Home > 105th Congressional Bills > H.R. 3656 (ih) To amend the Internal Revenue Code of 1986 to provide an election of a deduction in lieu of a basis increase where indebtedness secured by property has original issue discount and is held by a cash method taxpayer. ...

H.R. 3656 (ih) To amend the Internal Revenue Code of 1986 to provide an election of a deduction in lieu of a basis increase where indebtedness secured by property has original issue discount and is held by a cash method taxpayer. ...

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  1st Session
                                H. R. 3655

To amend the Internal Revenue Code of 1986 to replace the earned income 
 credit, the child tax credit, and the deduction for dependents with a 
                     simplified family tax credit.



                            December 8, 2003

  Mr. Kucinich (for himself, Ms. Lee, and Mr. Sanders) 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 replace the earned income 
 credit, the child tax credit, and the deduction for dependents with a 
                     simplified family tax credit.

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


    (a) Short Title.--This Act may be cited as the ``Progressive Tax 
Act of 2003''.
    (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.--

Sec. 1. Short title, etc.
                          TITLE I--TAX RELIEF

Sec. 101. Simplified family credit.
Sec. 102. Child support included in gross income of recipient and 
                            allowed as deduction to payor.
Sec. 103. Refundable credit for payroll taxes.

        Subtitle A--Provisions Designed To Curtail Tax Shelters

Sec. 201. Clarification of economic substance doctrine.
Sec. 202. Penalty for failing to disclose reportable transaction.
Sec. 203. Accuracy-related penalty for listed transactions and other 
                            reportable transactions having a 
                            significant tax avoidance purpose.
Sec. 204. Penalty for understatements attributable to transactions 
                            lacking economic substance, etc.
Sec. 205. Modifications of substantial understatement penalty for 
                            nonreportable transactions.
Sec. 206. Tax shelter exception to confidentiality privileges relating 
                            to taxpayer communications.
Sec. 207. Disclosure of reportable transactions.
Sec. 208. Modifications to penalty for failure to register tax 
Sec. 209. Modification of penalty for failure to maintain lists of 
Sec. 210. Modification of actions to enjoin certain conduct related to 
                            tax shelters and reportable transactions.
Sec. 211. Understatement of taxpayer's liability by income tax return 
Sec. 212. Penalty on failure to report interests in foreign financial 
Sec. 213. Frivolous tax submissions.
Sec. 214. Regulation of individuals practicing before the Department of 
Sec. 215. Penalty on promoters of tax shelters.
Sec. 216. Statute of limitations for taxable years for which listed 
                            transactions not reported.
Sec. 217. Denial of deduction for interest on underpayments 
                            attributable to nondisclosed reportable and 
                            noneconomic substance transactions.
                      Subtitle B--Other Provisions

Sec. 221. Limitation on transfer or importation of built-in losses.
Sec. 222. Disallowance of certain partnership loss transfers.
Sec. 223. No reduction of basis under section 734 in stock held by 
                            partnership in corporate partner.
Sec. 224. Repeal of special rules for FASITS.
Sec. 225. Expanded disallowance of deduction for interest on 
                            convertible debt.
Sec. 226. Expanded authority to disallow tax benefits under section 
Sec. 227. Modifications of certain rules relating to controlled foreign 
Sec. 228. Basis for determining loss always reduced by nontaxed portion 
                            of dividends.
Sec. 229. Affirmation of consolidated return regulation authority.

Sec. 301. Modification of individual income tax brackets and rates.
Sec. 302. Repeal of removal of limitations on itemized deductions and 
                            exemption amount.
Sec. 303. Individual capital gains and dividends treated as ordinary 
Sec. 304. Restoration and modifications of estate tax; repeal of 
                            carryover basis.
Sec. 305. Extension of superfund, oil spill liability, and leaking 
                            underground storage tank taxes.
Sec. 306. Limitation on certain business provisions enacted in 2002 and 
Sec. 307. Repeal of exclusion for parking transportation fringe 
Sec. 308. Repeal of certain deductions relating to second homes.

                          TITLE I--TAX RELIEF


    (a) In General.--Section 32 of the Internal Revenue Code of 1986 
(relating to earned income credit) is amended to read as follows:


    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to 50 percent of the 
taxpayer's modified adjusted gross income for the taxable year.
    ``(b) Limitations.--For purposes of subsection (a)--
            ``(1) Limitation based on qualifying children.--The amount 
        of the credit allowable to a taxpayer under paragraph (1) for 
        any taxable year shall not exceed the lesser of--
                    ``(A) $2,000 multiplied by the number of qualifying 
                children of the taxpayer, and
                    ``(B) 50 percent of earned income.
            ``(2) Limitation based on adjusted gross income.--
                    ``(A) In general.--The amount of the credit 
                allowable under subsection (a) shall be reduced (but 
                not below zero) by $50 for each $1,000 (or fraction 
                thereof) by which the taxpayer's modified adjusted 
                gross income exceeds the threshold amount.
                    ``(B) Threshold amount.--For purposes of 
                subparagraph (A), the term `threshold amount' means--
                            ``(i) $150,000 in the case of a joint 
                            ``(ii) $100,000 in the case of an 
                        individual who is not married, and
                            ``(iii) $75,000 in the case of a married 
                        individual filing a separate return.
                For purposes of this paragraph, marital status shall be 
                determined under section 7703.
            ``(3) Limitation on amount of refundable credit.--
                    ``(A) In general.--The amount of the credit allowed 
                under subsection (a) for a taxable year which is 
                allowed under this subpart shall not exceed the earned 
                income of the taxpayer for such year.
                    ``(B) Allowance of remaining amount of credit.--The 
                excess of--
                            ``(i) the amount of the credit allowed 
                        under subsection (a), over
                            ``(ii) the amount of the credit allowed 
                        under this subpart by reason of subparagraph 
                shall be treated as a credit allowed under subpart B 
                for such taxable year and not under this subpart.
    ``(c) Definitions and Special Rules.--For purposes of this 
            ``(1) Eligible individual.--
                    ``(A) In general.--The term `eligible individual' 
                means any individual who has a qualifying child for the 
                taxable year.
                    ``(B) Individual who is qualifying child 
                ineligible.--If an individual is the qualifying child 
                of a taxpayer for any taxable year of such taxpayer 
                beginning in a calendar year, such individual shall not 
                be treated as an eligible individual for any taxable 
                year of such individual beginning in such calendar 
                    ``(C) Exception for individual claiming benefits 
                under section 911.--The term `eligible individual' does 
                not include any individual who claims the benefits of 
                section 911 (relating to citizens or residents living 
                abroad) for the taxable year.
                    ``(D) Limitation on eligibility of nonresident 
                aliens.--The term `eligible individual' shall not 
                include any individual who is a nonresident alien 
                individual for any portion of the taxable year unless 
                such individual is treated for such taxable year as a 
                resident of the United States for purposes of this 
                chapter by reason of an election under subsection (g) 
                or (h) of section 6013.
                    ``(E) Identification number requirement.--No credit 
                shall be allowed under this section to an eligible 
                individual who does not include on the return of tax 
                for the taxable year--
                            ``(i) such individual's taxpayer 
                        identification number, and
                            ``(ii) if the individual is married (within 
                        the meaning of section 7703), the taxpayer 
                        identification number of such individual's 
                    ``(F) Individuals who do not include TIN, etc., of 
                any qualifying child.--No credit shall be allowed under 
                this section to any eligible individual who has one or 
                more qualifying children if no qualifying child of such 
                individual is taken into account under subsection (b) 
                by reason of paragraph (2)(F).
            ``(2) Qualifying child.--
                    ``(A) In general.--The term `qualifying child' 
                means, with respect to any taxpayer for any taxable 
                year, an individual--
                            ``(i) who bears a relationship to the 
                        taxpayer described in subparagraph (B),
                            ``(ii) who has the same principal place of 
                        abode as the taxpayer for more than one-half of 
                        such taxable year (or, in the case of a 
                        student, meets the requirements of subparagraph 
                        (F)), and
                            ``(iii) who meets the age requirements of 
                        subparagraph (C).
                    ``(B) Relationship test.--
                            ``(i) In general.--An individual bears a 
                        relationship to the taxpayer described in this 
                        subparagraph if such individual is--
                                    ``(I) a son, daughter, stepson, or 
                                stepdaughter, or a descendant of any 
                                such individual,
                                    ``(II) a brother, sister, 
                                stepbrother, or stepsister, or a 
                                descendant of any such individual, who 
                                the taxpayer cares for as the 
                                taxpayer's own child, or
                                    ``(III) an eligible foster child of 
                                the taxpayer.
                            ``(ii) Married children.--Clause (i) shall 
                        not apply to any individual who has made a 
                        joint return with his spouse under section 6013 
                        for the taxable year beginning in the calendar 
                        year in which the taxable year of the taxpayer 
                            ``(iii) Eligible foster child.--For 
                        purposes of clause (i), the term `eligible 
                        foster child' means an individual not described 
                        in subclause (I) or (II) of clause (i) who--
                                    ``(I) is placed with the taxpayer 
                                by an authorized placement agency, and
                                    ``(II) the taxpayer cares for as 
                                the taxpayer's own child.
                            ``(iv) Adoption.--For purposes of this 
                        subparagraph, a child who is legally adopted, 
                        or who is placed with the taxpayer by an 
                        authorized placement agency for adoption by the 
                        taxpayer, shall be treated as a child by blood.
                    ``(C) Age requirements.--An individual meets the 
                requirements of this subparagraph if such individual--
                            ``(i) has not attained the age of 19 as of 
                        the close of the calendar year in which the 
                        taxable year of the taxpayer begins,
                            ``(ii) is a student who has not attained 
                        the age of 24 as of the close of such calendar 
                        year, or
                            ``(iii) is permanently and totally disabled 
                        (as defined in section 22(e)(3)) at any time 
                        during the taxable year.
                    ``(D) Identification requirements.--
                            ``(i) In general.--A qualifying child shall 
                        not be taken into account under subsection (b) 
                        unless the taxpayer includes the name, age, and 
                        TIN of the qualifying child on the return of 
                        tax for the taxable year.
                            ``(ii) Other methods.--The Secretary may 
                        prescribe other methods for providing the 
                        information described in clause (i).
                    ``(E) Abode must be in the united states.--The 
                requirements of subparagraph (A)(ii) shall be met only 
                if the principal place of abode is in the United 
                    ``(F) Special rules relating to students.--For 
                purposes of this paragraph--
                            ``(i) Student defined.--The term `student' 
                        means an individual who during each of 5 
                        calendar months during the calendar year in 
                        which the taxable year of the taxpayer begins--
                                    ``(I) is a full-time student at an 
                                educational organization described in 
                                section 170(b)(1)(A)(ii); or
                                    ``(II) is pursuing a full-time 
                                course of institutional on-farm 
                                training under the supervision of an 
                                accredited agent of an educational 

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