article: SECTION 1. SHORT TITLE; ETC. (a) Short Title.--This Act may be cited as the ``Economic Growth and Tax Relief Act of 2001''. (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. (c) Section 15 Not To Apply.--No amendment made by section 2 shall be treated as a change in a rate of tax for purposes of section 15 of the Internal Revenue Code of 1986. SEC. 2. REDUCTION IN INCOME TAX RATES FOR INDIVIDUALS. (a) In General.--Section 1 is amended by adding at the end the following new subsection: ``(i) Rate Reductions After 2000.-- ``(1) New lowest rate bracket.-- ``(A) In general.--In the case of taxable years beginning after December 31, 2000-- ``(i) the rate of tax under subsections (a), (b), (c), and (d) on taxable income not over the initial bracket amount shall be 12 percent (as modified by paragraph (2)), and ``(ii) the 15 percent rate of tax shall apply only to taxable income over the initial bracket amount. ``(B) Initial bracket amount.--For purposes of this subsection, the initial bracket amount is-- ``(i) $12,000 in the case of subsection (a), ``(ii) $10,000 in the case of subsection (b), and ``(iii) \1/2\ the amount applicable under clause (i) in the case of subsections (c) and (d). ``(C) Inflation adjustment.--In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2001-- ``(i) the Secretary shall make no adjustment to the initial bracket amount for any taxable year beginning before January 1, 2007, ``(ii) the cost-of-living adjustment used in making adjustments to the initial bracket amount for any taxable year beginning after December 31, 2006, shall be determined under subsection (f)(3) by substituting `2005' for `1992' in subparagraph (B) thereof, and ``(iii) such adjustment shall not apply to the amount referred to in subparagraph (B)(iii). If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50. ``(2) Reductions in rates after 2001.--In the case of taxable years beginning in a calendar year after 2001, the corresponding percentage specified for such calendar year in the following table shall be substituted for the otherwise applicable tax rate in the tables under subsections (a), (b), (c), (d), and, to the extent applicable, (e). ------------------------------------------------------------------------ ``In the case of The corresponding percentages shall be taxable years substituted for the following percentages: beginning during -------------------------------------------- calendar year: 12% 28% 31% 36% 39.6% ------------------------------------------------------------------------ 2002............. 12% 27% 30% 35% 38% 2003............. 11% 27% 29% 35% 37% 2004............. 11% 26% 28% 34% 36% 2005............. 11% 26% 27% 34% 35% 2006 and 10% 25% 25% 33% 33% thereafter. ------------------------------------------------------------------------ ``(3) Adjustment of tables.--The Secretary shall adjust the tables prescribed under subsection (f) to carry out this subsection.''. (b) Repeal of Reduction of Refundable Tax Credits.-- (1) Subsection (d) of section 24 is amended by striking paragraph (2) and redesignating paragraph (3) as paragraph (2). (2) Section 32 is amended by striking subsection (h). (c) Conforming Amendments.-- (1) Subparagraph (B) of section 1(g)(7) is amended-- (A) by striking ``15 percent'' in clause (ii)(II) and inserting ``the first bracket percentage'', and (B) by adding at the end the following flush sentence: ``For purposes of clause (ii), the first bracket percentage is the percentage applicable to the lowest income bracket in the table under subsection (c).'' (2) Section 1(h) is amended-- (A) by striking ``28 percent'' both places it appears in paragraphs (1)(A)(ii)(I) and (1)(B)(i) and inserting ``25 percent'', and (B) by striking paragraph (13). (3) Section 15 is amended by adding at the end the following new subsection: ``(f) Rate Reductions Enacted by Economic Growth and Tax Relief Act of 2001.--This section shall not apply to any change in rates under subsection (i) of section 1 (relating to rate reductions after 2000).''. (4) Section 531 is amended by striking ``equal to'' and all that follows and inserting ``equal to the product of the highest rate of tax under section 1(c) and the accumulated taxable income.''. (5) Section 541 is amended by striking ``equal to'' and all that follows and inserting ``equal to the product of the highest rate of tax under section 1(c) and the undistributed personal holding company income.''. (6) Section 3402(p)(1)(B) is amended by striking ``7, 15, 28, or 31 percent'' and inserting ``7 percent, any percentage applicable to any of the 3 lowest income brackets in the table under section 1(c),''. (7) Section 3402(p)(2) is amended by striking ``equal to 15 percent of such payment'' and inserting ``equal to the product of the lowest rate of tax under section 1(c) and such payment''. (8) Section 3402(q)(1) is amended by striking ``equal to 28 percent of such payment'' and inserting ``equal to the product of the third to the lowest rate of tax under section 1(c) and such payment''. (9) Section 3402(r)(3) is amended by striking ``31 percent'' and inserting ``the third to the lowest rate of tax under section 1(c)''. (10) Section 3406(a)(1) is amended by striking ``equal to 31 percent of such payment'' and inserting ``equal to the product of the third to the lowest rate of tax under section 1(c) and such payment''. (11) Section 13273 of the Revenue Reconciliation Act of 1993 is amended by striking ``28 percent'' and inserting ``the third to the lowest rate of tax under section 1(c) of the Internal Revenue Code of 1986''. (d) Effective Dates.-- (1) In general.--Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2000. (2) Amendments to withholding provisions.--The amendments made by paragraphs (6), (7), (8), (9), (10), and (11) of subsection (c) shall apply to amounts paid after the 60th day after the date of the enactment of this Act. SEC. 3. PROTECTION OF SOCIAL SECURITY AND MEDICARE. The amounts transferred to any trust fund under the Social Security Act shall be determined as if this Act had not been enacted. Passed the House of Representatives March 8, 2001. Attest: JEFF TRANDAHL, Clerk.
summary: Economic Growth and Tax Relief Act of 2001 - States that tax rate revisions made by this Act shall not be treated as a tax rate change for purposes of applying the pre-and post-change tax rates under section 15 of the Internal Revenue Code. (Such provision would otherwise apply two tax rates to income in the same tax year, depending upon effective date.)Amends the Code, as of tax year 2001, to establish (in addition to existing brackets) a 12 percent individual tax bracket for each filing status. Caps taxable income levels for the 12 percent bracket at: (1) $12,000 for married individuals filing jointly; (2) $10,000 for heads of households; and (3) $6,000 for unmarried individuals or married individuals filing separately. Applies the current 15 percent bracket to income levels above the 12 percent caps but below current 15 percent caps.Prohibits minimum bracket amount inflation adjustments through tax year 2006. Revises the cost-of-living adjustment formula, as of tax year 2007.Provides, beginning in tax year 2002, for specified reductions in the 12, (maintaining the revised 15 percent bracket without further change), 28, 31, 36, and 39.6 percent individual (and estate) brackets, so that as of 2006 and thereafter, there shall be four tax brackets of 10, 15, 25, and 33 percent.Repeals mandatory reductions in the additional (three or more children) child tax credit and the earned income credit for taxpayers subject to the alternative minimum tax.Revises current tax rates in conformity with the amendments made by this Act respecting: (1) accumulated corporate earnings; (2) personal holding companies; (3) voluntary withholding on certain Federal payments, unemployment benefits, gambling winnings, and Indian casino profits; (3) backup withholding; and (4) supplemental wage payments.States that amounts transferred to any Social Security Act trust fund shall be determined as if this Act had not been enacted.