II
Calendar No. 524
110th CONGRESS
1st Session
S. 2416
IN THE SENATE OF THE UNITED STATES
December 5, 2007
Mr. DeMint introduced the following bill; which was read the first time
December 6, 2007
Read the second time and placed on the calendar
A BILL
To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals and replace it with an alternative tax individuals may choose.
Short title
This Act may be cited as the Taxpayer Choice Act of 2007
.
Repeal of alternative minimum tax for noncorporate taxpayers
In general
Section 55(a) of the Internal Revenue Code of 1986 (relating to alternative minimum tax imposed) is amended by adding at the end the following new flush sentence:
In the case of a taxpayer other than a corporation, no tax shall be imposed by this section for any taxable year beginning after December 31, 2006, and the tentative minimum tax of any taxpayer other than a corporation for any such taxable year shall be zero for purposes of this title.
.
Conforming amendments
Section 26(c) of such Code is amended by striking the term tentative minimum tax means the amount determined under section 55(b)(1)
and inserting the tentative minimum tax is zero.
.
Section 911(f)(2) of such Code is amended to read as follows:
the tentative minimum tax under section 55 for the taxable year shall be zero.
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2006.
Simplified individual income tax system
In general
Part I of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to tax on individuals) is amended by redesignating section 5 as section 6 and by inserting after section 4 the following new section:
Simplified individual income tax system
Election
In general
A taxpayer other than a corporation may elect in accordance with this subsection to be subject to the tax imposed by this section in lieu of the tax imposed by section 1 for a taxable year and all subsequent taxable years.
Effect of election
For purposes of this title, if an election is in effect under paragraph (1) for any taxable year, the tax imposed by this section shall be treated as the tax imposed by section 1 for the taxable year.
Election
In general
In general
Except as provided in clause (ii) of this subparagraph and clauses (ii) and (iii) of subparagraph (B), the election under paragraph (1) may only be made with respect to any taxable year beginning before January 1, 2017, on a timely filed return for the first taxable year for which the election applies.
New taxpayers
In the case of an individual with no tax liability under this title before January 1, 2017, the election under paragraph (1) may only be made for the first taxable year beginning after December 31, 2016, for which such individual has tax liability under this title.
Effect of election
In general
Except as provided in clauses (ii) and (iii), the election under paragraph (1), once made, shall be irrevocable.
One-time revocation of election
A taxpayer may revoke an election under paragraph (1) for a taxable year and all subsequent taxable years. The preceding sentence shall not apply if the taxpayer has made a revocation under such sentence for any prior taxable year.
Filing status changes due to major life events
In the case of any major life event described in clause (iv), a taxpayer may make an election under paragraph (1) or revoke such an election under clause (ii). Any such election or revocation shall apply for the taxable year for which made and all subsequent taxable years until the taxpayer makes an election under the preceding sentence for any subsequent (and all succeeding) taxable year.
Major life event
For purposes of clause (iii), a major life event described in this clause is marriage, divorce, and death.
Tax imposed
Married individuals and surviving spouses
In the case of a taxpayer for whom an election under subsection (a) is in effect and who is a married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013 or a surviving spouse (as defined in section 2(a)), there is hereby imposed on the alternative taxable income of such individual a tax determined in accordance with the following table:
| If taxable income is: | The tax is: |
| Not over $100,000 | 10% of alternative taxable income. |
| Over $100,000 | $10,000, plus 25% of the excess over $100,000. |
Unmarried individuals (other than surviving spouses)
In the case of a taxpayer for whom an election under subsection (a) is in effect and who is not described in paragraph (1), there is hereby imposed on the alternative taxable income of such individual a tax determined in accordance with the following table:
| If taxable income is: | The tax is: |
| Not over $50,000 | 10% of alternative taxable income. |
| Over $50,000 | $5,000, plus 25% of the excess over $50,000. |
Maximum of tax on net capital gain of noncorporate taxpayers
If a taxpayer has a net capital gain for the taxable year, the tax imposed by subsection (b) for such taxable year shall not exceed the sum of—
the amount determined under subsection (b) computed at the rate and in the same manner as if this paragraph had not been enacted on modified taxable income reduced by the lesser of—
the net capital gain, or
the adjusted net capital gain, plus
5 percent (0 percent in the case of taxable years beginning after 2007) of so much of the adjusted net capital gain (or, if less, modified taxable income) as does not exceed an amount equal to the excess described in section 1(h)(1)(B), plus
15 percent of the adjusted net capital gain (or, if less, modified taxable income) in excess of the amount on which tax is determined under paragraph (2).
Alternative taxable income
For purposes of this section—
In general
The term alternative taxable income means—
gross income, minus
the sum of—
the personal exemption,
the dependent allowance, plus
the alternative standard deduction.
Personal exemption
The personal exemption is—
200 percent of the dollar amount in effect under subparagraph (B) in the case of—
a joint return, or
a surviving spouse (as defined in section 2(a)), and
$3,500 in the case of an individual—
who is not married and is not a surviving spouse, or
who is a married individual filing a separate return.
Dependent allowance
The dependent allowance is $3,500 for each dependent (as defined in section 152).
Alternative standard deduction
The alternative standard deduction means—
$25,000 in the case of—
a joint return, or
a surviving spouse (as defined in section 2(a)), and
$12,500 in the case of an individual—
who is not married and is not a surviving spouse, or
who is a married individual filing a separate return.
Inflation adjustments
In general
In the case of any taxable year beginning in a calendar year after 2007, each of the dollar amounts for the rate brackets in subsection (b) and each of the dollar amounts in subsection (d)(2)(B), (d)(3), and (d)(4) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting calendar year 2006
for calendar year 1992
in subparagraph (B) thereof.
Rounding
If any amount as adjusted under clause (i) is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100.
.
Conforming amendment
The table of sections for part I of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 5 and inserting after the item relating to section 4 the following:
Sec. 5. Simplified Individual Income Tax System.
Sec. 6. Cross references relating to tax on individuals.
.
Capital gains and dividends rate made permanent
The Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended by striking section 303.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2006.
December 6, 2007
Read the second time and placed on the calendar