United States Code--
                  (A) subparagraphs (A), (B), and (C) of 
                section 7518(c)(1) (and the corresponding 
                provisions of such chapter 535) shall not apply 
                to--
                          (i) any amount deposited in such fund 
                        after December 31, 1986, or
                          (ii) any earnings (including gains 
                        and losses) after December 31, 1986, on 
                        amounts in such fund, and
                  (B) no reduction in basis shall be made under 
                section 7518(f) (or the corresponding 
                provisions of such chapter 535) with respect to 
                the withdrawal from the fund of any amount to 
                which subparagraph (A) applies.
        For purposes of this paragraph, any withdrawal of 
        deposits or earnings from the fund shall be treated as 
        allocable first to deposits made before (and earnings 
        received or accrued before) January 1, 1987.
          (3) Special deduction for certain organizations not 
        allowed.--The deduction determined under section 833(b) 
        shall not be allowed.
  (d) Alternative Tax Net Operating Loss Deduction Defined.--
          (1) In general.--For purposes of subsection (a)(4), 
        the term ``alternative tax net operating loss 
        deduction'' means the net operating loss deduction 
        allowable for the taxable year under section 172, 
        except that--
                  (A) the amount of such deduction shall not 
                exceed the sum of--
                          (i) the lesser of--
                                  (I) the amount of such 
                                deduction attributable to net 
                                operating losses (other than 
                                the deduction described in 
                                clause (ii)(I)), or
                                  (II) 90 percent of 
                                alternative minimum taxable 
                                income determined without 
                                regard to such deduction and 
                                the deduction under section 
                                199, plus
                          (ii) the lesser of--
                                  (I) the amount of such 
                                deduction attributable to an 
                                applicable net operating loss 
                                with respect to which an 
                                election is made under section 
                                172(b)(1)(H), or
                                  (II) alternative minimum 
                                taxable income determined 
                                without regard to such 
                                deduction and the deduction 
                                under section 199 reduced by 
                                the amount determined under 
                                clause (i), and
                  (B) in determining the amount of such 
                deduction--
                          (i) the net operating loss (within 
                        the meaning of section 172(c)) for any 
                        loss year shall be adjusted as provided 
                        in paragraph (2), and
                          (ii) appropriate adjustments in the 
                        application of section 172(b)(2) shall 
                        be made to take into account the 
                        limitation of subparagraph (A).
          (2) Adjustments to net operating loss computation.--
                  (A) Post-1986 loss years.--In the case of a 
                loss year beginning after December 31, 1986, 
                the net operating loss for such year under 
                section 172(c) shall--
                          (i) be determined with the 
                        adjustments provided in this section 
                        and section 58, and
                          (ii) be reduced by the items of tax 
                        preference determined under section 57 
                        for such year.
                An item of tax preference shall be taken into 
                account under clause (ii) only to the extent 
                such item increased the amount of the net 
                operating loss for the taxable year under 
                section 172(c).
                  (B) Pre-1987 years.--In the case of loss 
                years beginning before January 1, 1987, the 
                amount of the net operating loss which may be 
                carried over to taxable years beginning after 
                December 31, 1986, for purposes of paragraph 
                (2), shall be equal to the amount which may be 
                carried from the loss year to the first taxable 
                year of the taxpayer beginning after December 
                31, 1986.
  (e) Qualified Housing Interest.--For purposes of this part--
          (1) In general.--The term ``qualified housing 
        interest'' means interest which is qualified residence 
        interest (as defined in section 163(h)(3)) and is paid 
        or accrued during the taxable year on indebtedness 
        which is incurred in acquiring, constructing, or 
        substantially improving any property which--
                  (A) is the principal residence (within the 
                meaning of section 121) of the taxpayer at the 
                time such interest accrues, or
                  (B) is a qualified dwelling which is a 
                qualified residence (within the meaning of 
                section 163(h)(4)).
        Such term also includes interest on any indebtedness 
        resulting from the refinancing of indebtedness meeting 
        the requirements of the preceding sentence; but only to 
        the extent that the amount of the indebtedness 
        resulting from such refinancing does not exceed the 
        amount of the refinanced indebtedness immediately 
        before the refinancing.
          (2) Qualified dwelling.--The term ``qualified 
        dwelling'' means any--
                  (A) house,
                  (B) apartment,
                  (C) condominium, or
                  (D) mobile home not used on a transient basis 
                (within the meaning of section 
                7701(a)(19)(C)(v)),
        including all structures or other property appurtenant 
        thereto.
          (3) Special rule for indebtedness incurred before 
        July 1, 1982.--The term ``qualified housing interest'' 
        includes interest which is qualified residence interest 
        (as defined in section 163(h)(3)) and is paid or 
        accrued on indebtedness which--
                  (A) was incurred by the taxpayer before July 
                1, 1982, and
                  (B) is secured by property which, at the time 
                such indebtedness was incurred, was--
                          (i) the principal residence (within 
                        the meaning of section 121) of the 
                        taxpayer, or
                          (ii) a qualified dwelling used by the 
                        taxpayer (or any member of his family 
                        (within the meaning of section 
                        267(c)(4))).
  (g) Adjustments Based on Adjusted Current Earnings.--
          (1) In general.--The alternative minimum taxable 
        income of any corporation for any taxable year shall be 
        increased by 75 percent of the excess (if any) of--
                  (A) the adjusted current earnings of the 
                corporation, over
                  (B) the alternative minimum taxable income 
                (determined without regard to this subsection 
                and the alternative tax net operating loss 
                deduction).
          (2) Allowance of negative adjustments.--
                  (A) In general.--The alternative minimum 
                taxable income for any corporation of any 
                taxable year, shall be reduced by 75 percent of 
                the excess (if any) of--
                          (i) the amount referred to in 
                        subparagraph (B) of paragraph (1), over
                          (ii) the amount referred to in 
                        subparagraph (A) of paragraph (1).
                  (B) Limitation.--The reduction under 
                subparagraph (A) for any taxable year shall not 
                exceed the excess (if any) of--
                          (i) the aggregate increases in 
                        alternative minimum taxable income 
                        under paragraph (1) for prior taxable 
                        years, over
                          (ii) the aggregate reductions under 
                        subparagraph (A) of this paragraph for 
                        prior taxable years.
          (3) Adjusted current earnings.--For purposes of this 
        subsection, the term ``adjusted current earnings'' 
        means the alternative minimum taxable income for the 
        taxable year--
                  (A) determined with the adjustments provided 
                in paragraph (4), and
                  (B) determined without regard to this 
                subsection and the alternative tax net 
                operating loss deduction.
          (4) Adjustments.--In determining adjusted current 
        earnings, the following adjustments shall apply:
                  (A) Depreciation.--
                          (i) Property placed in service after 
                        1989.--The depreciation deduction with 
                        respect to any property placed in 
                        service in a taxable year beginning 
                        after 1989 shall be determined under 
                        the alternative system of section 
                        168(g). The preceding sentence shall 
                        not apply to any property placed in 
                        service after December 31, 1993, and 
                        the depreciation deduction with respect 
                        to such property shall be determined 
                        under the rules of subsection 
                        (a)(1)(A).
                          (ii) Property to which new ACRS 
                        system applies.--In the case of any 
                        property to which the amendments made 
                        by section 201 of the Tax Reform Act of 
                        1986 apply and which is placed in 
                        service in a taxable year beginning 
                        before 1990, the depreciation deduction 
                        shall be determined--
                                  (I) by taking into account 
                                the adjusted basis of such 
                                property (as determined for 
                                purposes of computing 
                                alternative minimum taxable 
                                income) as of the close of the 
                                last taxable year beginning 
                                before January 1, 1990, and
                                  (II) by using the straight-
                                line method over the remainder 
                                of the recovery period 
                                applicable to such property 
                                under the alternative system of 
                                section 168(g).
                          (iii) Property to which original ACRS 
                        system applies.--In the case of any 
                        property to which section 168 (as in 
                        effect on the day before the date of 
                        the enactment of the Tax Reform Act of 
                        1986 and without regard to subsection 
                        (d)(1)(A)(ii) thereof) applies and 
                        which is placed in service in a taxable 
                        year beginning before 1990, the 
                        depreciation deduction shall be 
                        determined--
                                  (I) by taking into account 
                                the adjusted basis of such 
                                property (as determined for 
                                purposes of computing the 
                                regular tax) as of the close of 
                                the last taxable year beginning 
                                before January 1, 1990, and
                                  (II) by using the straight 
                                line method over the remainder 
                                of the recovery period which 
                                would apply to such property 
                                under the alternative system of 
                                section 168(g).
                          (iv) Property placed in service 
                        before 1981.--In the case of any 
                        property not described in clause (i), 
                        (ii), or (iii), the amount allowable as 
                        depreciation or amortization with 
                        respect to such property shall be 
                        determined in the same manner as for 
                        purposes of computing taxable income.
                          (v) Special rule for certain 
                        property.--In the case of any property 
                        described in paragraph (1), (2), (3), 
                        or (4) of section 168(f), the amount of 
                        depreciation allowable for purposes of 
                        the regular tax shall be treated as the 
                        amount allowable under the alternative 
                        system of section 168(g).
                  (B) Inclusion of items included for purposes 
                of computing earnings and profits.--
                          (i) In general.--In the case of any 
                        amount which is excluded from gross 
                        income for purposes of computing 
                        alternative minimum taxable income but 
                        is taken into account in determining 
                        the amount of earnings and profits--
                                  (I) such amount shall be 
                                included in income in the same 
                                manner as if such amount were 
                                includible in gross income for 
                                purposes of computing 
                                alternative minimum taxable 
                                income, and
                                  (II) the amount of such 
                                income shall be reduced by any 
                                deduction which would have been 
                                allowable in computing 
                                alternative minimum taxable 
                                income if such amount were 
                                includible in gross income.
                        The preceding sentence shall not apply 
                        in the case of any amount excluded from 
                        gross income under section 108 (or the 
                        corresponding provisions of prior law) 
                        or under section 139A or 1357. In the 
                        case of any insurance company taxable 
                        under section 831(b), this clause shall 
                        not apply to any amount not described 
                        in section 834(b).
                          (ii) Inclusion of buildup in life 
                        insurance contracts.--In the case of 
                        any life insurance contract--
                                  (I) the income on such 
                                contract (as determined under 
                                section 7702(g)) for any 
                                taxable year shall be treated 
                                as includible in gross income 
                                for such year, and
                                  (II) there shall be allowed 
                                as a deduction that portion of 
                                any premium which is 
                                attributable to insurance 
                                coverage.
                          (iii) Tax exempt interest on certain 
                        housing bonds.--Clause (i) shall not 
                        apply in the case of any interest on a 
                        bond to which section 57(a)(5)(C)(iii) 
                        applies.
                          (iv) Tax exempt interest on bonds 
                        issued in 2009 and 2010.--
                                  (I) In general.--Clause (i) 
                                shall not apply in the case of 
                                any interest on a bond issued 
                                after December 31, 2008, and 
                                before January 1, 2011.
                                  (II) Treatment of refunding 
                                bonds.--For purposes of 
                                subclause (I), a refunding bond 
                                (whether a current or advance 
                                refunding) shall be treated as 
                                issued on the date of the 
                                issuance of the refunded bond 
                                (or in the case of a series of 
                                refundings, the original bond).
                                  (III) Exception for certain 
                                refunding bonds.--Subclause 
                                (II) shall not apply to any 
                                refunding bond which is issued 
                                to refund any bond which was 
                                issued after December 31, 2003, 
                                and before January 1, 2009.
                  (C) Disallowance of items not deductible in 
                computing earnings and profits.--
                          (i) In general.--A deduction shall 
                        not be allowed for any item if such 
                        item would not be deductible for any 
                        taxable year for purposes of computing 
                        earnings and profits.
                          (ii) Special rule for certain 
                        dividends.--
                                  (I) In general.--Clause (i) 
                                shall not apply to any 
                                deduction allowable under 
                                section 243 or 245 for any 
                                dividend which is a 100-percent 
                                dividend or which is received 
                                from a 20-percent owned 
                                corporation (as defined in 
                                section 243(c)(2)), but only to 
                                the extent such dividend is 
                                attributable to income of the 
                                paying corporation which is 
                                subject to tax under this 
                                chapter (determined after the 
                                application of sections 30A, 
                                936 (including subsections 
                                (a)(4), (i) and (j) thereof) 
                                and 921 (as in effect before 
                                its repeal by the FSC Repeal 
                                and Extraterritorial Income 
                                Exclusion Act of 2000)).
                                  (II) 100-percent dividend.--
                                For purposes of subclause (I), 
                                the term ``100 percent 
                                dividend'' means any dividend 
                                if the percentage used for 
                                purposes of determining the 
                                amount allowable as a deduction 
                                under section 243 or 245 with 
                                respect to such dividend is 100 
                                percent.
                          (iii) Treatment of taxes on dividends 
                        from 936 corporations.--
                                  (I) In general.--For purposes 
                                of determining the alternative 
                                minimum foreign tax credit, 75 
                                percent of any withholding or 
                                income tax paid to a possession 
                                of the United States with 
                                respect to dividends received 
                                from a corporation eligible for 
                                the credit provided by section 
                                936 shall be treated as a tax 
                                paid to a foreign country by 
                                the corporation receiving the 
                                dividend.
                                  (II) Limitation.--If the 
                                aggregate amount of the 
                                dividends referred to in 
                                subclause (I) for any taxable 
                                year exceeds the excess 
                                referred to in paragraph (1), 
                                the amount treated as tax paid 
                                to a foreign country under 
                                subclause (I) shall not exceed 
                                the amount which would be so 
                                treated without regard to this 
                                subclause multiplied by a 
                                fraction the numerator of which 
                                is the excess referred to in 
                                paragraph (1) and the 
                                denominator of which is the 
                                aggregate amount of such 
                                dividends.
                                  (III) Treatment of taxes 
                                imposed on 936 corporation.--
                                For purposes of this clause, 
                                taxes paid by any corporation 
                                eligible for the credit 
                                provided by section 936 to a 
                                possession of the United States 
                                shall be treated as a 
                                withholding tax paid with 
                                respect to any dividend paid by 
                                such corporation to the extent 
                                such taxes would be treated as 
                                paid by the corporation 
                                receiving the dividend under 
                                rules similar to the rules of 
                                section 902 (and the amount of 
                                any such dividend shall be 
                                increased by the amount so 
                                treated).
                                  (IV) Separate application of 
                                foreign tax credit 
                                limitations.--In determining 
                                the alternative minimum foreign 
                                tax credit, section 904(d) 
                                shall be applied as if 
                                dividends from a corporation 
                                eligible for the credit 
                                provided by section 936 were a 
                                separate category of income 
                                referred to in a subparagraph 
                                of section 904(d)(1).
                                  (V) Coordination with 
                                limitation on 936 credit.--Any 
                                reference in this clause to a 
                                dividend received from a 
                                corporation eligible for the 
                                credit provided by section 936 
                                shall be treated as a reference 
                                to the portion of any such 
                                dividend for which the 
                                dividends received deduction is 
                                disallowed under clause (i) 
                                after the application of clause 
                                (ii)(I).
                                  (VI) Application to section 
                                30A corporations.--References 
                                in this clause to section 936 
                                shall be treated as including 
                                references to section 30A.
                          (iv) Special rule for certain 
                        dividends received by certain 
                        cooperatives.--In the case of an 
                        organization to which part I of 
                        subchapter T (relating to tax treatment 
                        of cooperatives) applies which is 
                        engaged in the marketing of 
                        agricultural or horticultural products, 
                        clause (i) shall not apply to any 
                        amount allowable as a deduction under 
                        section 245(c).
                          (v) Deduction for domestic 
                        production.--Clause (i) shall not apply 
                        to any amount allowable as a deduction 
                        under section 199.
                          (vi) Special rule for certain 
                        distributions from controlled foreign 
                        corporations.--Clause (i) shall not 
                        apply to any deduction allowable under 
                        section 965.
                  (D) Certain other earnings and profits 
                adjustments.--
                          (i) Intangible drilling costs.--The 
                        adjustments provided in section 
                        312(n)(2)(A) shall apply in the case of 
                        amounts paid or incurred in taxable 
                        years beginning after December 31, 
                        1989. In the case of a taxpayer other 
                        than an integrated oil company (as 
                        defined in section 291(b)(4)), in the 
                        case of any oil or gas well, this 
                        clause shall not apply in the case of 
                        amounts paid or incurred in taxable 
                        years beginning after December 31, 
                        1992.
                          (ii) Certain amortization provisions 
                        not to apply.--Sections 173 and 248 
                        shall not apply to expenditures paid or 
                        incurred in taxable years beginning 
                        after December 31, 1989.
                          (iii) LIFO inventory adjustments.--
                        The adjustments provided in section 
                        312(n)(4) shall apply, but only with 
                        respect to taxable years beginning 
                        after December 31, 1989.
                          (iv) Installment sales.--In the case 
                        of any installment sale in a taxable 
                        year beginning after December 31, 1989, 
                        adjusted current earnings shall be 
                        computed as if the corporation did not 
                        use the installment method. The 
                        preceding sentence shall not apply to 
                        the applicable percentage (as 
                        determined under section 453A) of the 
                        gain from any installment sale with 
                        respect to which section 453A(a)(1) 
                        applies.
                  (E) Disallowance of loss on exchange of debt 
                pools.--No loss shall be recognized on the 
                exchange of any pool of debt obligations for 
                another pool of debt obligations having 
                substantially the same effective interest rates 
                and maturities.
                  (F) Depletion.--
                          (i) In general.--The allowance for 
                        depletion with respect to any property 
                        placed in service in a taxable year 
                        beginning after December 31, 1989, 
                        shall be cost depletion determined 
                        under section 611.
                          (ii) Exception for independent oil 
                        and gas producers and royalty owners.--
                        Clause (i) (and subparagraph (C)(i)) 
                        shall not apply to any deduction for 
                        depletion computed in accordance with 
                        section 613A(c).
                  (G) Treatment of certain ownership changes.--
                If--
                          (i) there is an ownership change 
                        (within the meaning of section 382) in 
                        a taxable year beginning after 1989 
                        with respect to any corporation, and
                          (ii) there is a net unrealized built-
                        in loss (within the meaning of section 
                        382(h)) with respect to such 
                        corporation,
                then the adjusted basis of each asset of such 
                corporation (immediately after the ownership 
                change) shall be its proportionate share 
                (determined on the basis of respective fair 
                market values) of the fair market value of the 
                assets of such corporation (determined under 
                section 382(h)) immediately before the 
                ownership change.
                  (H) Adjusted basis.--The adjusted basis of 
                any property with respect to which an 
                adjustment under this paragraph applies shall 
                be determined by applying the treatment 
                prescribed in this paragraph.
                  (I) Treatment of charitable contributions.--
                Notwithstanding subparagraphs (B) and (C), no 
                adjustment related to the earnings and profits 
                effects of any charitable contribution shall be 
                made in computing adjusted current earnings.
          (5) Other definitions.--For purposes of paragraph 
        (4)--
                  (A) Earnings and profits.--The term 
                ``earnings and profits'' means earnings and 
                profits computed for purposes of subchapter C.
                  (B) Treatment of alternative minimum taxable 
                income.--The treatment of any item for purposes 
                of computing alternative minimum taxable income 
                shall be determined without regard to this 
                subsection.
          (6) Exception for certain corporations.--This 
        subsection shall not apply to any S corporation, 
        regulated investment company, real estate investment 
        trust, or REMIC.

           *       *       *       *       *       *       *


Subchapter B--Computation of Taxable Income

           *       *       *       *       *       *       *


PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS

           *       *       *       *       *       *       *



SEC. 213. MEDICAL, DENTAL, ETC., EXPENSES.

  (a) Allowance of Deduction.--There shall be allowed as a 
deduction the expenses paid during the taxable year, not 
compensated for by insurance or otherwise, for medical care of 
the taxpayer, his spouse, or a dependent (as defined in section 
152, determined without regard to subsections (b)(1), (b)(2), 
and (d)(1)(B) thereof), to the extent that such expenses exceed 
[10 percent] 7.5 percent of adjusted gross income.
  (b) Limitation With Respect to Medicine and Drugs.--An amount 
paid during the taxable year for medicine or a drug shall be 
taken into account under subsection (a) only if such medicine 
or drug is a prescribed drug or is insulin.
  (c) Special Rule for Decedents.--
          (1) Treatment of expenses paid after death.--For 
        purposes of subsection (a), expenses for the medical 
        care of the taxpayer which are paid out of his estate 
        during the 1-year period beginning with the day after 
        the date of his death shall be treated as paid by the 
        taxpayer at the time incurred.
          (2) Limitation.--Paragraph (1) shall not apply if the 
        amount paid is allowable under section 2053 as a 
        deduction in computing the taxable estate of the 
        decedent, but this paragraph shall not apply if (within 
        the time and in the manner and form prescribed by the 
        Secretary) there is filed--
                  (A) a statement that such amount has not been 
                allowed as a deduction under section 2053, and
                  (B) a waiver of the right to have such amount 
                allowed at any time as a deduction under 
                section 2053.
  (d) Definitions.--For purposes of this section--
          (1) The term ``medical care'' means amounts paid--
                  (A) for the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or for the 
                purpose of affecting any structure or function 
                of the body,
                  (B) for transportation primarily for and 
                essential to medical care referred to in 
                subparagraph (A),
                  (C) for qualified long-term care services (as 
                defined in section 7702B(c)), or
                  (D) for insurance (including amounts paid as 
                premiums under part B of title XVIII of the 
                Social Security Act, relating to supplementary 
                medical insurance for the aged) covering 
                medical care referred to in subparagraphs (A) 
                and (B) or for any qualified long- term care 
                insurance contract (as defined in section 
                7702B(b)).
        In the case of a qualified long-term care insurance 
        contract (as defined in section 7702B(b)), only 
        eligible long-term care premiums (as defined in 
        paragraph (10)) shall be taken into account under 
        subparagraph (D).
          (2) Amounts paid for certain lodging away from home 
        treated as paid for medical care
          Amounts paid for lodging (not lavish or extravagant 
        under the circumstances) while away from home primarily 
        for and essential to medical care referred to in 
        paragraph (1)(A) shall be treated as amounts paid for 
        medical care if--
                  (A) the medical care referred to in paragraph 
                (1)(A) is provided by a physician in a licensed 
                hospital (or in a medical care facility which 
                is related to, or the equivalent of, a licensed 
                hospital), and
                  (B) there is no significant element of 
                personal pleasure, recreation, or vacation in 
                the travel away from home.
        The amount taken into account under the preceding 
        sentence shall not exceed $50 for each night for each 
        individual.
          (3) Prescribed drug
          The term ``prescribed drug'' means a drug or 
        biological which requires a prescription of a physician 
        for its use by an individual.
          (4) Physician
          The term ``physician'' has the meaning given to such 
        term by section 1861(r) of the Social Security Act (42 
        U.S.C. 1395x(r)).
          (5) Special rule in the case of child of divorced 
        parents, etc.
          Any child to whom section 152(e) applies shall be 
        treated as a dependent of both parents for purposes of 
        this section.
          (6) In the case of an insurance contract under which 
        amounts are payable for other than medical care 
        referred to in subparagraphs (A), (B), and (C) of 
        paragraph (1)--
                  (A) no amount shall be treated as paid for 
                insurance to which paragraph (1)(D) applies 
                unless the charge for such insurance is either 
                separately stated in the contract, or furnished 
                to the policyholder by the insurance company in 
                a separate statement,
                  (B) the amount taken into account as the 
                amount paid for such insurance shall not exceed 
                such charge, and
                  (C) no amount shall be treated as paid for 
                such insurance if the amount specified in the 
                contract (or furnished to the policyholder by 
                the insurance company in a separate statement) 
                as the charge for such insurance is 
                unreasonably large in relation to the total 
                charges under the contract.
          (7) Subject to the limitations of paragraph (6), 
        premiums paid during the taxable year by a taxpayer 
        before he attains the age of 65 for insurance covering 
        medical care (within the meaning of subparagraphs (A), 
        (B), and (C) of paragraph (1)) for the taxpayer, his 
        spouse, or a dependent after the taxpayer attains the 
        age of 65 shall be treated as expenses paid during the 
        taxable year for insurance which constitutes medical 
        care if premiums for such insurance are payable (on a 
        level payment basis) under the contract for a period of 
        10 years or more or until the year in which the 
        taxpayer attains the age of 65 (but in no case for a 
        period of less than 5 years).
          (8) The determination of whether an individual is 
        married at any time during the taxable year shall be 
        made in accordance with the provisions of section 
        6013(d) (relating to determination of status as husband 
        and wife).
          (9) Cosmetic surgery.--
                  (A) In general.--The term ``medical care'' 
                does not include cosmetic surgery or other 
                similar procedures, unless the surgery or 
                procedure is necessary to ameliorate a 
                deformity arising from, or directly related to, 
                a congenital abnormality, a personal injury 
                resulting from an accident or trauma, or 
                disfiguring disease.
                  (B) Cosmetic surgery defined.--For purposes 
                of this paragraph, the term ``cosmetic 
                surgery'' means any procedure which is directed 
                at improving the patient's appearance and does 
                not meaningfully promote the proper function of 
                the body or prevent or treat illness or 
                disease.
          (10) Eligible long-term care premiums.--
                  (A) In general.--For purposes of this 
                section, the term ``eligible long-term care 
                Premiums'' means the amount paid during a 
                taxable year for any qualified long-term care 
                insurance contract (as defined in section 
                7702B(b)) covering an individual, to the extent 
                such amount does not exceed the limitation 
                determined under the following table:


 
------------------------------------------------------------------------
 In the case of an individual with
an attained age before the close of           The limitation is:
        the taxable year of:
------------------------------------------------------------------------
40 or less                           $200
More than 40 but not more than 50    375
More than 50 but not more than 60    750
More than 60 but not more than 70    2,000
More than 70                         2,500
------------------------------------------------------------------------

                  (B) Indexing.--
                          (i) In general.--In the case of any 
                        taxable year beginning in a calendar 
                        year after 1997, each dollar amount 
                        contained in subparagraph (A) shall be 
                        increased by the medical care cost 
                        adjustment of such amount for such 
                        calendar year. If any increase 
                        determined under the preceding sentence 
                        is not a multiple of $10, such increase 
                        shall be rounded to the nearest 
                        multiple of $10.
                          (ii) Medical care cost adjustment.--
                        For purposes of clause (i), the medical 
                        care cost adjustment for any calendar 
                        year is the percentage (if any) by 
                        which--
                                  (I) the medical care 
                                component of the Consumer Price 
                                Index (as defined in section 
                                1(f)(5)) for August of the 
                                preceding calendar year, 
                                exceeds
                                  (II) such component for 
                                August of 1996.
                        The Secretary shall, in consultation 
                        with the Secretary of Health and Human 
                        Services, prescribe an adjustment which 
                        the Secretary determines is more 
                        appropriate for purposes of this 
                        paragraph than the adjustment described 
                        in the preceding sentence, and the 
                        adjustment so prescribed shall apply in 
                        lieu of the adjustment described in the 
                        preceding sentence.
          (11) Certain payments to relatives treated as not 
        paid for medical care --An amount paid for a qualified 
        long-term care service (as defined in section 7702B(c)) 
        provided to an individual shall be treated as not paid 
        for medical care if such service is provided--
                  (A) by the spouse of the individual or by a 
                relative (directly or through a partnership, 
                corporation, or other entity) unless the 
                service is provided by a licensed professional 
                with respect to such service, or
                  (B) by a corporation or partnership which is 
                related (within the meaning of section 267(b) 
                or 707(b)) to the individual.
        For purposes of this paragraph, the term ``relative'' 
        means an individual bearing a relationship to the 
        individual which is described in any of subparagraphs 
        (A) through (G) of section 152(d)(2). This paragraph 
        shall not apply for purposes of section 105(b) with 
        respect to reimbursements through insurance.
  (e) Exclusion of Amounts Allowed for Care of Certain 
Dependents.--Any expense allowed as a credit under section 21 
shall not be treated as an expense paid for medical care.
  [(f) Special Rule for 2013, 2014, 2015, and 2016.--In the 
case of any taxable year beginning after December 31, 2012, and 
ending before January 1, 2017, subsection (a) shall be applied 
with respect to a taxpayer by substituting ``7.5 percent'' for 
``10 percent'' if such taxpayer or such taxpayer's spouse has 
attained age 65 before the close of such taxable year.]

           *       *       *       *       *       *       *


                         VII. DISSENTING VIEWS

   H.R. 3590: HALT TAX INCREASES ON THE MIDDLE CLASS AND SENIORS ACT

    We strongly object to H.R. 3590, which would repeal one of 
the revenue provisions in the Affordable Care Act (ACA). The 
ACA increased the income threshold for claiming an itemized 
deduction for medical expenses from 7.5% of adjusted gross 
income to 10% of adjusted gross income beginning in 2013. For 
four years (2013 to 2016), seniors age 65 plus were generally 
provided the lower floor (7.5%) for claiming the deduction.
    We object because the cost of the bill is $33 billion and 
its cost is not offset. Adding $33 billion to our record-high 
federal deficits is irresponsible. It is a continuation of a 
reckless policy of passing hundreds of billions of dollars of 
tax cuts, often benefiting higher income Americans and 
corporations, without paying for them.
    In contrast, the ACA was fully paid-for. Revenue provisions 
in the ACA helped pay for over $1 trillion dollars in benefits 
for American families, including insurance market reforms and 
premium tax credits to help with paying for coverage in the 
reformed markets, expansion of Medicaid coverage, and closing 
the prescription drug donut hole for seniors on Medicare. In 
the past six years since the ACA's passage, the Majority has 
been wholly unable to offer an alternative to the ACA that 
would reduce the ranks of the uninsured and provide affordable 
coverage to American families.
    We are also concerned because the tax benefits of H.R. 3590 
accrue disproportionately to upper income households. According 
to data supplied by the Joint Committee on Taxation, 
approximately 55% of the aggregate tax benefit in 2016 and 66% 
of the benefit in later years will accrue to taxpayers with 
adjusted gross income of $100,000 and above. Taxpayers with 
that level of income are in the top 15% of earners according to 
statistical information published by the Internal Revenue 
Service.
    For these reasons we strongly object to H.R. 3590.

                                   Sander M. Levin.

                                  [all]