142 cosponsors
American Dream Restoration Act - Amends the Internal Revenue Code to allow individuals a tax credit of $500 multiplied by the number of qualifying children who have not attained age 18. Places limitations on such credit based on: (1) taxpayer adjusted gross incomes over $200,000; and (2) social security tax payments. Provides an inflation adjustment for such credit and the taxpayer adjusted gross income amount.
Allows a tax credit for qualified married couples equal to a dollar amount determined by the Secretary of the Treasury to reduce revenues by $2 billion. Describes such couples as those who would be required to pay more in income taxes because they are married than they would be required to pay if they were not married.
Establishes individual retirement plans which can be designated as American Dream Savings Accounts. Disallows a tax deduction for amounts contributed to such accounts. Limits contributions to such accounts to the lesser of $2,000, or compensation includible in an individual's gross income for a taxable year ($4,000 in the case of certain married individuals). Provides an inflation adjustment on such amounts. Permits contributions to be made after age 70.5.
Excludes distributions from such accounts from gross income and makes the penalty on early distributions inapplicable.
Designates qualified distributions as those: (1) made after the individual attains age 59.5; (2) made to a beneficiary on or after the death of the individual; (3) attributable to the individual being disabled; and (4) qualified as special purpose distributions. Prohibits qualified distributions from being made within the five-year period since the account began.
Describes special purpose distributions as those for: (1) qualified first-time homebuyers; (2) qualified higher education expenses; and (3) qualified medical expenses, including long-term care insurance.
[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6 Introduced in House (IH)]
1st Session
H. R. 6
To amend the Internal Revenue Code of 1986 to provide a tax credit for
families, to reform the marriage penalty, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 4, 1995
Mr. Crane, Mr. Nussle, and Mr. Salmon (for themselves, Mr. Allard, Mr.
Armey, Mr. Baker of California, Mr. Baker of Louisiana, Mr. Ballenger,
Mr. Barr, Mr. Bartlett of Maryland, Mr. Barton of Texas, Mr. Bilirakis,
Mr. Bliley, Mr. Blute, Mr. Bono, Mr. Bunning of Kentucky, Mr. Burr, Mr.
Callahan, Mr. Calvert, Mr. Camp, Mr. Canady of Florida, Mr. Cremeans,
Mr. Christensen, Mr. Chrysler, Mr. Coburn, Mr. Cooley, Mrs. Cubin, Mr.
Cunningham, Mr. Doolittle, Mr. Dornan, Ms. Dunn of Washington, Mr.
Emerson, Mr. English of Pennsylvania, Mr. Ensign, Mr. Ewing, Mr.
Flanagan, Mr. Foley, Mrs. Fowler, Mr. Forbes, Mr. Fox of Pennsylvania,
Mr. Frisa, Mr. Ganske, Mr. Gilchrest, Mr. Gilman, Mr. Gillmor, Mr.
Goodlatte, Mr. Goodling, Mr. Greenwood, Mr. Gunderson, Mr. Hancock, Mr.
Hastings of Washington, Mr. Hayworth, Mr. Heineman, Mr. Herger, Mr.
Hilleary, Mr. Hobson, Mr. Hostettler, Mr. Hutchinson, Mr. Inglis of
South Carolina, Mr. Istook, Mrs. Johnson of Connecticut, Mr. Jones, Mr.
Kingston, Mr. Knollenberg, Mr. Largent, Mr. LaTourette, Mr. Latham, Mr.
Lewis of Kentucky, Mr. Lightfoot, Mr. Linder, Mr. Longley, Mr.
McCollum, Mr. McHugh, Mr. McIntosh, Mr. Mica, Mr. Miller of Florida,
Ms. Molinari, Mrs. Myrick, Mr. Packard, Mr. Radanovich, Mr. Riggs, Mr.
Roth, Mr. Royce, Mr. Saxton, Mr. Sensenbrenner, Mr. Shadegg, Mr. Shaw,
Mr. Shays, Mr. Smith of New Jersey, Mr. Smith of Michigan, Mr. Solomon,
Mr. Stearns, Mr. Stockman, Mr. Stump, Mr. Talent, Mr. Tate, Mr. Taylor
of North Carolina, Mr. Thornberry, Mr. Thomas, Mr. Tiahrt, Mrs.
Waldholtz, Mr. Wamp, Mr. Weldon of Florida, Mr. Weller, Mr. Wicker, Mr.
Zimmer, Mr. Crapo, Mr. Kolbe, Mr. Paxon, Mr. Young of Florida, Mr.
Brownback, Mr. Weldon of Pennsylvania, Mr. Combest, Mr. Coble, Mr.
Ehrlich, and Mrs. Meyers of Kansas) 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 provide a tax credit for
families, to reform the marriage penalty, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``American Dream
Restoration 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.
SEC. 2. FAMILY TAX CREDIT.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
(relating to refundable credits) is amended by redesignating section 35
as section 36 and by inserting after section 34 the following new
section:
``SEC. 35. FAMILY TAX CREDIT.
``(a) Allowance of Credit.--
``(1) In general.--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 the
amount described in paragraph (2) multiplied by the number of
qualifying children of the taxpayer.
``(2) Description of amount.--
``(A) In general.--The amount described in this
paragraph is an amount equal to $500, reduced (but not
below zero) by the applicable reduction amount.
``(B) Applicable reduction amount.--For purposes of
subparagraph (A), the term `applicable reduction
amount' means an amount which bears the same ratio to
the amount applicable under subparagraph (A) as--
``(i) the excess (if any) of the taxpayer's
adjusted gross income over $200,000, bears to
``(ii) $50,000.
``(b) Limitation Based on Amount of Tax.--
``(1) In general.--The credit allowed by subsection (a) for
the taxable year shall not exceed the excess (if any) of--
``(A) the sum of--
``(i) the tax imposed by this chapter for
the taxable year (reduced by the credits
allowable against such tax other than the
credits allowable under this subpart), and
``(ii) the taxpayer's social security taxes
for such taxable year, over
``(B) the credit allowed for the taxable year under
section 32.
``(2) Social security taxes.--For purposes of paragraph
(1)--
``(A) In general.--The term `social security taxes'
means, with respect to any taxpayer for any taxable
year--
``(i) the amount of the taxes imposed by
sections 3101, 3111, 3201(a), and 3221(a) on
amounts received by the taxpayer during the
calendar year in which the taxable year begins,
``(ii) the taxes imposed by section 1401 on
the self-employment income of the taxpayer for
the taxable year, and
``(iii) the taxes imposed by section
3211(a)(1) on amounts received by the taxpayer
during the calendar year in which the taxable
year begins.
``(B) Coordination with special refund of social
security taxes.--The term `social security taxes' shall
not include any taxes to the extent the taxpayer is
entitled to a special refund of such taxes under
section 6413(c).
``(C) Special rule.--Any amounts paid pursuant to
an agreement under section 3121(l) (relating to
agreements entered into by American employers with
respect to foreign affiliates) which are equivalent to
the taxes referred to in subparagraph (A)(i) shall be
treated as taxes referred to in such subparagraph.
``(c) Inflation Adjustments.--
``(1) In general.--In the case of a taxable year beginning
in a calendar year after 1996, the $500 and $200,000 amounts
contained in subsection (a)(2) shall each be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 1995' for `calendar year 1992' in
subparagraph (B) thereof.
``(2) Rounding.--If any amount as adjusted under paragraph
(1) is not a multiple of $50, such amount shall be rounded to
the nearest multiple of $50.
``(d) Definitions and Special Rules.--For purposes of this
section--
``(1) Eligible individual.--The term `eligible individual'
has the meaning given to such term by section 32(c)(1)
(determined without regard to subparagraph (B) thereof).
``(2) Qualifying child.--The term `qualifying child' means
an individual who--
``(A) is a qualifying child, within the meaning of
section 32(c)(3) (determined without regard to
subparagraph (E) thereof), and
``(B) has not attained the age of 18 as of the
close of the calendar year in which the taxable year of
the taxpayer begins.
``(3) Certain other rules apply.--Rules similar to the
rules of subsections (d) and (e) of section 32 shall apply.''
(b) Conforming Amendments.--
(1) Paragraph (2) of section 1324(b) of title 31, United
States Code, is amended by inserting before the period ``, or
from section 35 of such Code''.
(2) The table of sections for subpart C of part IV of
subchapter A of chapter 1 is amended by striking the item
relating to section 35 and inserting the following new items:
``Sec. 35. Family tax credit.
``Sec. 36. Overpayments of tax.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
SEC. 3. CREDIT TO REDUCE THE MARRIAGE PENALTY.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
(relating to nonrefundable personal credits) is amended by inserting
after section 22 the following new section:
``SEC. 23. REDUCTION OF MARRIAGE PENALTY.
``(a) Allowance of Credit.--In the case of a qualified married
couple, there shall be allowed as a credit against the tax imposed by
this chapter for the taxable year an amount equal to the applicable
dollar amount.
``(b) Qualified Married Couple.--For purposes of this section, the
term `qualified married couple' means a husband and wife who file a
joint return for the taxable year and who, but for this section, would
be required to pay more in income taxes under this subtitle because of
the fact that they were legally married during such taxable year than
they would be required to pay if they had not been married.
``(c) Applicable Dollar Amount.--For purposes of this section, the
term `applicable dollar amount' means, with respect to taxable years
beginning in any calendar year, the amount which the Secretary
estimates will result in a reduction in revenues to the Treasury for
such taxable years of $2,000,000,000. In no event may the applicable
dollar amount with respect to any taxpayer exceed the marriage penalty
that such taxpayer would be required to pay but for this section.''
(b) Table of Sections.--The table of sections for such subpart A is
amended by inserting after the item relating to section 22 the
following new item:
``Sec. 23. Reduction of marriage
penalty.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 4. ESTABLISHMENT OF AMERICAN DREAM SAVINGS ACCOUNTS.
(a) In General.--Subpart A of part I of subchapter D of chapter 1
(relating to pension, profit-sharing, stock bonus plans, etc.) is
amended by inserting after section 408 the following new section:
``SEC. 408A. AMERICAN DREAM SAVINGS ACCOUNTS.
``(a) General Rule.--Except as provided in this section, an
American Dream Savings Account shall be treated for purposes of this
title in the same manner as an individual retirement plan.
``(b) American Dream Savings Account.--For purposes of this title,
the term `American Dream Savings Account' or `ADS account' means an
individual retirement plan which is designated at the time of the
establishment of the plan as an American Dream Savings Account. Such
designation shall be made in such manner as the Secretary may
prescribe.
``(c) Contribution Rules.--
``(1) No deduction allowed.--No deduction shall be allowed
under section 219 for a contribution to an ADS account.
``(2) Contribution limit.--
``(A) In general.--The aggregate amount of
contributions (other than rollover contributions) for
any taxable year to all ADS accounts maintained for the
benefit of an individual shall not exceed the lesser
of--
``(i) $2,000, or
``(ii) an amount equal to the compensation
includible in the individual's gross income for
such taxable year.
``(B) $4,000 limitation for certain additional
married individuals.--
``(i) In general.--In the case of an
individual to whom this subparagraph applies
for the taxable year, the limitation of
subparagraph (A)(ii) shall be equal to the sum
of--
``(I) the compensation includible
in such individual's gross income for
the taxable year, plus
``(II) the compensation includible
in the gross income of such
individual's spouse for the taxable
year reduced by the amount of the
limitation under subparagraph (A)
applicable to such spouse for such
taxable year.
``(ii) Individuals to whom clause (i)
applies.--Clause (i) shall apply to any
individual if--
``(I) such individual files a joint
return for the taxable year, and
``(II) the amount of compensation
(if any) includible in such
individual's gross income for the
taxable year is less than the
compensation includible in the gross
income of such individual's spouse for
the taxable year.
``(C) Adjustment for inflation.--
``(i) In general.--In the case of a taxable
year beginning in a calendar year after 1996,
the $2,000 amount contained in subparagraph (A)
shall be increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment under section 1(f)(3) for
the calendar year in which the taxable
year begins, determined by substituting
`calendar year 1995' for `calendar year
1992' in subparagraph (B) thereof.
``(ii) Rounding.--If any amount as adjusted
under clause (i) is not a multiple of $50, such
amount shall be rounded to the nearest multiple
of $50.
``(D) Tax on excess contributions.--Section 4973
shall be applied separately with respect to individual
retirement plans which are ADS accounts and individual
retirement plans which are not ADS accounts; except
that, for purposes of applying such section with
respect to individual retirement plans which are ADS
accounts, excess contributions shall be considered to
be any amounts in excess of the limitation under
subsection (c)(2)(A).
``(3) Contributions permitted after age 70\1/2\.--
Contributions to an ADS account may be made even after the
individual for whom the account is maintained has attained age
70\1/2\.
``(4) Mandatory distribution rules not to apply, etc.--
Subsections (a)(6) and (b)(3) of section 408 (relating to
required distributions) and section 4974 (relating to excise
tax on certain accumulations in qualified retirement plans)
shall not apply to any ADS account.
``(5) Limitations on rollover contributions.--No rollover
contribution may be made to an ADS account unless--
``(A) such contribution is from another ADS
account, or
``(B) such contribution is from an individual
retirement plan (other than an ADS account) and is made
before January 1, 1998.
``(d) Distribution Rules.--For purposes of this title--
``(1) In general.--In the case of a qualified distribution
from an ADS account--
``(A) no portion of such distribution shall be
includible in gross income, and
``(B) section 72(t) shall not apply.
``(2) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified
distribution' means any payment or distribution--
``(i) made on or after the date on which
the individual attains age 59\1/2\,
``(ii) made to a beneficiary (or to the
estate of the individual) on or after the death
of the individual,
``(iii) attributable to the individual's
being disabled (within the meaning of section
72(m)(7)), or
``(iv) which is a qualified special purpose
distribution (within the meaning of subsection
(e)).
``(B) Distributions within 5 years.--No payment or
distribution shall be treated as a qualified
distribution if--
``(i) it is made within the 5-taxable year
period beginning with the 1st taxable year in
which the individual made a contribution to an
ADS account (or such individual's spouse made a
contribution to an ADS account) established for
such individual, or
``(ii) in the case of a payment or
distribution properly allocable to a rollover
contribution (or income allocable thereto), it
is made within 5 years after the date on which
such rollover contribution was made, as
determined under regulations prescribed by the
Secretary.
Clause (ii) shall not apply to a rollover contribution
from an ADS account.
``(3) Income inclusion for rollovers from non-ADS
accounts.--In the case of any amount paid or distributed out of
an individual retirement plan (other than an ADS account) which
is paid into an ADS account (established for the benefit of the
payee or distributee, as the case may be) before the close of
the 60th day after the day on which the payment or distribution
is received--
``(A) sections 72(t) and 408(d)(3) shall not apply,
and
``(B) any amount required to be included in gross
income by reason of this paragraph shall be so included
ratably over the 4-taxable year period beginning with
the taxable year in which the payment or distribution
is made.
``(e) Qualified Special Purpose Distribution.--
``(1) In general.--For purposes of this section, the term
`qualified special purpose distribution' means any payments or
distributions to an individual from an ADS account--
``(A) if such payments or distributions are
qualified first-time homebuyer distributions, or
``(B) to the extent such payments or distributions
do not exceed--
``(i) the qualified higher education
expenses of the taxpayer for the taxable year
in which received, and
``(ii) the qualified medical expenses of
the taxpayer for the taxable year in which
received.
The term `qualified special purpose distribution' shall not
include any payment or distribution to the extent such payment
or distribution reduces the balance of the amounts in ADS
accounts of the taxpayer below $1,000.
``(2) Qualified first-time homebuyer distributions.--
``(A) In general.--For purposes of this subsection,
the term `qualified first-time homebuyer distribution'
means any payment or distribution received by an
individual to the extent such payment or distribution
is used by the individual before the close of the 60th
day after the day on which such payment or distribution
is received to pay qualified acquisition costs with
respect to a principal residence for such individual as
a first-time homebuyer.
``(B) Qualified acquisition costs.--For purposes of
this paragraph, the term `qualified acquisition costs'
means the costs of acquiring, constructing, or
reconstructing a residence. Such term includes any
usual or reasonable settlement, financing, or other
closing costs.
``(C) First-time homebuyer; other definitions.--For
purposes of this paragraph--
``(i) First-time homebuyer.--The term
`first-time homebuyer' means any individual if
such individual (and, if married, such
individual's spouse) had no present ownership
interest in a principal residence during the 3-
year period ending on the date of acquisition of the principal
residence to which this paragraph applies.
``(ii) Principal residence.--The term
`principal residence' has the same meaning as
when used in section 1034.
``(iii) Date of acquisition.--The term
`date of acquisition' means the date--
``(I) on which a binding contract
to acquire the principal residence to
which subparagraph (A) applies is
entered into, or
``(II) on which construction or
reconstruction of such a principal
residence is commenced.
``(D) Special rule where delay in acquisition.--If
any payment or distribution out of an ADS account fails
to meet the requirements of subparagraph (A) solely by
reason of a delay or cancellation of the purchase or
construction of the residence, the amount of the
payment or distribution may be contributed to an ADS
account as provided in subsection (d)(3)(A)(i) of
section 408 (determined by substituting `120 days' for
`60 days' in such section), except that--
``(i) subsection (d)(3)(B) of such section
shall not be applied to such contribution, and
``(ii) such amount shall not be taken into
account in determining whether subsection
(d)(3)(A)(i) of such section applies to any
other amount.
``(5) Qualified higher education expenses.--For purposes of
this subsection--
``(A) In general.--The term `qualified higher
education expenses' means tuition, fees, books,
supplies, and equipment required for the enrollment or
attendance of--
``(i) the taxpayer,
``(ii) the taxpayer's spouse, or
``(iii) the taxpayer's child (as defined in
section 151(c)(3)) or grandchild,
at an eligible educational institution (as defined in
section 135(c)(3)).
``(B) Coordination with savings bond provisions.--
The amount of qualified higher education expenses for
any taxable year shall be reduced by any amount
excludable from gross income under section 135.
``(6) Qualified medical expenses.--
``(A) In general.--For purposes of this subsection,
the term `qualified medical expenses' means any amounts
paid during the taxable year, not compensated for by
insurance or otherwise, for medical care (as defined in
section 213(d)) of the taxpayer, his spouse, or a
dependent (as defined in section 152).
``(B) Long-term care insurance.--Such term includes
premiums paid during the taxable year for any long-term
care insurance contract for the benefit of the
individual or such individual's spouse.
``(C) Long-term care insurance contract.--For
purposes of subparagraph (B), the term `long-term care
insurance contract' means any insurance contract issued
if--
``(i) the only insurance protection
provided under such contract is coverage of
qualified long-term care services and benefits
incidental to such coverage (as defined under
regulations prescribed by the Secretary),
``(ii) the maximum benefit under the policy
for expenses incurred for any day does not
exceed $200,
``(iii) such contract does not cover
expenses incurred for services or items to the
extent that such expenses are reimbursable
under title XVIII of the Social Security Act or
would be so reimbursable but for the
application of a deductible or coinsurance
amount,
``(iv) such contract is guaranteed
renewable,
``(v) such contract does not have any cash
surrender value, and
``(vi) all refunds of premiums, and all
policyholder dividends or similar amounts,
under such contract are to be applied as a
reduction in future premiums or to increase
future benefits.
``(f) Other Definitions.--For purposes of this section--
``(1) Rollover contributions.--The term `rollover
contributions' means contributions described in sections
402(c), 403(a)(4), 403(b)(8), and 408(d)(3).
``(2) Compensation.--The term `compensation' has the
meaning given such term by section 219(f).''
(b) Conforming Amendment.--The table of sections for subpart A of
part I of subchapter D of chapter 1 is amended by inserting after the
item relating to section 408 the following new item:
``Sec. 408A. American dream savings
accounts.''
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
<all>
HR 6 IH2S----2
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Sponsor introductory remarks on measure. (CR E52)
Committee Hearings Held.
Committee Hearings Held.
For Further Action See H.R.1215.
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