Summary of Amendments Made in Order to H.R. 2488, Financial Freedom Act of 1999

Part A: Summary of Amendment Modifying
the Amendment Recommended by the Committee on Ways and Means

• Section 101 (10 percent reduction in individual income tax rates) would be modified to phase in the 10-percent across-the-board rate reduction as follows: 1.0 percent for 2001 through 2003, 2.5 percent for 2004, 5.0 percent for 2005 through 2007, 7.5 percent for 2008, and 10 percent for 2009 and thereafter.

• Section 121 (repeal of individual alternative minimum tax on individuals) would be modified so that, during the period when the individual alternative minimum tax ("AMT") is being phased out, taxpayers would pay the following percentages of individual AMT liability: 80 percent in 2005, 70 percent in 2006, 60 percent in 2007, 50 percent in 2008, and 0 percent in 2009 and thereafter.

• Section 201 (exemption of certain interest and dividend income from tax) would be modified to provide the following exclusion from income: $50 ($100 in the case of a married couple filing a joint return) for 2001 through 2002, $100 ($200 in the case of a married couple filing a joint return) for 2003 through 2004, and $200 ($400 in the case of a married couple filing a joint return) for 2005 and thereafter.

• Section 301 (reduction in corporate capital gain tax rate) would be modified to reduce the tax on capital gains of corporations to 30 percent in 2005 and thereafter.

• Section 302(a) (repeal of alternative minimum tax on corporations) would be modified to allow AMT credit carryovers to offset the current year's minimum tax liability as follows: 20 percent in 2005, 30 percent in 2006, 40 percent in 2007, 50 percent in 2008, and 100 percent in 2009 and thereafter.

• Section 601 (repeal of estate, gift, and generation-skipping taxes) and section 611 (additional reductions of estate and gift tax rates) would be modified to phase in the repeal of the estate, gift, and generation-skipping taxes as follows: in 2001, repeal rates in excess of 53 percent; in 2002, repeal rates in excess of 50 percent; in 2003 through 2006, reduce all rates by 1 percentage point per year; in 2007, reduce all rates by 1.5 percentage point; and in 2008, reduce all rates by 2 percentage points.

• Sections 1205 (reduced PBGC premium for new plans of small employers), section 1206 (reduction of additional PBGC premium for new and small plans), 1243 (missing participants), and section 1254 (substantial owner benefits in terminated plans) would be deleted.

• A new provision would be added to Title XII–Provisions Relating to Pensions–to provide that the 100 percent of compensation limitation does not apply to multiemployer defined benefit pension plans. The modification would be effective with respect to years beginning after December 31, 2000.

• A new Title XVII–Commitment to Debt Reduction would be added. This title contains a provision regarding the commitment of the Congress to debt reduction. The provision would reflect the sense of the Congress that: (1) the national debt of the United States held by the public is $3.619 trillion as of fiscal year 1999; (2) the Federal budget is projected to produce a surplus each year in the next 10 fiscal years; (3) refunding taxes and reducing the national debt held by the public will assure continued economic growth and financial freedom for future generations; and (4) the national debt held by the public shall be reduced from $3.619 trillion to a level below $1.61 trillion by fiscal year 2009.

• A new Title XVIII–Budgetary Treatment would be added. This title contains a provision that would provide that, upon enactment of the Act, the Director of the Office of Management and Budget shall not make any estimate of the changes in direct spending outlays and receipts under section 252(d) of the Balanced Budget and Emergency Deficit Control Act of 1985 resulting from the enactment of the Act.

Part B: Summary of Rep. Rangel's Amendment in the
Nature of a Substitute Made in Order Under the Rule

The amendment in the nature of a substitute contains the following provisions:

• Marriage penalty relief provided by adjusting the standard deduction and by addressing the marriage penalty in the earned income tax credit.

• Modifications to the minimum tax in order to ensure that middle income families receive the full benefit of the per-child family credit, the education credit, dependent care credit and other nonrefundable credits.

• Tax relief for families with children under age 5 for purposes of assisting these families in meeting costs of child care, health care, and other expenses. The relief would be provided through a $250 increase in the per-child family credit.

• Tax relief to families residing in States that use retail sales taxes rather than income taxes to fund their State government.

• A school construction and modernization initiative that would provide $25 billion in free-or-interest-cost funds for public school construction and modernization costs.

• Permanent extension of the expiring provisions including the research credit, the Work Opportunity Tax Credit, the Welfare to Work Credit, subpart F exclusion for active financing, and the exclusion for employer-provided educational assistance. In addition, the exclusion, for employer-provided education assistance would be expanded to include graduate study.

• Assistance to families in meeting the cost of long-term care by providing an annual income tax credit of $1,000 for each individual with long-term care needs. This provision contrasts with the Committee bill under which 77 percent of American families would be entitled to tax relief of $400 or less.

• Important community development initiatives such as an increase in the low-income housing tax credit program and the new markets tax credit proposed by the President to revitalize depressed areas.

• Acceleration of the $1 million estate tax exclusion and 100 percent deductibility for the health insurance costs of the self-employed, as well as an increase in the costs which small businesses can expense rather than capitalize.

  * Summaries derived from information submitted by the amendment sponsors.