[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1190 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1190
To amend the Internal Revenue Code of 1986 to permit a husband and wife
to file a combined return to which separate tax rates apply.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 22, 2001
Mr. Matheson 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 permit a husband and wife
to file a combined return to which separate tax rates apply.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Marriage Penalty Relief Act''.
SEC. 2. COMBINED RETURN TO WHICH UNMARRIED RATES APPLY.
(a) In General.--Subpart B of part II of subchapter A of chapter 61
of the Internal Revenue Code of 1986 (relating to income tax returns)
is amended by inserting after section 6013 the following new section:
``SEC. 6013A. COMBINED RETURN WITH SEPARATE RATES.
``(a) General Rule.--A husband and wife may make a combined return
of income taxes under subtitle A under which--
``(1) a separate taxable income is determined for each
spouse by applying the rules provided in this section, and
``(2) the tax imposed by section 1 is the aggregate amount
resulting from applying the separate rates set forth in section
1(c) to each such taxable income.
``(b) Treatment of Income.--For purposes of this section--
``(1) earned income (within the meaning of section 911(d)),
and any income received as a pension or annuity which arises
from an employer-employee relationship, shall be treated as the
income of the spouse who rendered the services,
``(2) income from property shall be divided between the
spouses in accordance with their respective ownership rights in
such property (equally in the case of property held jointly by
the spouses), and
``(3) any exclusion from income shall be allowable to the
spouse with respect to whom the income would be otherwise
includible.
``(c) Treatment of Deductions.--For purposes of this section--
``(1) except as otherwise provided in this subsection, the
deductions described in section 62(a) shall be allowed to the
spouse treated as having the income to which such deductions
relate,
``(2) the deductions allowable by section 151(b) (relating
to personal exemptions for taxpayer and spouse) shall be
determined by allocating 1 personal exemption to each spouse,
``(3) section 63 shall be applied as if such spouses were
not married, except that the election whether or not to itemize
deductions shall be made jointly by both spouses and apply to
each, and
``(4) each spouse's share of all other deductions shall be
determined by multiplying the aggregate amount thereof by the
fraction--
``(A) the numerator of which is such spouse's gross
income, and
``(B) the denominator of which is the combined
gross incomes of the 2 spouses.
Any fraction determined under paragraph (4) shall be rounded to the
nearest percentage point.
``(d) Treatment of Credits.--For purposes of this section--
``(1) In general.--Except as provided in paragraph (2),
each spouse's share of credits allowed to both spouses shall be
determined by multiplying the aggregate amount of the credits
by the fraction determined under subsection (c)(4).
``(2) Earned income credit.--The earned income credit under
section 32 shall be determined as if each spouse were a
separate taxpayer, except that--
``(A) the earned income and the modified adjusted
gross income of each spouse shall be determined under
the rules of subsections (b), (c), and (e), and
``(B) qualifying children shall be allocated
between spouses proportionate to the earned income of
each spouse (rounded to the nearest whole number).
``(e) Special Rules Regarding Income Limitations.--
``(1) Exclusions and deductions.--For purposes of making a
determination under subsection (b) or (c), any eligibility
limitation with respect to each spouse shall be determined by
taking into account the limitation applicable to a single
individual.
``(2) Credits.--For purposes of making a determination
under subsection (d)(1), in no event shall an eligibility
limitation for any credit allowable to both spouses be less
than twice such limitation applicable to a single individual.
``(f) Special Rules for Alternative Minimum Tax.--If a husband and
wife elect the application of this section--
``(1) the tax imposed by section 55 shall be computed
separately for each spouse, and
``(2) for purposes of applying section 55--
``(A) the rules under this section for allocating
items of income, deduction, and credit shall apply, and
``(B) the exemption amount for each spouse shall be
the amount determined under section 55(d)(1)(B).
``(g) Treatment as Joint Return.--Except as otherwise provided in
this section or in the regulations prescribed hereunder, for purposes
of this title (other than sections 1 and 63(c)) a combined return under
this section shall be treated as a joint return.
``(h) Phase-In of Benefit.--
``(1) In general.--In the case of any taxable year
beginning before January 1, 2004, the tax imposed by section 1
or 55 shall in no event be less than the sum of--
``(A) the tax determined after the application of
this section, plus
``(B) the applicable percentage of the excess of--
``(i) the tax determined without the
application of this section, over
``(ii) the amount determined under
subparagraph (A).
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage shall be determined in
accordance with the following table:
The applicable
``For taxable years beginning in: percentage is:
2002.......................................... 50
2003.......................................... 10.
``(i) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out this section.''.
(b) Unmarried Rate Made Applicable.--So much of subsection (c) of
section 1 of the Internal Revenue Code of 1986 as precedes the table is
amended to read as follows:
``(c) Separate or Unmarried Return Rate.--There is hereby imposed
on the taxable income of every individual (other than a married
individual (as defined in section 7703) filing a return which is not a
combined return under section 6013A, a surviving spouse as defined in
section 2(a), or a head of household as defined in section 2(b)) a tax
determined in accordance with the following table:''.
(c) Penalty for Substantial Understatement of Income From
Property.--Section 6662 of the Internal Revenue Code of 1986 (relating
to imposition of accuracy-related penalty) is amended--
(1) by adding at the end of subsection (b) the following:
``(6) Any substantial understatement of income from
property under section 6013A.'', and
(2) by adding at the end the following new subsection:
``(i) Substantial Understatement of Income From Property Under
Section 6013A.--For purposes of this section, there is a substantial
understatement of income from property under section 6013A if--
``(1) the spouses electing the treatment of such section
for any taxable year transfer property from 1 spouse to the
other spouse in such year,
``(2) such transfer results in reduced tax liability under
such section, and
``(3) the significant purpose of such transfer is the
avoidance or evasion of Federal income tax.''.
(d) Protection of Social Security and Medicare Trust Funds.--
(1) In general.--Nothing in this section shall be construed
to alter or amend the Social Security Act (or any regulation
promulgated under that Act).
(2) Transfers.--
(A) Estimate of secretary.--The Secretary of the
Treasury shall annually estimate the impact that the
enactment of this section has on the income and
balances of the trust funds established under sections
201 and 1817 of the Social Security Act (42 U.S.C. 401
and 1395i).
(B) Transfer of funds.--If, under subparagraph (A),
the Secretary of the Treasury estimates that the
enactment of this section has a negative impact on the
income and balances of such trust funds, the Secretary
shall transfer, not less frequently than quarterly,
from the general revenues of the Federal Government an
amount sufficient so as to ensure that the income and
balances of such trust funds are not reduced as a
result of the enactment of this section.
(e) Clerical Amendment.--The table of sections for subpart B of
part II of subchapter A of chapter 61 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 6013
the following:
``Sec. 6013A. Combined return with
separate rates.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
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