H.R. 6100 – Middle Class Tax Cut Protection Act of 2012

112th CONGRESS

2d Session

H. R. 6100

IN THE HOUSE OF REPRESENTATIVES

July 11, 2012

Mr. Braley of Iowa 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 provide a temporary extension of the 2001 and 2003 tax cuts for the middle class, and for other purposes.

Short title

This Act may be cited as the Middle Class Tax Cut Protection Act of 2012.

2-year extension of tax relief for middle class

(a)

Extension of 2001 tax relief

(1)

In general

Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended by striking December 31, 2012 both places it appears and inserting December 31, 2014.

(2)

Effective date

The amendment made by this subsection shall take effect as if included in the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001.

(b)

Extension of 2003 tax relief

(1)

In general

Section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended by striking December 31, 2012 and inserting December 31, 2014.

(2)

Effective date

The amendment made by this section shall take effect as if included in the enactment of the Jobs and Growth Tax Relief Reconciliation Act of 2003.

(c)

Temporary extension of 2009 tax relief

(1)

American opportunity tax credit

(A)

In general

Section 25A(i) of the Internal Revenue Code of 1986 is amended by striking or 2012 and inserting , 2012, 2013, or 2014.

(B)

Treatment of possessions

Section 1004(c)(1) of the American Recovery and Reinvestment Tax Act of 2009 is amended by striking and 2012 each place it appears and inserting 2012, 2013, and 2014.

(C)

Child tax credit

Section 24(d)(4) of such Code is amended—

(i)

by striking and 2012 in the heading and inserting 2012, 2013, and 2014, and

(ii)

by striking or 2012 and inserting 2012, 2013, or 2014.

(D)

Earned income tax credit

Section 32(b)(3) of such Code is amended—

(i)

by striking and 2012 in the heading and inserting 2012, 2013, and 2014, and

(ii)

by striking or 2012 and inserting 2012, 2013, or 2014.

Certain tax cuts not 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 redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:

(3)

33-Percent rate bracket

(A)

In general

In the case of taxable years beginning after December 31, 2012—

(i)

paragraph (2) shall not apply in determining the rates of tax for the fourth rate bracket and higher rate brackets,

(ii)

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

(iii)

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)

$250,000 in the case of subsection (a),

(ii)

$200,000 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 2012, applied by substituting 2010 for 1992 in subsection (f)(3)(B).

(b)

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), respectively, 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, 2012, 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.

(c)

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, 2012.

(2)

Withholding

The amendments made by subparagraphs (A)(i) and (C) of subsection (b)(4) shall apply to amounts paid on or after January 1, 2013.

Middle Class Tax Cut Protection Act of 2012

Legislative Activity

Bill Text