article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Family Living Wage Act''. SEC. 2. INCREASE IN EARNED INCOME TAX CREDIT. (a) General Rule.--Subsections (a) and (b) of section 32 of the Internal Revenue Code of 1986 (relating to earned income tax credit) are amended to read as follows: ``(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 credit percentage of so much of the earned income for the taxable year as does not exceed $8,000. ``(2) Limitation.--The amount of the credit allowable to a taxpayer under this subsection for any taxable year shall not exceed the excess (if any) of-- ``(A) the credit percentage of $8,000, over ``(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds $10,000. ``(b) Percentages.--For purposes of subsection (a)-- ``(1) Credit percentage.-- ``(A) In general.--The credit percentage is the percentage equal to the sum of-- ``(i) 20 percent, ``(ii) 5 percent for each school age qualifying child, plus ``(iii) 10 percent for each preschool age qualifying child. ``(B) Not more than 4 children taken into account.--Not more than 4 children shall be taken into account under subparagraph (A), and preschool age qualifying children shall be taken into account before any other children are taken into account. ``(2) Phaseout percentage.-- ``(A) Phasedown to minimum benefit.-- ``(i) In general.--The phaseout percentage is the percentage determined in accordance with the following table: ``If the combination of qualifying children taken into account under The phaseout paragraph (1) is-- percentage is-- 1 S................. 13 2 S, or 1 P......... 14 3 S, or 1 S and 1 P. 15 4 S, or 2 S and 1 P, 16 or 2 P. 3 S and 1 P, or 1 S 17 and 2 P. 2 S and 2 P, or 3 P. 18 1 S and 3 P......... 19 4 P................. 20. ``(ii) Symbols used in table.--For purposes of clause (i)-- ``(I) S means school age qualifying child, and ``(II) P means preschool age qualifying child. ``(B) Minimum benefit for taxpayers with incomes below $50,000.--Except as provided in subparagraph (C), subparagraph (A) shall not apply so as to reduce the credit allowed by this section to a taxpayer to less than the minimum benefit determined in accordance with the following table: ``If the phaseout percentage The minimum applicable to the taxpayer is-- benefit is-- 13..................... $200 14..................... 400 15..................... 600 16..................... 800 17..................... 1,000 18..................... 1,200 19..................... 1,400 20..................... 1,600. ``(C) Phaseout of minimum benefit.--If the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year exceeds $50,000, the minimum benefit determined under subparagraph (B) shall be reduced by 15 percent of such excess. ``(3) Special rules for individual whose only children have attained age 16.--For purposes of this section, in the case of an individual who is an eligible individual solely by reason of children each of whom has attained age 16 as of the close of the taxable year-- ``(A) the credit percentage shall be 20 percent, ``(B) the phaseout percentage shall be 12 percent, and ``(C) subparagraphs (B) and (C) of paragraph (2) shall not apply.'' (b) Preschool Age and School Age Qualifying Children Defined.-- Subsection (c) of section 32 of such Code is amended by adding at the end the following new paragraph: ``(4) Preschool age and school age qualifying children.-- ``(A) Preschool age qualifying child.--The term `preschool age qualifying child' means any qualifying child who has not attained age 6 as of the close of the taxable year. ``(B) School age qualifying child.--The term `school age qualifying child' means any qualifying child who has attained age 6 but not age 16 as of the close of the taxable year.'' (c) Advance Payment Provisions.-- (1) Subsection (b) of section 3507 of such Code is amended by striking ``and'' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ``, and'', and by inserting after paragraph (3) the following new paragraph: ``(4) states the number and ages of qualifying children (as defined in section 32(c)) of the employee for the taxable year.'' (2) Paragraph (2) of section 3507(c) of such Code is amended-- (A) in subparagraph (B)(i), by striking ``(without regard to subparagraph (D)'' and by striking ``section 32(a)(1)'' and inserting ``section 32(a)'', (B) in subparagraph (B)(ii), by striking ``section 32(b)(1)(B)(ii)'' and inserting ``section 32(a)(2)'' and by striking ``section 32(a)(1)'' and inserting ``section 32(a)'', and (C) by adding at the end the following new sentence: ``For purposes of this paragraph, the credit percentage shall be determined under section 32(b) on the basis of the number and ages of qualifying children specified in the earned income eligibility certificate and the determination of the amounts referred to in subparagraph (B)(ii) shall be made on the basis of the number and ages of qualifying children so specified.'' (3) Clause (i) of section 3507(e)(3)(A) of such Code is amended by inserting before ``, or'' the following: ``(or changing the percentages applicable to the employee under section 32(b) for the taxable year)''. (d) Conforming Amendments.-- (1) Paragraph (2) of section 32(f) of such Code is amended-- (A) by striking ``subsection (b)'' each place it appears in subparagraphs (A) and (B) and inserting ``subsection (a)(2)'', and (B) by adding at the end the following new sentence: ``Separate tables shall be prescribed for each of the phaseout percentages specified in the table contained in subsection (b)(2)(A)(i).'' (2) Paragraphs (1) and (2) of section 32(i) of such Code are amended to read as follows: ``(1) In general.--In the case of any taxable year beginning after 1995, each amount referred to in paragraph (2) shall be increased by an amount equal to-- ``(A) such 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 by substituting `1994' for `1989' in subparagraph (B) thereof. ``(2) Amounts.--The amounts referred to in this paragraph are-- ``(A) the credit percentages used for purposes of subsection (a), ``(B) the $10,000 amount contained in subsection (a)(2)(B), and ``(C) the $50,000 amount contained in subsection (b)(2)(C).'' (3) Section 213 of such Code (relating to medical, dental, etc., expenses) is amended by striking subsection (f). (4) Paragraph (3) of section 162(l) of such Code is amended to read as follows: ``(3) Coordination with medical deduction.--Any amount paid by a taxpayer for insurance to which paragraph (1) applies shall not be taken into account in computing the amount allowable to the taxpayer as a deduction under section 213(a).'' (e) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1993; except that the amendments made by subsection (c) shall take effect on January 1, 1994. SEC. 3. DEPENDENT CARE CREDIT LIMITED TO HANDICAPPED DEPENDENTS AND SPOUSES. (a) In General.--Paragraph (1) of section 21(b) of the Internal Revenue Code of 1986 (defining qualifying individual and employment- related expenses) is amended by striking subparagraph (A), by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively, and by adding at the end the following new sentence: ``In the case of an individual described in subparagraph (A) who has not attained age 16 as of the close of the taxable year, such individual may be treated as a qualifying individual for purposes of this section only if the taxpayer elects not to treat such individual as a qualifying child under section 32 for such year.'' (b) Conforming Amendments.-- (1) Subparagraph (B) of section 21(b)(2) of such Code is amended by striking ``care of--'' and all that follows and inserting ``care of a qualifying individual who regularly spends at least 8 hours each day in the taxpayer's household.'' (2) Paragraph (2) of section 21(d) of such Code is amended by striking ``subsection (b)(1)(C)'' and inserting ``subsection (b)(1)(B)''. (3) Paragraph (5) of section 21(e) of such Code is amended-- (A) by striking ``is under the age of 13 or'' in subparagraph (B), and (B) by striking ``subparagraph (A) or (B) of subsection (b)(1) (whichever is appropriate)'' and inserting ``subsection (b)(1)(A)''. (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1993. SEC. 4. ELIMINATION OF PROPOSED CHANGES IN TREATMENT OF EARNED INCOME CREDIT IN DETERMINING CERTAIN WELFARE BENEFITS. Paragraphs (1) and (2)(A) of section 402(c) of the Family Support Act of 1988 are repealed.
summary: Family Living Wage Act - Amends Internal Revenue Code provisions governing the earned income tax credit to: (1) increase from $5,714 to $8,000 the amount of earned income subject to the credit; (2) establish the basic credit at 20 percent; and (3) permit an additional credit (to apply to not more than four children) of five percent for each dependent school age child between age six and age 16 and ten percent for each preschool age child. Reduces the amount of the credit for taxpayers with adjusted gross income over $50,000. Indexes amounts relating to the credit beginning in 1995. Disallows application of the nonrefundable dependent care income tax credit with respect to a taxpayer's dependents under age 13, unless the child is physically or mentally incapable of self-care. Permits the credit with respect to handicapped children under age 16 only if the taxpayer elects not to include the child within the framework of the earned income credit. Repeals provisions of the Family Support Act of 1988 that revise the way in which the earned income credit is treated in the context of needs analysis for purposes of State plans for aid and services to needy families with children under title IV of the Social Security Act.