II
Calendar No. 457
112th CONGRESS
2d Session
S. 3393
IN THE SENATE OF THE UNITED STATES
July 17, 2012
Mr. Reid introduced the following bill; which was read the first time
July 18, 2012
Read the second time and placed on the calendar
A BILL
To amend the Internal Revenue Code of 1986 to provide tax relief to middle-class families.
Short title; etc
Short title
This Act may be cited
as the Middle Class Tax Cut
Act
.
Amendment of 1986 Code
Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; etc.
TITLE I—Temporary extension of tax relief
Sec. 101. Temporary extension of 2001 tax relief.
Sec. 102. Temporary extension of 2003 tax relief.
Sec. 103. Temporary extension of 2010 tax relief.
Sec. 104. Temporary extension of election to expense certain depreciable business assets.
TITLE II—Estate tax relief
Sec. 201. Modifications to estate, gift, and generation-skipping transfer taxes.
TITLE III—Alternative minimum tax relief
Sec. 301. Temporary extension of increased alternative minimum tax exemption amount.
Sec. 302. Temporary extension of alternative minimum tax relief for nonrefundable personal credits.
TITLE IV—Budgetary effects
Sec. 401. Budgetary effects.
Temporary extension of tax relief
Temporary extension of 2001 tax relief
Temporary extension
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, 2013
.
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.
Application to certain high-Income taxpayers
Income tax rates
Treatment of 25- and 28-percent rate brackets
Paragraph (2) of section 1(i) is amended to read as follows:
25- and 28-percent rate brackets
The tables under subsections (a), (b), (c), (d), and (e) shall be applied—
by substituting
25%
for 28%
each place it appears (before the
application of subparagraph (B)), and
by substituting
28%
for 31%
each place it
appears.
.
33-percent rate bracket
Subsection (i) of section 1 is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:
33-percent rate bracket
In general
In the case of taxable years beginning after December 31, 2012—
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—
the applicable amount, over
the dollar amount at which such bracket begins, and
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.
Applicable amount
For purposes of this paragraph, the term applicable
amount
means the excess of—
the applicable threshold, over
the sum of the following amounts in effect for the taxable year:
the basic standard deduction (within the meaning of section 63(c)(2)), and
the exemption amount (within the meaning of section 151(d)(1) (or, in the case of subsection (a), 2 such exemption amounts).
Applicable threshold
For purposes of this paragraph, the term
applicable threshold
means—
$250,000 in the case of subsection (a),
$225,000 in the case of subsection (b),
$200,000 in the case of subsections (c), and
1/2 the amount applicable under clause (i) (after adjustment, if any, under subparagraph (E)) in the case of subsection (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.
Inflation adjustment
For purposes of this paragraph, with respect to
taxable years beginning in calendar years after 2012, each of the dollar
amounts under clauses (i), (ii), and (iii) of subparagraph (C) shall be
adjusted in the same manner as under paragraph (1)(C), except that subsection
(f)(3)(B) shall be applied by substituting 2008
for
1992
.
.
Phaseout of personal exemptions and itemized deductions
Overall limitation on itemized deductions
Section 68 is amended—
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)
,
by
striking the applicable amount
in subsection (a)(1) and
inserting such applicable threshold
,
by striking subsection (b) and redesignating subsections (c), (d), and (e) as subsections (b), (c), and (d), respectively, and
by striking subsections (f) and (g).
Phaseout of deductions for personal exemptions
In general
Paragraph (3) of section 151(d) is amended—
by striking
the threshold amount
in subparagraphs (A) and (B) and inserting
the applicable threshold in effect under section 1(i)(3)
,
by striking subparagraph (C) and redesignating subparagraph (D) as subparagraph (C), and
by striking subparagraphs (E) and (F).
Conforming amendments
Paragraph (4) of section 151(d) is amended—
by striking subparagraph (B),
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
by striking all
that precedes in a calendar year after 1989,
and inserting the
following:
Inflation adjustment
In the case of any taxable year beginning
.
Effective date
Except as otherwise provided, the amendments made by this section shall apply to taxable years beginning after December 31, 2012.
Application of EGTRRA sunset
Each amendment made by subsection (b) shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 to the same extent and in the same manner as if such amendment was included in title I of such Act.
Temporary extension of 2003 tax relief
Extension
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,
2013
.
Effective date
The amendment made by this subsection shall take effect as if included in the enactment of the Jobs and Growth Tax Relief Reconciliation Act of 2003.
20-Percent capital gains rate for certain high income individuals
In general
Paragraph (1) of section 1(h) 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:
15 percent of the lesser of—
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
the excess (if any) of—
the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 36 percent, over
the sum of the amounts on which a tax is determined under subparagraphs (A) and (B),
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),
.
Minimum tax
Paragraph (3) of section 55(b) is amended by striking subparagraph (C), by redesignating subparagraph (D) as subparagraph (E), and by inserting after subparagraph (B) the following new subparagraphs:
15 percent of the lesser of—
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), or
the excess described in section 1(h)(1)(C)(ii), plus
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 subparagraphs (B) and (C), plus
.
Conforming amendments
The following
provisions are each amended by striking 15 percent
and inserting
20 percent
:
Section 531.
Section 541.
Section 1445(e)(1).
The second sentence of section 7518(g)(6)(A).
Section 53511(f)(2) of title 46, United States Code.
Sections
1(h)(1)(B) and 55(b)(3)(B) are each amended by striking 5 percent (0
percent in the case of taxable years beginning after 2007)
and
inserting 0 percent
.
Section 1445(e)(6) is amended by striking
15 percent (20 percent in the case of taxable years beginning after
December 31, 2010)
and inserting 20 percent
.
Effective dates
In general
Except as otherwise provided, the amendments made by subsections (b) and (c) shall apply to taxable years beginning after December 31, 2012.
Withholding
The amendments made by paragraphs (1)(C) and (3) of subsection (c) shall apply to amounts paid on or after January 1, 2013.
Application of JGTRRA sunset
Each amendment made by subsections (b) and (c) shall be subject to section 303 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 to the same extent and in the same manner as if such amendment was included in title III of such Act.
Temporary extension of 2010 tax relief
American Opportunity Tax Credit
In general
Section 25A(i) is amended by striking or
2012
and inserting 2012, or 2013
.
Treatment of possessions
Section 1004(c)(1) of division B of the American
Recovery and Reinvestment Tax Act of 2009 is amended by striking and
2012
each place it appears and inserting 2012, and
2013
.
Child tax credit
Section 24(d)(4) is amended—
by striking
and
2012
in the heading and inserting 2012, and 2013
, and
by striking
or 2012
and inserting 2012, or 2013
.
Earned income tax credit
Section 32(b)(3) is amended—
by striking
and
2012
in the heading and inserting 2012, and 2013
, and
by striking
or 2012
and inserting 2012, or 2013
.
Temporary extension of rule disregarding refunds in the administration of Federal programs and Federally assisted programs
Subsection (b) of
section 6409 is amended by striking December 31, 2012
and
inserting December 31, 2013
.
Effective dates
In general
Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2012.
Rule disregarding refunds in the administration of certain programs
The amendment made by subsection (d) shall apply to amounts received after December 31, 2012.
Temporary extension of election to expense certain depreciable business assets
In general
Dollar limitation
Section 179(b)(1) is amended—
by striking
and
at the end of subparagraph (C),
by redesignating subparagraph (D) as subparagraph (E),
by inserting after subparagraph (C) the following new subparagraph:
$250,000 in the case of taxable years beginning in 2013, and
, and
in subparagraph
(E), as so redesignated, by striking 2012
and inserting
2013
.
Reduction in limitation
Section 179(b)(2) is amended—
by striking
and
at the end of subparagraph (C),
by redesignating subparagraph (D) as subparagraph (E),
by inserting after subparagraph (C) the following new subparagraph:
$800,000 in the case of taxable years beginning in 2013, and
, and
in subparagraph
(E), as so redesignated, by striking 2012
and inserting
2013
.
Computer software
Section 179(d)(1)(A)(ii) is amended by striking
2013
and inserting 2014
.
Election
Section
179(c)(2) is amended by striking 2013
and inserting
2014
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2012.
Estate tax relief
Modifications to estate, gift, and generation-skipping transfer taxes
Modifications to estate tax
Exclusion amount
Paragraph (3) of section 2010(c) is amended to read as follows:
Basic exclusion amount
For purposes of this section, the basic exclusion amount is $3,500,000.
.
Maximum estate tax rate
The table in subsection (c) of section 2001 is amended
by striking Over $500,000
and all that follows and inserting the
following:
| Over $500,000 but not over $750,000 | $155,800, plus 37 percent of the excess of such amount over $500,000. |
| Over $750,000 but not over $1,000,000 | $248,300, plus 39 percent of the excess of such amount over $750,000. |
| Over $1,000,000 but not over $1,250,000 | $345,800, plus 41 percent of the excess of such amount over $1,000,000. |
| Over $1,250,000 but not over $1,500,000 | $448,300, plus 43 percent of the excess of such amount over $1,250,000. |
| Over $1,500,000 | $555,800, plus 45 percent of the excess of such amount over $1,500,000. |
.
Modifications of estate and gift taxes To reflect differences in credit resulting from different tax rates and exclusion amounts
Changing tax rates
Notwithstanding section 304 of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall not apply to the amendments made by section 302(d) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
Decreasing exclusions
Estate tax adjustment
Section 2001 is amended by adding at the end the following new subsection:
Adjustment To reflect changes in exclusion amount
In general
If, with respect to any gift to which subsection (b)(2) applies, the applicable exclusion amount in effect at the time of the decedent’s death is less than such amount in effect at the time such gift is made by the decedent, the amount of tax computed under subsection (b) shall be reduced by the amount of tax which would have been payable under chapter 12 at the time of the gift if the applicable exclusion amount in effect at such time had been the applicable exclusion amount in effect at the time of the decedent's death and the modifications described in subsection (g) had been applicable at the time of such gifts.
Limitation
The aggregate amount of gifts made in any calendar year to which the reduction under paragraph (1) applies shall not exceed the excess of—
the applicable exclusion amount in effect for such calendar year, over
the applicable exclusion amount in effect at the time of the decedent's death.
Applicable exclusion amount
The term applicable exclusion amount means, with respect to any period, the amount determined under section 2010(c) for such period, except that in the case of any period for which such amount includes the deceased spousal unused exclusion amount (as defined in section 2010(c)(4)), such term shall mean the basic exclusion amount (as defined under section 2010(c)(3), as in effect for such period).
.
Gift tax adjustment
Section 2502 is amended by adding at the end the following new subsection:
Adjustment To reflect changes in exclusion amount
In general
If the taxpayer made a taxable gift in an applicable preceding calendar period, the amount of tax computed under subsection (a) shall be reduced by the amount of tax which would have been payable under chapter 12 for such applicable preceding calendar period if the applicable exclusion amount in effect for such preceding calendar period had been the applicable exclusion amount in effect for the calendar year for which the tax is being computed and the modifications described in subsection (g) had been applicable for such preceding calendar period.
Limitation
The aggregate amount of gifts made in any applicable preceding calendar period to which the reduction under paragraph (1) applies shall not exceed the excess of—
the applicable exclusion amount for such preceding calendar period, over
the applicable exclusion amount for the calendar year for which the tax is being computed.
Applicable preceding calendar year period
The term applicable preceding calendar year period means any preceding calendar year period in which the applicable exclusion amount exceeded the applicable exclusion amount for the calendar year for which the tax is being computed.
Applicable exclusion amount
The term applicable exclusion amount means, with respect to any period, the amount determined under section 2010(c) for such period, except that in the case of any period for which such amount includes the deceased spousal unused exclusion amount (as defined in section 2010(c)(4)), such term shall mean the basic exclusion amount (as defined under section 2010(c)(3), as in effect for such period).
.
Effective date
The amendments made by this section shall apply to estates of decedents dying, and generation-skipping transfers and gifts made, after December 31, 2012.
Application of EGTRRA sunset
Section 901 of the Economic Growth and Tax Relief Reconciliation Act shall apply to the amendments made by subsection (a).
Alternative minimum tax relief
Temporary extension of increased alternative minimum tax exemption amount
In general
Paragraph (1) of section 55(d) is amended—
by striking
$72,450
and all that follows through 2011
in
subparagraph (A) and inserting $78,750 in the case of taxable years
beginning in 2012
, and
by striking
$47,450
and all that follows through 2011
in
subparagraph (B) and inserting $50,600 in the case of taxable years
beginning in 2012
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2011.
Temporary extension of alternative minimum tax relief for nonrefundable personal credits
In general
Paragraph (2) of section 26(a) is amended—
by striking
or 2011
and inserting 2011, or 2012
, and
by striking
2011
in the heading thereof and inserting
2012
.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2011.
Budgetary effects
Budgetary effects
PAYGO Scorecard
The budgetary effects of this Act shall not be entered on either PAYGO scorecard maintained pursuant to section 4(d) of the Statutory Pay-As-You-Go Act of 2010.
Senate PAYGO Scorecard
The budgetary effects of this Act shall not be entered on any PAYGO scorecard maintained for purposes of section 201 of S. Con. Res. 21 (110th Congress).
July 18, 2012
Read the second time and placed on the calendar