H. Rept. 106-765 - 106th Congress (1999-2000)
July 19, 2000

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House Report 106-765 - MARRIAGE TAX RELIEF RECONCILIATION ACT OF 2000




[House Report 106-765]
[From the U.S. Government Printing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-765

======================================================================



 
             MARRIAGE TAX RELIEF RECONCILIATION ACT OF 2000

                                _______
                                

                 July 19, 2000.--Ordered to be printed

                                _______
                                

 Mr. Archer, from the committee of conference, submitted the following

                           CONFERENCE REPORT

                        [To accompany H.R. 4810]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendment of the Senate to the bill (H.R. 
4810), to provide for reconciliation pursuant to section 
103(a)(1) of the concurrent resolution on the budget for fiscal 
year 2001, having met, after full and free conference, have 
agreed to recommend and do recommend to their respective Houses 
as follows:
      That the House recede from its disagreement to the 
amendment of the Senate and agree to the same with an amendment 
as follows:
      In lieu of the matter proposed to be inserted by the 
Senate amendment, insert the following:

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Marriage 
Tax Relief Reconciliation Act of 2000''.
    (b) Section 15 Not To Apply.--No amendment made by this Act 
shall be treated as a change in a rate of tax for purposes of 
section 15 of the Internal Revenue Code of 1986.

SEC. 2. ELIMINATION OF MARRIAGE PENALTY IN STANDARD DEDUCTION.

    (a) In General.--Paragraph (2) of section 63(c) of the 
Internal Revenue Code of 1986 (relating to standard deduction) 
is amended--
            (1) by striking ``$5,000'' in subparagraph (A) and 
        inserting ``200 percent of the dollar amount in effect 
        under subparagraph (C) for the taxable year'',
            (2) by adding ``or'' at the end of subparagraph 
        (B),
            (3) by striking ``in the case of'' and all that 
        follows in subparagraph (C) and inserting ``in any 
        other case.'', and
            (4) by striking subparagraph (D).
    (b) Technical Amendments.--
            (1) Subparagraph (B) of section 1(f)(6) of such 
        Code is amended by striking ``(other than with'' and 
        all that follows through ``shall be applied'' and 
        inserting ``(other than with respect to sections 
        63(c)(4) and 151(d)(4)(A)) shall be applied''.
            (2) Paragraph (4) of section 63(c) of such Code is 
        amended by adding at the end the following flush 
        sentence:
        ``The preceding sentence shall not apply to the amount 
        referred to in paragraph (2)(A).''.
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999.

SEC. 3. PHASEOUT OF MARRIAGE PENALTY IN 15-PERCENT BRACKET.

    (a) In General.--Subsection (f) of section 1 of the 
Internal Revenue Code of 1986 (relating to adjustments in tax 
tables so that inflation will not result in tax increases) is 
amended by adding at the end the following new paragraph:
            ``(8) Phaseout of marriage penalty in 15-percent 
        bracket.--
                    ``(A) In general.--With respect to taxable 
                years beginning after December 31, 1999, in 
                prescribing the tables under paragraph (1)--
                            ``(i) the maximum taxable income in 
                        the lowest rate bracket in the table 
                        contained in subsection (a) (and the 
                        minimumtaxable income in the next 
higher taxable income bracket in such table) shall be the applicable 
percentage of the maximum taxable income in the lowest rate bracket in 
the table contained in subsection (c) (after any other adjustment under 
this subsection), and
                            ``(ii) the comparable taxable 
                        income amounts in the table contained 
                        in subsection (d) shall be \1/2\ of the 
                        amounts determined under clause (i).
                    ``(B) Applicable percentage.--For purposes 
                of subparagraph (A), the applicable percentage 
                shall be determined in accordance with the 
                following table:

        ``For taxable years beginning                     The applicable
          in calendar year--                             percentage is--
            2000..............................................      170 
            2001..............................................      173 
            2002..............................................      178 
            2003..............................................      183 
            2004 and thereafter...............................     200. 

                    ``(C) Rounding.--If any amount determined 
                under subparagraph (A)(i) is not a multiple of 
                $50, such amount shall be rounded to the next 
                lowest multiple of $50.''.
    (b) Technical Amendments.--
            (1) Subparagraph (A) of section 1(f)(2) of such 
        Code is amended by inserting ``except as provided in 
        paragraph (8),'' before ``by increasing''.
            (2) The heading for subsection (f) of section 1 of 
        such Code is amended by inserting ``Phaseout of 
        Marriage Penalty in 15-Percent Bracket;'' before 
        ``Adjustments''.
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999.

SEC. 4. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

    (a) In General.--Paragraph (2) of section 32(b) of the 
Internal Revenue Code of 1986 (relating to percentages and 
amounts) is amended--
            (1) by striking ``Amounts.--The earned'' and 
        inserting ``Amounts.--
                    ``(A) In general.--Subject to subparagraph 
                (B), the earned'', and
            (2) by adding at the end the following new 
        subparagraph:
                    ``(B) Joint returns.--In the case of a 
                joint return, the phaseout amount determined 
                under subparagraph (A) shall be increased by 
                $2,000.''.
    (b) Inflation Adjustment.--Paragraph (1)(B) of section 
32(j) of such Code (relating to inflation adjustments) is 
amended to read as follows:
                    ``(B) the cost-of-living adjustment 
                determined under section 1(f)(3) for the 
                calendar year in which the taxable year begins, 
                determined--
                            ``(i) in the case of amounts in 
                        subsections (b)(2)(A) and (i)(1), by 
                        substituting `calendar year 1995' for 
                        `calendar year 1992' in subparagraph 
                        (B) of section 1(f)(3), and
                            ``(ii) in the case of the $2,000 
                        amount in subsection (b)(2)(B), by 
                        substituting `calendar year 1999' for 
                        `calendar year 1992' in subparagraph 
                        (B) of section 1(f)(3).''.
    (c) Rounding.--Section 32(j)(2)(A) of such Code (relating 
to rounding) is amended by striking ``subsection (b)(2)'' and 
inserting ``subparagraph (A) of subsection (b)(2) (after being 
increased under subparagraph (B) thereof)''.
    (d) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999.

SEC. 5. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR AND 
                    MINIMUM TAX LIABILITY.

    (a) In General.--Subsection (a) of section 26 of the 
Internal Revenue Code of 1986 (relating to limitation based on 
tax liability; definition of tax liability) is amended to read 
as follows:
    ``(a) Limitation Based on Amount of Tax.--The aggregate 
amount of credits allowed by this subpart for the taxable year 
shall not exceed the sum of--
            ``(1) the taxpayer's regular tax liability for the 
        taxable year reduced by the foreign tax credit 
        allowable under section 27(a), and
            ``(2) the tax imposed for the taxable year by 
        section 55(a).''.
    (b) Conforming Amendments.--
            (1) Subsection (d) of section 24 of such Code is 
        amended by striking paragraph (2) and by redesignating 
        paragraph (3) as paragraph (2).
            (2) Section 32 of such Code is amended by striking 
        subsection (h).
            (3) Section 904 of such Code is amended by striking 
        subsection (h) and by redesignating subsections (i), 
        (j), and (k) as subsections (h), (i), and (j), 
        respectively.
    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001.

SEC. 6. ESTIMATED TAX.

    The amendments made by this Act shall not be taken into 
account under section 6654 of the Internal Revenue Code of 1986 
(relating to failure to pay estimated tax) in determining the 
amount of any installment required to be paid before October 1, 
2000.

SEC. 7. COMPLIANCE WITH BUDGET ACT.

    (a) In General.--Except as provided in subsection (b), all 
amendments made by this Act which are in effect on September 
30, 2005, shall cease to apply as of the close of September 30, 
2005.
    (b) Sunset for Certain Provisions Absent Subsequent 
Legislation.--The amendments made by sections 2, 3, 4, and 5 of 
this Act shall not apply to any taxable year beginning after 
December 31, 2004.
    And the Senate agree to the same.

                                   Bill Archer,
                                   Dick Armey,
                                 Managers on the Part of the House.

                                   Bill Roth,
                                   Trent Lott,
                                Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

      The managers on the part of the House and the Senate at 
the conference on the disagreeing votes of the two Houses on 
the amendment of the Senate to the bill (H.R. 4810), to provide 
for reconciliation pursuant to section 103(a)(1) of the 
concurrent resolution on the budget for fiscal year 2001, 
submit the following joint statement to the House and the 
Senate in explanation of the effect of the action agreed upon 
by the managers and recommended in the accompanying conference 
report:
      The Senate amendment struck all of the House bill after 
the enacting clause and inserted a substitute text.
      The House recedes from its disagreement to the amendment 
of the Senate with an amendment that is a substitute for the 
House bill and the Senate amendment. The differences between 
the House bill, the Senate amendment, and the substitute agreed 
to in conference are noted below, except for clerical 
corrections, conforming changes made necessary by agreements 
reached by the conferees, and minor drafting and clerical 
changes.

                       I. EXPLANATION OF THE BILL

 A. Standard Deduction Tax Relief (Sec. 2 of the House Bill, Sec. 2 of 
             the Senate Amendment, and Sec. 63 of the Code)

                              present law

Marriage penalty
      A married couple generally is treated as one tax unit 
that must pay tax on the couple's total taxable income. 
Although married couples may elect to file separate returns, 
the rate schedules and other provisions are structured so that 
filing separate returns usually results in a higher tax than 
filing a joint return. Other rate schedules apply to single 
individuals and to single heads of households.
      A ``marriage penalty'' exists when the combined tax 
liability of a married couple filing a joint return is greater 
than the sum of the tax liabilities of each individual computed 
as if they were not married. A ``marriage bonus'' exists when 
the combined tax liability of a married couple filing a joint 
return is less than the sum of the tax liabilities of each 
individual computed as if they were not married.
      While the size of any marriage penalty or bonus under 
present law depends upon the individuals' incomes, number of 
dependents, and itemized deductions, as a general rule married 
couples whose incomes are split more evenly than 70-30 suffer a 
marriage penalty. Married couples whose incomes are largely 
attributable to one spouse generally receive a marriage bonus.
      Under present law, the amount of the standard deduction 
and the tax bracket breakpoints follow certain customary ratios 
across filing statuses. The standard deduction and tax bracket 
breakpoints for single individuals are roughly 60 percent of 
those for married couples filing joint returns.\1\ Thus, the 
sum of the standard deductions for two single individuals 
exceeds the standard deduction for a married couple filing a 
joint return.
---------------------------------------------------------------------------
    \1\ The beginning point of the 39.6 percent rate bracket is the 
same for all taxpayers regardless of filing status.
---------------------------------------------------------------------------
Basic standard deduction
      Taxpayers who do not itemize deductions may choose the 
basic standard deduction (and additional standard deductions, 
if applicable),\2\ which is subtracted from adjusted gross 
income (``AGI'') in arriving at taxable income. The amount of 
the basic standard deduction varies according to filing status 
and is indexed for inflation. For 2000, the amount of the basic 
standard deduction for each filing status is shown in the 
following table:
---------------------------------------------------------------------------
    \2\ Additional standard deductions are allowed with respect to any 
individual who is elderly (age 65 or over) or blind.
---------------------------------------------------------------------------

Table 1.--Basic standard deduction amounts

                                                                   Basic
        Filing status                                 standard deduction
Married, joint return.........................................    $7,350
Head of household return......................................     6,450
Single return.................................................     4,400
Married, separate return......................................     3,675

      For 2000, the basic standard deduction for joint returns 
is 1.67 times the basic standard deduction for single returns.

                               House Bill

      The House bill increases the basic standard deduction for 
a married couple filing a joint return to twice the basic 
standard deduction for a single individual. The basic standard 
deduction for a married taxpayer filing a separate return will 
continue to equal one-half of the basic standard deduction for 
a married couple filing a joint return.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2000.

                            Senate Amendment

      The Senate amendment is the same as the House bill.

                          Conference Agreement

      The conference agreement follows the House bill and the 
Senate amendment, with the modification that the provision is 
effective for taxable years beginning after December 31, 1999. 
The agreement further provides that the provision cannot be 
taken into account for estimated tax purposes prior to October 
1, 2000.

B. Expansion of the 15-Percent and 28-Percent Rate Brackets (Sec. 3(a) 
of the House Bill, Sec. 3(a) of the Senate Amendment, and Sec. 1 of the 
                                 Code)

                              Present Law

Rate brackets
      To determine regular income tax liability, a taxpayer 
generally must apply the tax rate schedules (or the tax tables) 
to his or her taxable income. The rate schedules are broken 
into several ranges of income, known as income brackets, and 
the marginal tax rate increases as a taxpayer's income 
increases. The income bracket amounts are indexed for 
inflation. Separate rate schedules apply based on an 
individual's filing status. In order to limit multiple uses of 
a graduated rate schedule within a family, the net unearned 
income of a child under age 14 may be taxed as if it were the 
parent's income. For 2000, the individual regular income tax 
rate schedules are shown below. These rates apply to ordinary 
income; separate rates apply to capital gains.

         Table 2.--Federal individual income tax rates for 2000

          If taxable income is:               Then income tax equals:

                           Single individuals

$0-$26,250...............................  15 percent of taxable income.
$26,250-$63,550..........................  $3,937.50, plus 28% of the
                                            amount over $26,250.
$63,550-$132,600.........................  $14,381.50 plus 31% of the
                                            amount over $63,550.
$132,600-$288,350........................  $35,787 plus 36% of the
                                            amount over $132,600.
Over $288,350............................  $91,857 plus 39.6% of the
                                            amount over $288,350.

                           Heads of households

$0-$35,150...............................  15 percent of taxable income.
$35,150-$90,800..........................  $5,272.50 plus 28% of the
                                            amount over $35,150.
$90,800-$147,050.........................  $20,854.50 plus 31% of the
                                            amount over $90,800.
$147,050-$288,350........................  $38,292 plus 36% of the
                                            amount over $147,050.
Over $288,350............................  $89,160 plus 39.6% of the
                                            amount over $288,350.

              Married individuals filing joint returns \1\

$0-$43,850...............................  15 percent of taxable income.
$43,850-$105,950.........................  $6,577.50 plus 28% of the
                                            amount over $43,850.
$105,950-$161,450........................  $23,965.50 plus 31% of the
                                            amount over $105,950.
$161,450-$288,350........................  $41,170.40 plus 36% of the
                                            amount over $161,450.
Over $288,350............................  $86,854.50 plus 39% of the
                                            amount over $288,350.


\1\ Married individuals filing separate returns must apply a separate
  rate structure with tax rate brackets one-half the width of those for
  married individuals filing joint returns.

                               house bill

      The House bill increases the size of the 15-percent 
regular income tax rate bracket for a married couple filing a 
joint return to twice the size of the corresponding rate 
bracket for a single individual. This increase is phased in 
over six years as shown in the following table. Therefore, this 
provision is fully effective (i.e., the size of the 15-percent 
regular income tax rate bracket for a married couple filing a 
joint return will be twice the size of the 15-percent regular 
income tax rate bracket for a single individual) for taxable 
years beginning after December 31, 2007.
                    Joint return 15-percent rate bracket as a percentage 
                                             of single return 15-percent
        Taxable year                                        rate bracket
2003..........................................................     170.3
2004..........................................................     173.8
2005..........................................................     183.5
2006..........................................................     184.3
2007..........................................................     187.9
2008 and thereafter...........................................     200.0

      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2002.

                            senate amendment

      The Senate amendment increases the size of the 15-percent 
and 28-percent regular income tax rate brackets for a married 
couple filing a joint return to twice the size of the 
corresponding rate brackets for a single individual. This 
increase is phased in over six years as shown in the following 
table. The Senate amendment is fully effective (i.e., the size 
of the 15-percent and 28-percent regular income tax rate 
brackets for a married couple filing a joint return is twice 
the size of the corresponding regular income tax rate brackets 
for a single individual) for taxable years beginning after 
December 31, 2006.
                    Joint return 15-percent and 28-percent rate bracket 
                     as a percentage of single return 15- and 28-percent
        Taxable year                                        rate bracket
2002..........................................................     170.3
2003..........................................................     173.8
2004..........................................................     180.0
2005..........................................................     183.2
2006..........................................................     185.0
2007 and thereafter...........................................     200.0

      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2001.

                          conference agreement

      The conference agreement follows the House bill, but with 
a different phase-in, as described in the following table:
                    Joint return 15-percent rate bracket as a percentage 
                                             of single return 15-percent
        Taxable year                                        rate bracket
2000..........................................................     170.0
2001..........................................................     173.0
2002..........................................................     178.0
2003..........................................................     183.0
2004 and thereafter...........................................     200.0

      The agreement further provides that the provision cannot 
be taken into account for estimated tax purposes prior to 
October 1, 2000.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 1999.

  C. Allowance of Nonrefundable Personal Credits Against Regular and 
   Minimum Tax Liability (Sec. 3(b) of the House Bill, Sec. 5 of the 
         Senate Amendment, and Secs. 24, 26, and 32 of the Code

                              present Law

Allow nonrefundable personal credits to offset both the regular tax and 
        the alternative minimum tax
      Present law provides for certain nonrefundable personal 
tax credits (i.e., the dependent care credit, the credit for 
the elderly and disabled, the adoption credit, the child 
credit, the credit for interest on certain home mortgages, the 
HOPE Scholarship and Lifetime Learning credits, and the D.C. 
homebuyer's credit). Except for taxable years beginning during 
1998-2001, these credits are allowed only to the extent that 
the individual's regular income tax liability exceeds the 
individual's tentative minimum tax, determined without regard 
to the minimum tax foreign tax credit. For taxable years 
beginning during 1998 and 1999, these credits are allowed to 
the extent of the full amount of the individual's regular tax 
(without regard to the tentative minimum tax). For taxable 
years beginning during 2000 and 2001, the nonrefundable 
personal credits may offset both the regular tax and the 
minimum tax.\3\
---------------------------------------------------------------------------
    \3\ The foreign tax credit is allowed before the personal credits 
in computing the regular tax for these years.
---------------------------------------------------------------------------
      An individual's tentative minimum tax is an amount equal 
to (1) 26 percent of the first $175,000 ($87,500 in the case of 
a married individual filing a separate return) of alternative 
minimum taxable income (``AMTI'') in excess of a phased-out 
exemption amount plus (2) 28 percent of the remaining AMTI, if 
any. The maximum tax rates on net capital gain used in 
computing the tentative minimum tax are the same as under the 
regular tax. AMTI is the individual's taxable income adjusted 
to take account of specified preferences and adjustments. The 
exemption amounts are: (1) $45,000 in the case of married 
individuals filing a joint return and surviving spouses; (2) 
$33,750 in the case of other individuals; and (3) $22,500 in 
the case of married individuals filing a separate return, 
estates and trusts. The exemption amounts are phased out by an 
amount equal to 25 percent of the amount by which the 
individual's AMTI exceeds (1) $150,000 in the case of married 
individuals filing a joint return and surviving spouses, (2) 
$112,500 in the case of other unmarried individuals, and (3) 
$75,000 in the case of married individuals filing separate 
returns or an estate or a trust. These amounts are not indexed 
for inflation.
Reduction of refundable credits by alternative minimum tax
      Refundable credits may offset tax liability determined 
under present-law tax rates and allow refunds to an individual 
in excess of income tax liability. However, the refundable 
child credit (beginning in taxable years beginning after 
December 31, 2001) and the earned income credit are reduced by 
the amount of the individual's alternative minimum tax.

                               House Bill

Allow nonrefundable personal credits to offset both the regular tax and 
        the alternative minimum tax
      No provision.
Reduction of refundable credits by alternative minimum tax
      The House bill repeals the provisions that reduce the 
refundable child credit and the earned income credit by the 
amount of the individual's alternative minimum tax.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2001.

                            Senate Amendment

Allow nonrefundable personal credits to offset both the regular tax and 
        the alternative minimum tax
      The Senate amendment permanently extends the present-law 
temporary provision that allows the nonrefundable personal 
credits to offset both the regular tax and the minimum tax.\4\
---------------------------------------------------------------------------
    \4\ The foreign tax credit will continue to be allowed before the 
personal credits in computing the regular tax.
---------------------------------------------------------------------------
Reduction of refundable credits by alternative minimum tax
      The Senate amendment is the same as the House bill.
Effective date
      The provisions are effective for taxable years beginning 
after December 31, 2001.

                          Conference Agreement

Allow nonrefundable personal credits to offset both the regular tax and 
        the alternative minimum tax
      The conference agreement follows the Senate amendment.
Reduction of refundable credits by alternative minimum tax
      The conference agreement follows the House bill and the 
Senate amendment.

D. Marriage Tax Relief Relating to the Earned Income Credit (Sec. 4 of 
  the House Bill, Sec. 4 of the Senate Amendment, and Sec. 32 of the 
                                 Code)

                              present law

      Certain eligible low-income workers are entitled to claim 
a refundable earned income credit (``EIC'') on their income tax 
returns.\5\ The amount of the EIC an eligible individual may 
claim depends upon whether the individual has one, more than 
one, or no qualifying children, and is determined by 
multiplying the applicable credit rate by the individual's 
earned income up to an earned income amount. The maximum amount 
of the credit is the product of the credit rate and the earned 
income amount. The credit is phased out above certain income 
levels. For individuals with earned income (or modified AGI, if 
greater) in excess of the beginning of the phase-out range, the 
maximum credit amount is reduced by the phase-out rate 
multiplied by earned income (or modified AGI, if greater) in 
excess of the beginning of the phase-out range. For individuals 
with earned income (or modified AGI, if greater) in excess of 
the end of the phase-out range, no credit is allowed. In the 
case of a married individual who files a joint return, income 
for purposes of these tests is the combined income of the 
couple.
---------------------------------------------------------------------------
    \5\ A refundable credit is a credit that not only reduces an 
individual's tax liability but also allows refunds to the individual of 
amounts in excess of income tax liability.
---------------------------------------------------------------------------
      The parameters of the EIC for 2000 are provided in the 
following table:

            TABLE 3.--EARNED INCOME CREDIT PARAMETERS (2000)
------------------------------------------------------------------------
                                   Two or more      One           No
                                    qualifying   qualifying   qualifying
                                     children      child       children
------------------------------------------------------------------------
Credit rate (percent)............        40.00        34.00         7.65
Earned income amount.............       $9,720       $6,920       $4,610
Maximum credit...................       $3,888       $2,353         $353
Phase-out begins.................      $12,690      $12,690       $5,770
Phase-out rate (percent).........        21.06        15.98         7.65
Phase-out ends...................      $31,152      $27,413      $10,380
------------------------------------------------------------------------

                               house bill

      The House bill increases the beginning point of the 
phase-out range of the EIC for married couples filing a joint 
return by $2,000. Because the rate of the phase-out range is 
not changed by the House bill, the endpoint of the phase-out 
range is also increased by $2,000. The effect of the increase 
in the beginning of the phase-out range is to increase the EIC 
for taxpayers in the phase-out range by an amount up to $2,000 
times the phase-out rate. For example, for couples with two or 
more qualifying children, the maximum increase in the EIC as a 
result of the provision will be $2,000 multiplied by 21.06 
percent, or $421.20. The House bill also expands the number of 
married couples eligible for the EIC. Specifically, the $2,000 
increase in the end of the phase-out range will make married 
couples with earnings up to $2,000 beyond the present-law 
phase-out range eligible for the credit. The beginning and 
ending points of the phase-outrange of the EIC (including the 
$2,000 increase for joint returns) will continue to be indexed for 
inflation, as under present law.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2000.

                            Senate Amendment

      The Senate amendment is the same as the House bill except 
that the Senate amendment increases the beginning and ending 
income levels of the phase-out of the EIC for married couples 
filing a joint return by $2,500 rather than by $2,000.
      Effective date.--The provision is effective for taxable 
years beginning after December 31, 2000.

                          Conference Agreement

      The conference agreement follows the House bill, with the 
modification that the provision is effective for taxable years 
beginning after December 31, 1999. The agreement further 
provides that the provision cannot be taken into account for 
estimated tax purposes prior to October 1, 2000.

   E. Compliance with Congressional Budget Act (Sec. 6 of the Senate 
                               amendment)

                              Present Law

      Reconciliation is a procedure under the Congressional 
Budget Act of 1974 (``the Budget Act'') by which Congress 
implements spending and tax policies contained in a budget 
resolution. The Budget Act contains rules defining the scope of 
items permitted to be considered under the budget 
reconciliation process. One such rule, the so-called ``Byrd 
rule,'' was incorporated into the Budget Act in 1990. The Byrd 
rule, named after its principal sponsor, Senator Robert C. 
Byrd, is contained in section 313 of the Budget Act. The Byrd 
rule is generally interpreted to permit Members to make a 
motion to strike extraneous provisions (those which are 
unrelated to the deficit reduction goals of the reconciliation 
process) from either a budget reconciliation bill or a 
conference report on such a bill.
      Under the Byrd rule, a provision is considered to be 
extraneous if it falls under one or more of the following six 
definitions:
            (1) it does not produce a change in outlays or 
        revenues;
            (2) it produces an outlay increase or revenue 
        decrease when the instructed committee is not in 
        compliance with its instructions;
            (3) it is outside of the jurisdiction of the 
        committee that submitted the title or provision for 
        inclusion in the reconciliation measure;
            (4) it produces a change in outlays or revenues 
        which is merely incidental to the non-budgetary 
        components of the provision;
            (5) it would increase the deficit for a fiscal year 
        beyond those covered by the reconciliation measure; and
            (6) it recommends changes in Social Security.

                               House Bill

      No provision.

                            Senate Amendment

      To ensure compliance with the Budget Act, the provision 
provides that all provisions of, and amendments made by, the 
Senate amendment shall cease to apply for taxable years 
beginning after December 31, 2004.
      Effective date.--The provision is effective on date of 
enactment.

                          Conference Agreement

      The conference agreement follows the Senate amendment.

                        II. COMPLEXITY ANALYSIS

      The following tax complexity analysis is provided 
pursuant to section 4022(b) of the Internal Revenue Service 
Reform and Restructuring Act of 1998, which requires the staff 
of the Joint Committee on Taxation (in consultation with the 
Internal Revenue Service (``IRS'') and the Treasury Department) 
to provide a complexity analysis of tax legislation reported by 
the House Committee on Ways and Means, the Senate Committee on 
Finance, or a Conference Report containing tax provisions. The 
complexity analysis is required to report on the complexity and 
administrative issues raised by provisions that directly or 
indirectly amend the Internal Revenue Code and that have 
widespread applicability to individuals or small businesses. 
For each such provision identified by the staff of the Joint 
Committee on Taxation, a summary description of the provision 
is provided, along with an estimate of the number and the type 
of affected taxpayers, and a discussion regarding the relevant 
complexity and administrative issues. Time constraints 
prevented the staff of the Joint Committee on Taxation from 
consulting with the IRS regarding the provisions in the 
conference agreement that have widespread applicability.
1. Standard deduction tax relief (sec. 2 of the conference agreement)
Summary description of provision
      For taxable years beginning after December 31, 1999, the 
bill phases in an increase in the basic standard deduction for 
a married couple filing a joint return until it is twice the 
basic standard deduction for a single individual.
Number of affected taxpayers
      It is estimated that the provision will affect 
approximately 25 million individual tax returns.
Discussion
      It is not anticipated that individuals will need to keep 
additional records due to this provision. The higher basic 
standard deduction should not result in an increase in disputes 
with the IRS, nor will regulatory guidance be necessary to 
implement this provision. In addition, the provision should not 
increase individuals' tax preparation costs.
      Some taxpayers who currently itemize deductions may 
respond to the provision by claiming the increased standard 
deduction in lieu of itemizing. According to estimates by the 
staff of the Joint Committee on Taxation, approximately three 
million individual tax returns will realize greater tax savings 
from the increased standard deduction than from itemizing their 
deductions. In addition to the tax savings, such taxpayers will 
no longer have to file Schedule A to Form 1040 or need to 
engage in the record keeping inherent in itemizing below-the-
line deductions. Moreover, by claiming the standard deduction, 
such taxpayers may qualify to use simpler versions of the Form 
1040 (i.e., Form 1040EZ or Form 1040A) that are not available 
to individuals who itemize their deductions. These forms 
simplify the return preparation process by eliminating from the 
Form 1040 those items that do not apply to a particular 
taxpayer.
      This reduction in complexity and record keeping may also 
result in a decline in the number of individuals using a tax 
preparation service (or a decline in the cost of using such a 
service). Furthermore, if the provision results in a taxpayer 
qualifying to use one of the simpler versions of the Form 1040, 
the taxpayer may be eligible to file a paperless Federal tax 
return by telephone. The provision also should reduce the 
number of disputes between taxpayers and the IRS regarding 
substantiation of itemized deductions.
2. Expansion of the 15-percent rate bracket for married couples filing 
        a joint return (sec. 3 of the conference agreement)
Summary description of provision
      The provision increases the size of the 15-percent 
regular income tax rate bracket for married couples filing a 
joint return to twice the size of the corresponding rate 
brackets for a single individual. This increase is phased in 
over five years beginning for taxable years beginning after 
December 31, 1999. It is fully effective for taxable years 
beginning after December 31, 2003.
Number of affected taxpayers
      It is estimated that the provision will affect 
approximately 21 million individual tax returns.
Discussion
      It is not anticipated that individuals will need to keep 
additional records due to this provision. The increased size of 
the 15-percent regular income tax rate bracket for married 
couples filing joint returns should not result in an increase 
in disputes with the IRS, nor will regulatory guidance be 
necessary to implement this provision.
3. Interactive effect of the alternative minimum tax rules
      Both provisions (i.e., the standard deduction tax relief 
and the expanded 15-percent rate bracket) are affected by the 
alternative minimum tax (``AMT'') rules. Specifically, because 
neither provision makes corresponding changes to the 
alternative minimum tax regime other than the allowance of the 
nonrefundable personal credits against the AMT, additional 
individual taxpayers will need to make the necessary 
calculations to determine the applicability of the alternative 
minimum tax rules. It is estimated that for the year 2005, less 
than two million additional individual income tax returns with 
a benefit from the provisions will be required to include a 
calculation of the tentative minimum tax and file the 
appropriate alternative minimum tax forms. By the year 2009, 
this number is expected to rise to over seven million 
additional individual income tax returns. At the same time, 
however, by 2009, there will be approximately two million 
individual income tax returns that will be relieved of the 
burden of the AMT calculations by virtue of the extension of 
the nonrefundable personal credits against the AMT.
      For taxpayers who have to calculate the tentative minimum 
tax and file the appropriate alternative minimum tax forms, it 
could be expected that the interaction of the provisions with 
the alternative minimum tax rules would result in an increase 
in tax preparation costs and in the number of individuals using 
a tax preparation service.
4. Sunset (sec. 7 of the conference agreement)

Summary description of provision
      The provision sunsets the provisions and amendments made 
by the bill for taxable years beginning after December 31, 
2004.
Number of affected taxpayers
      It is estimated that the provision would affect almost 
all individuals affected by the other provisions of the bill.
Discussion
      The provision would reverse any simplification achieved 
under the other provisions of the bill. Specifically, two 
categories of individuals would have additional record keeping 
and tax return filing complexity. First, individuals who, 
because of the bill changes, switch from itemizing deductions 
to using the increased standard deduction would likely revert 
to itemizing deductions when the increased standard deduction 
sunsets. Second, individuals who are relieved of the AMT 
calculations under the bill would be required to make such AMT 
calculations after the sunset. The sunset provision also can be 
expected to result in an increase in the tax preparation cost 
of individuals using a tax preparation service. In addition, 
the provision may require the IRS to issue guidance regarding 
the termination of the tax benefits as a result of the sunset.

                                   ESTIMATED REVENUE EFFECTS OF THE CONFERENCE AGREEMENT FOR H.R. 4810, THE ``MARRIAGE TAX RELIEF RECONCILIATION ACT OF 2000''
                                                                       [Fiscal years 2001-2010 \1\ in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Provision                      Effective             2001       2002       2003       2004       2005       2006       2007       2008       2009       2010     2001-05    2001-10
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1. Standard deduction set at 2     tyba 12/31/99............     -9,873     -6,003     -6,383     -6,523     -1,959  .........  .........  .........  .........  .........    -30,741    -30,741
 times single for married filing
 jointly (sunset 12/31/04).
2. 15% rate bracket set at 2       tyba 12/31/99............     -4,146     -6,361     -9,718    -17,680     -6,277  .........  .........  .........  .........  .........    -44,182    -44,182
 times single for married filing
 jointly; 5-year phasein (sunset
 12/31/04).
3. Extension of AMT treatment of   typa 12/31/01............  .........       -343     -1,876     -2,875     -3,460  .........  .........  .........  .........  .........     -8,554     -8,554
 refundable and nonrefundable
 personal credit (sunset 12/31/
 04).
4. $2,000 increase to the          tyba 12/31/99............     -1,250     -1,281     -1,255     -1,268     -1,287  .........  .........  .........  .........  .........     -6,341     -6,341
 beginning and ending income
 levels for the EIC phaseout for
 married filing jointly (sunset
 12/31/04) \2\.
                                  --------------------------------------------------------------------------------------------------------------------------------------------------------------
      Net Total..................  .........................    -15,269    -13,988    -19,232    -28,346    -12,983  .........  .........  .........  .........  .........    -89,818    -89,818
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The provisions of the bill generally are effective for taxable years beginning after 12/31/99. The bill provides that these provisions can not be taken into account for estimated tax
  purposes before 10/1/00. Accordingly, the provisions result in little to no effect on receipts in fiscal year 2000.
\2\ Estimate includes the following effects on fiscal year outlays: 2001--1,073; 2002--1,109; 2003--1,078; 2004--1,082; 2005--1,097; 2006--....; 2007--....; 2008--....; 2009--....; 2010--....;
  2001-05--5,439; 2001-10--5,439.

Legend for ``Effective'' column: tyba=taxable years beginning after.

Note.--Details may not add to totals due to rounding.
Source: Joint Committee on Taxation.

                                   Bill Archer,
                                   Dick Armey,
                                 Managers on the Part of the House.

                                   Bill Roth,
                                   Trent Lott,
                                Managers on the Part of the Senate.