ELIMINATION OF PROVISION REDUCING MARGINAL TAX RATE FOR HIGH-INCOME TAXPAYERS.

SEC. 11101. ELIMINATION OF PROVISION REDUCING MARGINAL TAX RATE FOR HIGH-INCOME TAXPAYERS. (a) General Rule.— Section 1 (relating to tax imposed) is amended by striking subsections (a) through (e) and inserting the following: “(a) Married Individuals Filing Joint Returns and Surviving Spouses.— There is hereby imposed on the taxable income of— “(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and “(2) every surviving spouse (as defined in section 2(a)), a tax determined in accordance with the following table: “If taxable income is: The tax is: Not over $32,450 15% of taxable income. Over $32,450 but not over $78,400 $4,867.50, plus 28% of the excess over $32,450. Over $78,400 $17,733.50, plus 31% of the excess over $78,400. 104 STAT. 1388–404 “(b) Heads of Households.— There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: “If taxable income is: The tax is: Not over $26,050 15% of taxable income. Over $26,050 but not over $67,200 $3,907.50, plus 28% of the excess over $26,500 Over $67,200 $15,429.50, plus 31% of the excess over $67,200. “(c) Unmarried Individuals (Other Than Surviving Spouses and Heads of Households).— There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: “If taxable income is: The tax is: Not over $19,450 15% of taxable income Over $19,450 but not over $47,050 $2,917.50, plus 28% of the excess over $19.450 Over $47,050 $10,645.50, plus 31% of the excess over $47,050 “(d) Married Individuals Filing Separate Returns.— There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, a tax determined in accordance with the following table: “If taxable income is: The tax is: Not over $16,225 15% of taxable income Over $16,225 but not over $39,200 $2,433.75, plus 28% of the excess over $16,225 Over $39,200 $8,866.75, plus 31% of the excess over $39.200 “(e) Estates and Trusts.— There is hereby imposed on the taxable income of— “(1) every estate, and “(2) every trust, taxable under this subsection a tax determined in accordance with the following table: “If taxable income is: The tax is: Not over $3.300 15% of taxable income Over $3,300 but not over $9,900 $495, plus 28% of the excess over $3,300 Over $9,900 $2,343, plus 31% of the excess over $9,900” (b) Repeal of Phaseout.— (1) In general.— Section 1 is amended by striking subsection (g) (relating to phaseout of 15-percent rate and personal exemptions). (2) Conforming amendment.— Subparagraph (A) of section 1(1)(6) (relating to adjustments for inflation) is amended by striking “subsection (g)(4),”. (c) 28 Percent Maximum Capital Gains Rate.— Subsection (j) of section 1 (relating to maximum capital gains rate) is amended to read as follows: “(j) Maximum Capital Gains Rate.— If a taxpayer has a net capital gain for any taxable year, then the tax imposed by this section shall not exceed the sum of— “(1) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of— 104 STAT. 1388–405 “(A) taxable income reduced by the amount of the net capital gain, or “(B) the amount of taxable income taxed at a rate below 28 percent, plus “(2) a tax of 28 percent of the amount of taxable income in excess of the amount determined under paragraph (1).” (d) Technical Amendments.— (1) (A) Subsection (f) of section 1 is amended— (i) by striking “1988” in paragraph (1) and inserting “1990”, and (ii) by striking “1987” in paragraph (3)(B) and inserting “1989”. (B) Subparagraph (B) of section 32(i)(l) is amended by striking “1987” and inserting “1989”. (C) Subparagraph (C) of section 41(e)(5) is amended— (i) by inserting “, by substituting ‘calendar year 1987’ for ‘calendar year 1989’ in subparagraph (B) thereof” before the period at the end of clause (i), (ii) by striking “1987” in clause (ii) and inserting “1989”, and (iii) by adding at the end of clause (ii) the following new sentence: “Such substitution shall be in lieu of the substitution under clause (i).”. (D) Subparagraph (B) of section 63(c)(4) is amended by inserting “, by substituting ‘calendar year 1987’ for ‘calendar year 1989’ in subparagraph (B) thereof” before the period at the end. (E) Clause (ii) of section 135(b)(2)(B) is amended by striking “, determined by substituting ‘calendar year 1989’ for ‘calendar year 1987’ in subparagraph (B) thereof”. (F) Subparagraph (B) of section 151(d)(3) is amended by striking “1987” and inserting “1989”. (G) Clause (ii) of section 513(h)(2)(C) is amended by inserting “, by substituting ‘calendar year 1987’ for ‘calendar year 1989’ in subparagraph (B) thereof” before the period at the end. (2) Section 1 is amended by striking subsection (h) and re-designating subsections (i) and (j) as subsections (g) and (h), respectively. (3) Subsection (j) of section 59 is amended— (A) by striking “section l(i)” each place it appears and inserting “section 1(g)”, and (B) by striking “section l(i)(3)(B)” in paragraph (2)(C) and inserting “section Kg)(S)(B)”. (4) Paragraph (4) of section 691(c) is amended by striking “l(j)” and inserting “1(h)”. (5) (A) Clause (i) of section 904(b)(3)(D) is amended by striking “subsection (j)” and inserting “subsection (h)”. (B) Subclause (I) of section 904(b)(3)(E)(iii) is amended by striking “section l(j)” and inserting “section 1(h)”. (6) Clause (iv) of section 61O3(e)(l)(A) is amended by striking “section l(j)” and inserting “section 1(g)”. (7) (A) Subparagraph (A) of section 7518(g)(6) is amended by striking “I” and inserting “1(h)”. (B) Subparagraph (A) of section 607(h)(6) of the Merchant Marine Act, 1936 is amended by striking “l(j)” and inserting “1(h)”. (e) Effective Date.— The amendments made by this section shall apply to taxable years beginning after December 31, 1990.