July 1, 1976
Page 22065
TAX REFORM ACT OF 1976
The PRESIDING OFFICER. Under the previous order, the Senate will now resume consideration of the unfinished business, which will be stated by title.
The legislative clerk read as follows:
A bill (HR. 10612) to reform the tax laws of the United States.
AMENDMENT NO. 2012
Mr. MUSKIE. Mr. President, on behalf of myself and Senator BELLMON, I send an amendment to the desk, and I also add Senators MONDALE and HUMPHREY as cosponsors at their request.
The PRESIDING OFFICER. Without objection, the cosponsors will be added, and the amendment will be stated.
The legislative clerk read as follows:
The Senator from Maine (Mr. MUSKIE) for himself and others, proposes an amendment.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 152, beginning with line 11, strike all through line 3 on page 155, and insert the following:
(2) NINE MONTH RULE FOR 1977.— Notwithstanding the provisions of paragraph (1), in the case of taxable years ending after December 31, 1976, and before January 1, 1978, the percentage "1.5 percent" shall be substituted for the percentage "2 percent" in subparagraph (A) of such paragraph and the amount "$26.25", shall be substituted for the amount "$35" in subparagraph (B) of such paragraph.
(3) TECHNICAL AMENDMENTS.
(A) Section 56(a) (2) (relating to imposition of minimum tax), as in effect on the day before the date of the enactment of the Tax Reduction Act of 1975, is amended by striking out "and" at the end of clause (iv), by striking out "; and" at the end of clause (v) and inserting in lieu thereof ", and", and by inserting after clause (v) the following new clause:
"(vi) section 42 (relating to taxable income credit); and".
(B) Section 56(c) (1) (relating to tax carryovers) , as in effect on the day before the date of enactment of the Tax Reduction Act of 1975, is amended by striking out "and" at the end of subparagraph (D) , by striking out "exceed" at the end of subparagraph (E) and inserting in lieu thereof "and", and by inserting after subparagraph (E) the following new subparagraph:
"(F) section 42 (relating to taxable income credit), exceed".
(C) Section 6096(b) (relating to designation of income tax payments to Presidential Election Campaign Fund), as in effect on the day before the date of enactment of the Tax Reduction Act of 1975, is amended by striking out "and 41" and inserting in lieu thereof "41, and 42".
(4) CLERICAL AMENDMENT.—The table of sections for subpart A of part IV of subchapter A of chapter 1, as in effect on the day before the date of enactment of the Tax Reduction Act of 1975, is amended by striking out the item relating to section 42 and inserting in lieu thereof the following:"SEC. 42. Taxable income credit.".
(b) STANDARD DEDUCTION:
(1) LOW INCOME ALLOWANCE. Subsection (c) of section 141 (relating to low income allowance) is amended to read as follows:
"(C) LOW INCOME ALLOWANCE: The low income allowance is—
" (1) $2,100 in the case of—
"(A) a joint return under section 6013, or
"(B) a surviving spouse (as defined in section 2(a)).
"(2) $1,700 in the case of an individual who is not married and who is not a surviving spouse (as so defined) , or
"(3) $1,050 in the case of a married individual filing a separate return.".
(2) PERCENTAGE STANDARD DEDUCTION: Subsection (b) of section 141 (relating to percentage standard deduction) is amended to read as follows:
"(b) PERCENTAGE STANDARD DEDUCTION.—The percentage standard deduction is an amount equal to 16 percent of adjusted gross income, but not more than—
"(1) $2,800 in the case of—
"(A) a joint return under section 6013, or
"(B) a surviving spouse (as defined in section 2(a)),
"(2) $2,400 in the case of an individual who is not married and who is not a surviving spouse (as so defined), or
"(3) $1,400 in the case of a married individual filing a separate return.".
(3) TECHNICAL AMENDMENT.
(A) Subsection (a) of section 3402 (relating to income tax collected at source) is amended to read as follows:
"(a) REQUIREMENT OF WITHHOLDING.—Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables prescribed by the Secretary. Until September 30, 1977, the tables so prescribed shall be the same as the tables in effect on June 18, 1976. With respect to wages paid after September 30, 1977, the Secretary shall prescribe new tables which are the same as the tables in effect on January 1, 1975, but modified to the extent necessary to reflect the amendments made by section 101(b) of the Tax Reform Act of 1976.
"For purposes of applying such tables, the term 'the amount of wages' means the amount by which the wages exceed the number of withholding exemptions claimed, multiplied by the amount of one such exemption as shown in the table in subsection (b) (1) .".
Mr. MUSKIE. Mr. President, this is an amendment—
Mr. MANSFIELD. Mr. President, will the Senator yield?
Mr. MUSKIE. I yield.
Mr. MANSFIELD. Mr. President. I ask unanimous consent that there be a 2 hour limitation on the pending amendment, the time to be equally divided between the sponsor of the amendment and the manager of the bill, and that the vote thereon occur at 2 o'clock on Tuesday, July 20.
The PRESIDING OFFICER. Is there objection?
Mr. MANSFIELD. The vote on final passage.
Mr. MUSKIE. Mr. President, reserving the right to object, this issue was debated last, I think, for a period of somewhere around 3 days. We were urged to delay action on it until the major issues were brought up, voted on, and decided.
That has been done. I sat, to use the phrase of the chairman of the Finance Committee, waiting my turn. My turn is here, and the Senator apparently is not ready to vote. I certainly am not going to put myself in an obstructionist posture at this point and insist on trying to go to a vote today or tomorrow, but I want to make it clear that I understand what games are being played. I am ready for a vote; I do not need 5 minutes, and I do not think any Senator in this body needs 5 minutes to resolve this issue.
But out of deference to my colleagues, at the suggestion of the majority leader, I will not object.
Mr. MANSFIELD. Mr. President, may I say to our distinguished colleague from Maine that the chairman of the committee, the manager of the bill, the Senator from Louisiana (Mr. LONG) was willing to agree to a 40-minute limitation and a vote tonight.
Mr. MUSKIE. I would commend him for that.
The PRESIDING OFFICER. Is there objection?
Mr. CURTIS. Mr. President, reserving the right to object, and I shall not object, in order to be sure I understand, what was the request?
Mr. MANSFIELD. Two hours to be equally divided between the sponsor of the amendment and the manager of the bill.
Mr. LONG. Could we have an order that at least 30 minutes of that would be just prior to the vote on Tuesday?
Mr. MANSFIELD. Yes. Indeed. So we could get in an hour and a half tonight and tomorrow, and, if the Senate agrees to the unanimous consent request, come in and start again on the pending amendment at 1:30 on Tuesday, the 20th of July, and vote on it at 2 o'clock that day.
Mr. LONG. Very well.
Mr. MUSKIE. Mr. President, will the majority leader yield? I want to make sure I understand.
As I understand, Senator LONG is willing to agree to a time agreement and a vote tonight?
Mr. MANSFIELD. That is right.
Mr. MUSKIE. I did not understand that, and I would like to thank the Senator from Louisiana for his courtesy.
Mr. ABOUREZK. Reserving the right to object, I just want to ask the majority leader if there will be any more votes this evening.
Mr. MANSFIELD. There will be no more votes this evening, but there will be a vote around 8:30 or 8:40 tomorrow morning.
The PRESIDING OFFICER. Is there objection to the request of the Senator from Montana? The Chair hears none, and it is so ordered.
The Chair requests the attention of the Senator from Montana.
The Chair would observe that this amendment is not in order until committee amendment No. 14 has been laid before the Senate. The clerk will state that amendment.
The legislative clerk read as follows:
On page 147, line 1, strike all through page 151, line 24, and insert new language.
The amendment is as follows:
COMMITTEE AMENDMENT NO. 14
On page 147, line 1, strike all through page 151, line 24, and insert in lieu thereof :
TITLE IV—EXTENSIONS OF INDIVIDUAL INCOME TAX REDUCTIONS
SEC. 401, EXTENSIONS OF INDIVIDUAL INCOMETAX REDUCTIONS
(a) TAXABLE INCOME CREDIT.
(1) IN GENERAL.— Section 3(b) of the Revenue Adjustment Act of 1975 is amended by striking out "December 31, 1976" and inserting in lieu thereof "December 31, 1977".
(2) SIX MONTH RULE FOR 1977.— Paragraph(2) of section 42(a) (relating to application of sixmonth rule) is amended by adding at the end thereof the following: "This paragraph applies to taxable year ending after December 31, 1976 and before January 1, 1978.".
(3) TECHNICAL AMENDMENT.— Section 6096(b) (relating to designation of income tax payments to Presidential Election Campaign Fund) , as in effect on the day before the date of enactment of the Tax Reduction Act of 1975, is amended by striking out "and 41" and inserting in lieu thereof "41, and 42".
(4) CLERICAL AMENDMENT.— The table ofsections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 42 and inserting in lieu thereof the following:
"Sec. 42. Taxable income credit.".
(b) STANDARD DEDUCTION.
(1) LOW INCOME ALLOWANCE. Subsection (c) of section 141 (relating to low income allowance) is amended to read as follows:
"(C) LOW INCOME ALLOWANCE.—The low income allowance is—
" (1) $2,100 in the case of—
"(A) a joint return under section 6013, or
"(B) a surviving spouse (as defined in section 2(a)),
"(2) $1,700 in the case of an individual who is not married and who is not a surviving spouse (as so defined) , or
"(3) $1,050 in the case of a married individual filing a separate return.".
(2) PERCENTAGE STANDARD DEDUCTION.— Subsection (b) of section 141 (relating to percentage standard deduction) is amended to read as follows:
"(b) PERCENTAGE STANDARD DEDUCTION.— The percentage standard deduction is an amount equal to 16 percent of adjusted gross income, but not more than—
"(1) $2,800 in the case of—
"(A) a joint return under section 6013, or
"(B) a surviving spouse (as defined in section 2(a)),
"(2) $2,400 in the case of an individual who is not married and who is not a surviving spouse (as so defined), or
"(3) $1,400 in the case of a married individual filing a separate return.".
(3) TECHNICAL AMENDMENTS.
(A) Subsection (a) of section 3402 (relating to income tax collected at source) is amended to read as follows:
"(a) REQUIREMENT OF WITHHOLDING.— Except as otherwise provided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined in accordance with tables prescribed by the Secretary. The tables so prescribed shall be the same as the tables prescribed under this subsection which were in effect on January 1, 1975, except that, with respect to wages paid after June 30, 1977, the Secretary shall prescribe new tables only to the extent necessary to reflect the amendments made by section 401(b) of the Tax Reform Act of 1976. For purposes of applying such tables, the term 'the amount of wages' means the amount by which the wages exceed the number of withholding exemptions claimed, multiplied by the amount of one such exemption as shown in the table in subsection (b) (1).".
(B) Paragraph (6) of section 3402(c) (relating to wage bracket withholding) , as such paragraph existed on the day before the date of enactment of the Tax Reduction Act of 1975, is amended by striking out "table 7contained in subsection (a)" and inserting in lieu thereof "the table for an annual payroll period prescribed pursuant to subsection (a) ".
(C) Subparagraph (B) of section 3402(m) (1) (relating to withholding allowance based on itemized deductions) is amended to read as follows:
"(B) an amount equal to the lesser of (i) 16 percent of his estimated wages, or (ii) $2,800 ($2,400 in the case of an individual who is not married (within the meaning of section 143) and who is not a surviving spouse (as defined in section 2(a)).".
(D) So much of paragraph (1) of section 6012(a) (relating to persons required to make returns of income) as precedes subparagraph (C) thereof is amended to read as follows:
"(1) (A) Every individual having for the taxable year a gross income of $750 or more, except that a return shall not be required of an individual (other than an individual referred to in section 142(b))
"(i) who is not married (determined by applying section 143), is not a surviving spouse (as defined in section 2(a)), and for the taxable year has a gross income of less than $2,450,
"(ii) who is a surviving spouse (as so defined) and for the taxable year has a gross income of less than $2,850, or
"(iii) who is entitled to make a joint return under section 6013 and whose gross income, when combined with the gross income of his spouse, is, for the taxable year, less than $3,600 but only if such individual and his spouse, at the close of the taxable year, had the same household as their home. Clause (iii) shall not apply if for the taxable year such spouse makes a separate return or any other taxpayer is entitled to an exemption for such spouse under section 151(e).
"(B) The amount specified in clause (i) or (ii) of subparagraph (A) shall be increased by $750 in the case of an individual entitled to an additional personal exemption under section 151(c) (1), and the amount specified in clause (iii) of subparagraph (A) shall be increased by $750 for each additional personal exemption to which the individual or his spouse is entitled under section 151(c) ;".
(C) EARNED INCOME CREDIT.
(1) IN GENERAL.—Subsections (a) and (b) of section 43 (relating to earned income credit) are amended to read as follows:
"(a) ALLOWANCE OF CREDIT.—In the case of an eligible individual, there is allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of so much of the earned income for the taxable year as does not exceed $4,000.
"(b) LIMITATION.—The amount of the credit allowable to a taxpayer under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount equal to 10 percent of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds $4,000.".
(2) ELIGIBLE INDIVIDUAL.–Section 43(c) (1)(A) is amended by striking out "with respect to whom he is entitled to claim a deduction under" and inserting in lieu thereof the following: "if such child meets the requirements of".
(3) CONFORMING AMENDMENT.—Section 209(b) of the Tax Reduction Act of 1975 is amended by striking out ", and before January 1, 1977." and inserting in lieu thereof a period.
(d) EFFECTIVE DATES.—The amendments made by subsection (a) apply to taxable years ending after December 31, 1975, and cease to apply to taxable years ending after December 31, 1977. The amendments made by subsections (b) and (c) (1) apply to taxable years ending after December 1, 1975.
The amendments made by subsections (c) (2) and (3) shall apply to taxable years beginning after December 31, 1974.
SEC. 402. REFUNDS OF EARNED INCOME CREDIT DISREGARDED IN THE ADMINISTRATION OF FEDERAL PROGRAMS AND FEDERALLY ASSISTED PROGRAMS.
(a) Subsection (d) of section 2 of the Revenue Adjustment Act of 1975 is amended by striking out "or any month thereafter which begins prior to July 1, 1976,".
(b) Subsection (g) of section 2 of such Act is amended to read as follows:
"(g) EFFECTIVE DATES. The amendments made by this section (other than by subsection (d)) apply to taxable years ending after December 31, 1975, and before January 1, 1977. Subsection (d) applies to taxable years ending after December 31, 1975.".
Mr. MANSFIELD. The amendment of the Senator from Maine is now in order?
The PRESIDING OFFICER. The amendment is now in order.
Mr. MANSFIELD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The second assistant legislative clerk proceeded to call the roll.
Mr. LONG. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded, and that the Senate be in order.
The PRESIDING OFFICER. Without objection, it is so ordered. The Senate will be in order. Senators will please clear the well and clear the aisles.
The Senator from Louisiana may proceed.