HR 3818 IHCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals and replace it with an alternative tax individuals may choose.CommentsClose CommentsPermalink

October 10, 2007

Mr. RYAN of Wisconsin (for himself, Mr. HENSARLING, Mr. CAMPBELL of California, Mrs. BACHMANN, Mr. HERGER, Mr. PENCE, Mr. FEENEY, Mr. GARRETT of New Jersey, Mrs. MUSGRAVE, Mr. ISSA, Mr. PRICE of Georgia, Ms. FOXX, Mr. PAUL, Mr. KLINE of Minnesota, Mr. SALI, Mr. WILSON of South Carolina, Mr. NEUGEBAUER, Mr. BURTON of Indiana, Mr. MCHENRY, Mr. AKIN, Ms. FALLIN, Mr. BROUN of Georgia, Mr. LAMBORN, Mr. WALBERG, Mr. PITTS, Mr. MCKEON, Mr. MCCAUL of Texas, Mr. MILLER of Florida, Mr. ROYCE, Mr. ADERHOLT, Mr. BARTLETT of Maryland, Mr. MARCHANT, Mr. DOOLITTLE, and Mr. ALEXANDER) introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals and replace it with an alternative tax individuals may choose.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Taxpayer Choice Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. REPEAL OF ALTERNATIVE MINIMUM TAX FOR NONCORPORATE TAXPAYERS.

(a) In General- Section 55(a) of the Internal Revenue Code of 1986 (relating to alternative minimum tax imposed) is amended by adding at the end the following new flush sentence:CommentsClose CommentsPermalink





`In the case of a taxpayer other than a corporation, no tax shall be imposed by this section for any taxable year beginning after December 31, 2006, and the tentative minimum tax of any taxpayer other than a corporation for any such taxable year shall be zero for purposes of this title.'.CommentsClose CommentsPermalink





(b) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 26(c) of such Code is amended by striking `the term `tentative minimum tax' means the amount determined under section 55(b)(1)' and inserting `the tentative minimum tax is zero.'.CommentsClose CommentsPermalink





(2) Section 911(f)(2) of such Code is amended to read as follows:CommentsClose CommentsPermalink





`(2) the tentative minimum tax under section 55 for the taxable year shall be zero.'.CommentsClose CommentsPermalink





(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.CommentsClose CommentsPermalink

SEC. 3. SIMPLIFIED INDIVIDUAL INCOME TAX SYSTEM.

(a) In General- Part I of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to tax on individuals) is amended by redesignating section 5 as section 6 and by inserting after section 4 the following new section:CommentsClose CommentsPermalink

`SEC. 5. SIMPLIFIED INDIVIDUAL INCOME TAX SYSTEM.

`(a) Election-CommentsClose CommentsPermalink





`(1) IN GENERAL- A taxpayer other than a corporation may elect in accordance with this subsection to be subject to the tax imposed by this section in lieu of the tax imposed by section 1 for a taxable year and all subsequent taxable years.CommentsClose CommentsPermalink





`(2) EFFECT OF ELECTION- For purposes of this title, if an election is in effect under paragraph (1) for any taxable year, the tax imposed by this section shall be treated as the tax imposed by section 1 for the taxable year.CommentsClose CommentsPermalink





`(3) ELECTION-CommentsClose CommentsPermalink





`(A) IN GENERAL-CommentsClose CommentsPermalink





`(i) IN GENERAL- Except as provided in clause (ii) of this subparagraph and clauses (ii) and (iii) of subparagraph (B), the election under paragraph (1) may only be made with respect to any taxable year beginning before January 1, 2017, on a timely filed return for the first taxable year for which the election applies.CommentsClose CommentsPermalink





`(ii) NEW TAXPAYERS- In the case of an individual with no tax liability under this title before January 1, 2017, the election under paragraph (1) may only be made for the first taxable year beginning after December 31, 2016, for which such individual has tax liability under this title.CommentsClose CommentsPermalink





`(B) EFFECT OF ELECTION-CommentsClose CommentsPermalink





`(i) IN GENERAL- Except as provided in clauses (ii) and (iii), the election under paragraph (1), once made, shall be irrevocable.CommentsClose CommentsPermalink





`(ii) ONE-TIME REVOCATION OF ELECTION- A taxpayer may revoke an election under paragraph (1) for a taxable year and all subsequent taxable years. The preceding sentence shall not apply if the taxpayer has made a revocation under such sentence for any prior taxable year.CommentsClose CommentsPermalink





`(iii) FILING STATUS CHANGES DUE TO MAJOR LIFE EVENTS- In the case of any major life event described in clause (iv), a taxpayer may make an election under paragraph (1) or revoke such an election under clause (ii). Any such election or revocation shall apply for the taxable year for which made and all subsequent taxable years until the taxpayer makes an election under the preceding sentence for any subsequent (and all succeeding) taxable year.CommentsClose CommentsPermalink





`(iv) MAJOR LIFE EVENT- For purposes of clause (iii), a major life event described in this clause is marriage, divorce, and death.CommentsClose CommentsPermalink





`(b) Tax Imposed-CommentsClose CommentsPermalink





`(1) MARRIED INDIVIDUALS AND SURVIVING SPOUSES- In the case of a taxpayer for whom an election under subsection (a) is in effect and who is a married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013 or a surviving spouse (as defined in section 2(a)), there is hereby imposed on the alternative taxable income of such individual a tax determined in accordance with the following table:CommentsClose CommentsPermalink

The tax is:

Not over $100,000CommentsClose CommentsPermalink

10% of alternative taxable income.CommentsClose CommentsPermalink

Over $100,000CommentsClose CommentsPermalink

$10,000, plus 25% of the excess over $100,000.CommentsClose CommentsPermalink

`(2) UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES)- In the case of a taxpayer for whom an election under subsection (a) is in effect and who is not described in paragraph (1), there is hereby imposed on the alternative taxable income of such individual a tax determined in accordance with the following table:CommentsClose CommentsPermalink

The tax is:

Not over $50,000CommentsClose CommentsPermalink

10% of alternative taxable income.CommentsClose CommentsPermalink

Over $50,000CommentsClose CommentsPermalink

$5,000, plus 25% of the excess over $50,000.CommentsClose CommentsPermalink

`(c) Maximum of Tax on Net Capital Gain of Noncorporate Taxpayers- If a taxpayer has a net capital gain for the taxable year, the tax imposed by subsection (b) for such taxable year shall not exceed the sum of--CommentsClose CommentsPermalink





`(1) the amount determined under subsection (b) computed at the rate and in the same manner as if this paragraph had not been enacted on modified taxable income reduced by the lesser of--CommentsClose CommentsPermalink





`(A) the net capital gain, orCommentsClose CommentsPermalink





`(B) the adjusted net capital gain, plusCommentsClose CommentsPermalink





`(2) 5 percent (0 percent in the case of taxable years beginning after 2007) of so much of the adjusted net capital gain (or, if less, modified taxable income) as does not exceed an amount equal to the excess described in section 1(h)(1)(B), plusCommentsClose CommentsPermalink





`(3) 15 percent of the adjusted net capital gain (or, if less, modified taxable income) in excess of the amount on which tax is determined under paragraph (2).CommentsClose CommentsPermalink





Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h) but computed with the adjustments under this section.CommentsClose CommentsPermalink





`(d) Alternative Taxable Income- For purposes of this section--CommentsClose CommentsPermalink





`(1) IN GENERAL- The term `alternative taxable income' means--CommentsClose CommentsPermalink





`(A) gross income, minusCommentsClose CommentsPermalink





`(B) the sum of--CommentsClose CommentsPermalink





`(i) the personal exemption,CommentsClose CommentsPermalink





`(ii) the dependent allowance, plusCommentsClose CommentsPermalink





`(iii) the alternative standard deduction.CommentsClose CommentsPermalink





`(2) PERSONAL EXEMPTION- The personal exemption is--CommentsClose CommentsPermalink





`(A) 200 percent of the dollar amount in effect under subparagraph (B) in the case of--CommentsClose CommentsPermalink





`(i) a joint return, orCommentsClose CommentsPermalink





`(ii) a surviving spouse (as defined in section 2(a)), andCommentsClose CommentsPermalink





`(B) $3,500 in the case of an individual--CommentsClose CommentsPermalink





`(i) who is not married and is not a surviving spouse, orCommentsClose CommentsPermalink





`(ii) who is a married individual filing a separate return.CommentsClose CommentsPermalink





`(3) DEPENDENT ALLOWANCE- The dependent allowance is $3,500 for each dependent (as defined in section 152).CommentsClose CommentsPermalink





`(4) ALTERNATIVE STANDARD DEDUCTION- The alternative standard deduction means--CommentsClose CommentsPermalink





`(A) $25,000 in the case of--CommentsClose CommentsPermalink





`(i) a joint return, orCommentsClose CommentsPermalink





`(ii) a surviving spouse (as defined in section 2(a)), andCommentsClose CommentsPermalink





`(B) $12,500 in the case of an individual--CommentsClose CommentsPermalink





`(i) who is not married and is not a surviving spouse, orCommentsClose CommentsPermalink





`(ii) who is a married individual filing a separate return.CommentsClose CommentsPermalink





`(e) Inflation Adjustments-CommentsClose CommentsPermalink





`(1) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2007, each of the dollar amounts for the rate brackets in subsection (b) and each of the dollar amounts in subsection (d)(2)(B), (d)(3), and (d)(4) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(A) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting `calendar year 2006' for `calendar year 1992' in subparagraph (B) thereof.CommentsClose CommentsPermalink





`(2) ROUNDING- If any amount as adjusted under clause (i) is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100.'.CommentsClose CommentsPermalink





(b) Conforming Amendment- The table of sections for part I of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 5 and inserting after the item relating to section 4 the following:CommentsClose CommentsPermalink





`Sec. 5. Simplified Individual Income Tax System.CommentsClose CommentsPermalink





`Sec. 6. Cross references relating to tax on individuals.'.CommentsClose CommentsPermalink





(c) Capital Gains and Dividends Rate Made Permanent- The Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended by striking section 303.CommentsClose CommentsPermalink





(d) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.CommentsClose CommentsPermalink