H.R. 2710 – Fair and Impartial Reform Tax Act of 2011

112th CONGRESS

1st Session

H. R. 2710

IN THE HOUSE OF REPRESENTATIVES

July 29, 2011

Mr. Tonko introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to repeal certain tax cuts extended for high income individuals.

Short title

This Act may be cited as the Fair and Impartial Reform Tax Act of 2011.

Repeal of certain tax cuts extended for high income individuals

(a)

Individual income tax rates

Subsection (i) of section 1 of the Internal Revenue Code of 1986 is amended by striking paragraph (2), by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (1) the following new paragraphs:

(2)

25- and 28-percent rate brackets

The tables under subsections (a), (b), (c), (d), and (e) shall be applied—

(A)

by substituting 25% for 28% each place it appears (before the application of subparagraph (B)), and

(B)

by substituting 28% for 31% each place it appears.

(3)

33-percent rate bracket

(A)

In general

In the case of taxable years beginning after December 31, 2011—

(i)

the rate of tax under subsections (a), (b), (c), and (d) on a taxpayer's taxable income in the fourth rate bracket shall be 33 percent to the extent such income does not exceed an amount equal to the excess of—

(I)

the applicable amount, over

(II)

the dollar amount at which such bracket begins, and

(ii)

the 36-percent rate of tax under such subsections shall apply only to the taxpayer's taxable income in such bracket in excess of the amount to which clause (i) applies.

(B)

Applicable amount

For purposes of this paragraph, the term applicable amount means the excess of—

(i)

the applicable threshold, over

(ii)

the sum of the following amounts in effect for the taxable year:

(I)

the basic standard deduction (within the meaning of section 63(c)(2)), and

(II)

the exemption amount (within the meaning of section 151(d)(1)) (or, in the case of subsection (a), 2 such exemption amounts).

(C)

Applicable threshold

For purposes of this paragraph, the term applicable threshold means—

(i)

$500,000 in the case of subsection (a),

(ii)

$400,000 in the case of subsections (b) and (c), and

(iii)

1/2 the amount applicable under clause (i) (after adjustment, if any, under subparagraph (E)) in the case of subsection (d).

(D)

Fourth rate bracket

For purposes of this paragraph, the term fourth rate bracket means the bracket which would (determined without regard to this paragraph) be the 36-percent rate bracket.

(E)

Inflation adjustment

For purposes of this paragraph, a rule similar to the rule of paragraph (1)(C) shall apply with respect to taxable years beginning in calendar years after 2011, applied by substituting 2009 for 1992 in subsection (f)(3)(B).

(b)

Phaseout of personal exemptions and itemized deductions

(1)

Overall limitation on itemized deductions

Section 68 of such Code is amended—

(A)

by striking the applicable amount the first place it appears in subsection (a) and inserting the applicable threshold in effect under section 1(i)(3),

(B)

by striking the applicable amount in subsection (a)(1) and inserting such applicable threshold,

(C)

by striking subsection (b) and redesignating subsections (c), (d), and (e) as subsections (b), (c), and (d), respectively, and

(D)

by striking subsections (f) and (g).

(2)

Phaseout of deductions for personal exemptions

(A)

In general

Paragraph (3) of section 151(d) of such Code is amended—

(i)

by striking the threshold amount in subparagraphs (A) and (B) and inserting the applicable threshold in effect under section 1(i)(3),

(ii)

by striking subparagraph (C) and redesignating subparagraph (D) as subparagraph (C), and

(iii)

by striking subparagraphs (E) and (F).

(B)

Conforming amendment

Paragraph (4) of section 151(d) of such Code is amended—

(i)

by striking subparagraph (B),

(ii)

by redesignating clauses (i) and (ii) of subparagraph (A) as subparagraphs (A) and (B), respectively, and by indenting such subparagraphs (as so redesignated) accordingly, and

(iii)

by striking all that precedes in a calendar year after 1989, and inserting the following:

(4)

Inflation adjustment

In the case of any taxable year beginning

(c)

Reduced rate on capital gains and dividends

(1)

In general

Paragraph (1) of section (1)(h) of such Code is amended by striking subparagraph (C), by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F) and by inserting after subparagraph (B) the following new subparagraphs:

(C)

15 percent of the lesser of—

(i)

so much of the adjusted net capital gain (or, if less, taxable income) as exceeds the amount on which a tax is determined under subparagraph (B), or

(ii)

the excess (if any) of—

(I)

the amount of taxable income which would (without regard to this subsection) be taxed at a rate below 36 percent, over

(II)

the sum of the amounts on which tax is determined under subparagraphs (A) and (B),

(D)

20 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the sum of the amounts on which tax is determined under subparagraphs (B) and (C),

(2)

Dividends

Subparagraph (A) of section 1(h)(11) of such Code is amended by striking qualified dividend income and inserting

so much of the qualified dividend income as does not exceed the excess (if any) of—

(i)

the amount of taxable income which would (without regard to this subsection) be taxed at a rate below 36 percent, over

(ii)

taxable income reduced by qualified dividend income.

(3)

Minimum tax

Section 55 of such Code is amended by adding at the end the following new subsection:

(f)

Application of maximum rate of tax on net capital gain of noncorporate taxpayers

In the case of taxable years beginning after December 31, 2011, the amount determined under subparagraph (C) of subsection (b)(3) shall be the sum of—

(1)

15 percent of the lesser of—

(A)

so much of the adjusted net capital gain (or, if less, taxable excess) as exceeds the amount on which tax is determined under subparagraph (B) of subsection (b)(3), or

(B)

the excess described in section 1(h)(1)(C)(ii), plus

(2)

20 percent of the adjusted net capital gain (or, if less, taxable excess) in excess of the sum of the amounts on which tax is determined under subsection (b)(3)(B) and paragraph (1).

(4)

Conforming amendments

(A)

The following provisions are amended by striking 15 percent and inserting 20 percent:

(i)

Section 1445(e)(1) of such Code.

(ii)

The second sentence of section 7518(g)(6)(A) of such Code.

(iii)

Section 53511(f)(2) of title 46, United States Code.

(B)

Sections 531 and 541 of the Internal Revenue Code of 1986 are each amended by striking 15 percent of and inserting the product of the highest rate of tax under section 1(c) and.

(C)

Section 1445(e)(6) of such Code is amended by striking 15 percent (20 percent in the case of taxable years beginning after December 31, 2011) and inserting 20 percent.

(d)

Application of EGTRRA sunset

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall apply to the amendments made by this section.

(e)

Effective dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2011.

(2)

Withholding

The amendments made by subparagraphs (A)(i) and (C) of subsection (c)(4) shall apply to amounts paid on or after January 1, 2012.

Fair and Impartial Reform Tax Act of 2011

Legislative Activity

Bill Text