Tax Restructuring Act of 1980

Tax Restructuring Act of 1980 - Title I; Rate Reductions and Related Adjustments - Amends the Internal Revenue Code to lower the income tax rates on individuals and trusts and estates. Reduces the top marginal income tax rate to 50 percent of taxable income and the bottom rate to 12 percent. Reduces the number of income tax brackets to eight for each category of taxpayer. Increases the amount of the zero bracket amount (formerly the standard deduction) for married individuals filing jointly to $4,000, for unmarried individuals to $2,600, and for married individuals filing separately to $2,000. Increases the minimum income levels at which a taxpayer is required to file an income tax return. Reduces the rate of the alternative minimum tax.

Increases the rate of the earned income credit to 15 percent. Increases the maximum dollar amount of such credit to $750 (reduced by 15 percent of adjusted gross income in excess of $7,000). Qualifies childless couples for such credit. Makes the credit for the elderly refundable where the amount of such credit exceeds tax liability. Reduces the amount of income eligible for the credit for the elderly by amounts received as benefits under Title XVI (Supplemental Security Income Benefits for the Aged, Blind, and Disabled) of the Social Security Act.

Allows married individuals filing jointly an income tax deduction from gross income equal to ten percent of the earned income of the lower income spouse (or of one spouse if both incomes are the same). Limits the amount of such deduction to $2,000 for the taxable year.

Requires State plans for benefits under Title IV (Aid to Families with Dependent Children) of the Social Security Act to adjust levels used by the State for determining payments under such title to reflect changes in the cost of living.

Reduces social security taxes with respect to wages earned after 1980. Directs the Secretary of the Treasury to deposit revenues from the value added tax into the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, and the Federal Hospital Insurance Trust Fund to compensate the loss of social security tax revenues resulting from rate reductions.

Reduces the income tax rates for corporations and the rate of tax on corporate capital gains.

Title II: Capital Formation - Amends the Internal Revenue Code to permit a tax exclusion from the gross income of shareholders (other than trusts, estates, and shareholders holding five percent or more of the value of the voting power of the distributing corporation) of up to $1,500 ($3,000 in the case of joint returns) of stock dividends paid by domestic corporations in the form of newly issued common stock. Specifies that the number of shares so issued shall be determined by reference to a value equal to between 95 and 105 percent of the stocks' value on the distribution date. Disqualifies the stock of a corporation which has repurchased any of its stock within one year before or after the distribution date. Establishes the basis of stock distributed at zero. Treats as ordinary income, rather than capital gain, stock which is sold by a shareholder within one year of its distribution.

Increases the allowable amount of the income tax deduction for contributions to an individual retirement account (IRA) to the lesser of $2,000 or 15 percent of an employee's taxable compensation. Permits active participants in tax-qualified retirement plans, tax-sheltered annuities, or governmental plans to claim an income tax deduction for contribution to an IRA up to a maximum of $1,000 for the taxable year. Disqualifies self-employed individuals and shareholder employees for the retirement savings deduction.

Revises the method for computing depreciation allowances. Establishes a simplified cost recovery system for depreciable tangible property (other than public utility property, certain livestock, property subject to amortization, certain leased property, and property depreciable on a basis other than time) which is used in a trade or business or held for the production of income and which is placed in service after December 31, 1980. Assigns recovery periods to such property of three, six, nine, or 12 years depending upon the current midpoint useful life of the property under the present Asset Depreciation Range (ADR) system utilized by the Internal Revenue Service. Requires that the recovery period for each type of depreciable property be at least 35 percent shorter than its present midpoint useful life under ADR, unless the taxpayer elects to place the property in a class having a longer recovery period.

Permits taxpayers to choose depreciation percentages of either 200, 150, or 100 percent of straight line depreciation. Specifies that the recovery percentage used in computing the depreciation allowance for a taxable year shall be the depreciation percentage selected by the taxpayer divided by the number of years in the recovery period assigned to the property.

Requires the taxpayer to establish a recovery account into which the cost of depreciable property which is placed in service is added in accordance with the "half-year convention" rule of the ADR system (one-half of the asset's cost is added to the account in the year it is placed in service, one-half in the next year). Reduces the amount of the recovery account by the amount realized on the sale of any asset in the account disposed of by the taxpayer.

Reduces to three years the present six year useful life requirement for depreciable assets which otherwise qualify for additional first year depreciation.

Establishes a 25 year useful life for buildings (except public utility buildings) assigned a 45 year or less useful life under IRS Revenue Procedure 62-61, and a 30 year useful life for buildings assigned a useful life of more than 45 years. Establishes a 15 year useful life for farm buildings.

Increases the present 20 percent variance for useful lives of depreciable property allowed under ADR to 35 percent in the case of public utility property.

Shortens to six years the useful life required for the full basis of an asset to qualify for the investment tax credit. Provides that 60 percent of the basis of an asset is eligible for the investment tax credit if its useful life is at least three years but less than six years.

Title III: Value Added Tax - Imposes a ten percent tax on business transactions involving: (1) the sale of property in the United States; (2) the performance of services in the United States; and (3) the importing of property into the United States by individuals engaging in a trade or business.

Exempts from the value added tax the following commodities: (1) food; (2) housing; and (3) medical care. Exempts from such tax sales by farmers or fishermen, the performance of mass transportation services in urbanized areas, sales to governmental entities and educational activities of such entities, tax-exempt public charities, exports of property, and interest. Imposes a tax on sales and the performance of services by a governmental entity and tax-exempt organization other than public charities if (and only if) a separate charge or fee is made therefor.

Allows taxpayers a refundable credit against the value added tax for the amount of such tax paid by suppliers of the taxpayer.

Charges the seller of property or services with the responsibility for payment of the value added tax. Requires the seller to provide the purchaser with a tax invoice relating to the transaction if the seller has reason to believe that the purchaser is liable for the value added tax. Conditions the allowance of a tax credit upon the receipt of a tax invoice.

Exempts individuals, at their election, from the value added tax whose taxable transactions do not exceed $20,000 for the calendar year, and can reasonably be expected not to exceed $20,000 for the following calendar year. Terminates such exemption if the taxpayer's taxable transactions exceed specified amounts during any quarter of the calendar year.

Requires tax returns for the value added tax to be filed before the first day of the second month after the close of each calendar quarter (or calendar month if the taxpayer so elects).

Requires individuals engaged in business activity to notify the Secretary of any change in the form of their business which might affect their liability for the value added tax.

Sets forth rules for the application of the value added tax, including rules relating to: (1) the income tax treatment of property which is subject to the value added tax; (2) gifts of business property or services; (3) dispositions of nonbusiness real property; and (4) insurance contracts.

Title IV: Limitation on Growth of Federal Spending - Federal Spending Control Act of 1980 - Amends the Congressional Budget Act of 1974 to prohibit the adoption of any concurrent resolution on the budget which contains a level of total budget outlays in excess of specified percentages for fiscal years after 1980. Establishes procedures to enable the President and Congress to suspend such limitations.

Requires the inclusion in the Congressional budget, for purposes of this Act, of the outlays of all agencies of the Federal Government which are otherwise exempt from inclusion under the Budget and Accounting Act, 1921.