S 3412 – The ‘Middle Class Tax Cut Act’

S 3412

ES

112th CONGRESS

2d Session

S. 3412

To amend the Internal Revenue Code of 1986 to provide tax relief to middle-class families.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) Short Title- This Act may be cited as the ‘Middle Class Tax Cut Act’.

(b) 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.

(c) 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–ALTERNATIVE MINIMUM TAX RELIEF

Sec. 201. Temporary extension of increased alternative minimum tax exemption amount.

Sec. 202. Temporary extension of alternative minimum tax relief for nonrefundable personal credits.

TITLE III–BUDGETARY EFFECTS

Sec. 301. Budgetary effects.

TITLE I–TEMPORARY EXTENSION OF TAX RELIEF

SEC. 101. TEMPORARY EXTENSION OF 2001 TAX RELIEF.

(a) Temporary Extension-

(1) IN GENERAL- Section 901(a)(1) of the Economic Growth and Tax Relief Reconciliation Act of 2001 is amended by striking ‘December 31, 2012’ and inserting ‘December 31, 2013’.

(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) Application to Certain High-Income Taxpayers-

(1) INCOME TAX RATES-

(A) TREATMENT OF 25- AND 28-PERCENT RATE BRACKETS- Paragraph (2) of section 1(i) is amended to read as follows:

‘(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.’.

 

(B) 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:

‘(3) 33-percent RATE BRACKET-

 

‘(A) IN GENERAL- In the case of taxable years beginning after December 31, 2012–

 

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

 

‘(ii) $225,000 in the case of subsection (b),

 

‘(iii) $200,000 in the case of subsections (c), and

 

‘(iv) 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, 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’.’.

(2) PHASEOUT OF PERSONAL EXEMPTIONS AND ITEMIZED DEDUCTIONS-

(A) OVERALL LIMITATION ON ITEMIZED DEDUCTIONS- Section 68 is amended–

(i) 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)’,

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

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

(iv) by striking subsections (f) and (g).

(B) PHASEOUT OF DEDUCTIONS FOR PERSONAL EXEMPTIONS-

(i) IN GENERAL- Paragraph (3) of section 151(d) 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).

(ii) CONFORMING AMENDMENTS- Paragraph (4) of section 151(d) 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) Effective Date- Except as otherwise provided, the amendments made by this section shall apply to taxable years beginning after December 31, 2012.

(d) 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.

SEC. 102. TEMPORARY EXTENSION OF 2003 TAX RELIEF.

(a) Extension-

(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, 2013’.

(2) 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.

(b) 20-Percent Capital Gains Rate for Certain High Income Individuals-

(1) 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:

‘(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 paragraph) be taxed at a rate below 36 percent, over

 

‘(II) the sum of the amounts on which a 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) 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:

‘(C) 15 percent of the lesser of–

 

‘(i) 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

 

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

 

‘(D) 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’.

(c) Conforming Amendments-

(1) The following provisions are each amended by striking ‘15 percent’ and inserting ‘20 percent’:

(A) Section 531.

(B) Section 541.

(C) Section 1445(e)(1).

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

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

(2) 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’.

(3) 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’.

(d) Effective Dates-

(1) IN GENERAL- Except as otherwise provided, the amendments made by subsections (b) and (c) shall apply to taxable years beginning after December 31, 2012.

(2) WITHHOLDING- The amendments made by paragraphs (1)(C) and (3) of subsection (c) shall apply to amounts paid on or after January 1, 2013.

(e) 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.

SEC. 103. TEMPORARY EXTENSION OF 2010 TAX RELIEF.

(a) American Opportunity Tax Credit-

(1) IN GENERAL- Section 25A(i) is amended by striking ‘or 2012’ and inserting ‘2012, or 2013’.

(2) 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’.

(b) Child Tax Credit- Section 24(d)(4) is amended–

(1) by striking ‘AND 2012’ in the heading and inserting ‘2012, AND 2013’, and

(2) by striking ‘or 2012’ and inserting ‘2012, or 2013’.

(c) Earned Income Tax Credit- Section 32(b)(3) is amended–

(1) by striking ‘AND 2012’ in the heading and inserting ‘2012, AND 2013’, and

(2) by striking ‘or 2012’ and inserting ‘2012, or 2013’.

(d) 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’.

(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, 2012.

(2) RULE DISREGARDING REFUNDS IN THE ADMINISTRATION OF CERTAIN PROGRAMS- The amendment made by subsection (d) shall apply to amounts received after December 31, 2012.

SEC. 104. TEMPORARY EXTENSION OF ELECTION TO EXPENSE CERTAIN DEPRECIABLE BUSINESS ASSETS.

(a) In General-

(1) DOLLAR LIMITATION- Section 179(b)(1) is amended–

(A) by striking ‘and’ at the end of subparagraph (C),

(B) by redesignating subparagraph (D) as subparagraph (E),

(C) by inserting after subparagraph (C) the following new subparagraph:

‘(D) $250,000 in the case of taxable years beginning in 2013, and’, and

 

(D) in subparagraph (E), as so redesignated, by striking ‘2012’ and inserting ‘2013’.

(2) REDUCTION IN LIMITATION- Section 179(b)(2) is amended–

(A) by striking ‘and’ at the end of subparagraph (C),

(B) by redesignating subparagraph (D) as subparagraph (E),

(C) by inserting after subparagraph (C) the following new subparagraph:

‘(D) $800,000 in the case of taxable years beginning in 2013, and’, and

 

(D) in subparagraph (E), as so redesignated, by striking ‘2012’ and inserting ‘2013’.

(b) Computer Software- Section 179(d)(1)(A)(ii) is amended by striking ‘2013’ and inserting ‘2014’.

(c) Election- Section 179(c)(2) is amended by striking ‘2013’ and inserting ‘2014’.

(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2012.

TITLE II–ALTERNATIVE MINIMUM TAX RELIEF

SEC. 201. TEMPORARY EXTENSION OF INCREASED ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNT.

(a) In General- Paragraph (1) of section 55(d) is amended–

(1) 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

(2) 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’.

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2011.

SEC. 202. TEMPORARY EXTENSION OF ALTERNATIVE MINIMUM TAX RELIEF FOR NONREFUNDABLE PERSONAL CREDITS.

(a) In General- Paragraph (2) of section 26(a) is amended–

(1) by striking ‘or 2011’ and inserting ‘2011, or 2012’, and

(2) by striking ‘2011’ in the heading thereof and inserting ‘2012’.

(b) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2011.

TITLE III–BUDGETARY EFFECTS

SEC. 301. BUDGETARY EFFECTS.

(a) 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.

(b) 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).

Calendar No. 467

Passed the Senate July 25, 2012.

112th CONGRESS

2d Session

S. 3412

AN ACT

To amend the Internal Revenue Code of 1986 to provide tax relief to middle-class families.