,i #aac? ,,congress #a/ ,session ,h4 ,r4 #ajdj ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,m>* #aa1 #bjac ,mr4 ,burgess 7= himself1 ,mr4 ,cole1 ,mr4 ,ross1 & ,mr4 ,=bes7 introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,ways & ,means1 & 9 addition to ! ,committee on ,rules1 = a p]iod to be subsequ5tly det]m9$ by ! ,speak]1 9 ea* case = consid]ation ( su* provisions z fall )9 ! jurisdiction ( ! committee conc]n$ ,a ,,bill ,to am5d ! ,int]nal ,rev5ue ,code ( #aihf to provide taxpay]s a flat tax alt]native to ! curr5t income tax sy/em4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,flat ,tax ,act4 #b4 ,! flat tax 7a7 ,9 g5]al ,sub*apt] ,a ( *apt] #a ( ! ,int]nal ,rev5ue ,code ( #aihf is am5d$ by ins]t+ aft] "p ,,vii ! foll[+ new "p3 ,,viii ,! flat tax ,sec4 #fj4 ,irrevocable election to be subject to flat tax4 ,sec4 #fj;,a4 ,tax impos$ on individuals4 ,sec4 #fj;,b4 ,tax impos$ on bus9ess activities4 ,sec4 #fj;,c4 ,tax on nonca% comp5sation provid$ to employees n engag$ 9 bus9ess activity4 #fj4 ,irrevocable election to be subject to flat tax 7a7 ,individual 7#a7 ,9 g5]al ,except z provid$ 9 p>agraph 7#b71 9 lieu ( ! tax impos$ by sections #a 7relat+ to tax impos$7 & #ee 7relat+ to alt]native m9imum tax impos$71 "u regulations prescrib$ by ! ,secret>y1 an individual may make an irrevocable election to be subject to ! tax impos$ by ?is "p4 7#b7 ,innoc5t sp\se exception ,an individual :o has made an election "u p>agraph 7#a7 & :o subsequ5tly obta9s relief ( liability = tax "u section #fjae7;b7 may1 n lat] ?an #a ye> aft] ! date su* relief is grant$1 revoke ! election made "u p>agraph 7#a74 7b7 ,p]son engag$ 9 bus9ess activity ,9 lieu ( ! tax impos$ by sections #aa 7relat+ to tax impos$7 & #ee 7relat+ to alt]native m9imum tax impos$71 "u regulations prescrib$ by ! ,secret>y1 a p]son engag$ 9 bus9ess activity may make an irrevocable election to be subject to ! tax impos$ by ?is "p4 7c7 ,disall[ance ( ,cr$its ,no cr$it %all be all[$ "u ?is *apt] = any taxable ye> to any p]son ) respect to :om an election "u subsection 7a7 or 7b7 is 9 effect4 #fj;,a4 ,tax impos$ on individuals 7a7 ,9 g5]al ,!re is h]eby impos$ on ! taxable income ( e individual :o makes an election to be subject to ?is "p a tax equal to-- 7#a7 #ai p]c5t ( ! taxable income ( su* individual = su* taxable ye> 9 ! case ( ! fir/ #b taxable ye>s ( ! individual beg9n+ ) ! taxable ye> = :i* ! election is made1 & 7#b7 #ag p]c5t ( ! taxable income ( su* individual = su* taxable ye> 9 ! case ( all taxable ye>s subsequ5t to ! taxable ye>s describ$ 9 p>agraph 7#a74 7b7 ,taxable income ,= purposes ( ?is "p1 ! t]m taxable income means ! excess (-- 7#a7 ! sum (-- 7,a7 wages 7z def9$ 9 section #caba7;a7 )\t reg>d to p>agraph 7#a7 !re(7 :i* are paid 9 ca% & :i* are receiv$ dur+ ! taxable ye> = s]vices p]=m$ 9 ! ,unit$ ,/ates1 7,b7 retirem5t di/ributions :i* are includible 9 gross income = su* taxable ye>1 plus 7,c7 am\nts receiv$ "u any law ( ! ,unit$ ,/ates or ( any ,/ate :i* is 9 ! nature ( unemploym5t comp5sation1 ov] 7#b7 ! /&>d d$uction4 7c7 ,/&>d d$uction ,= purposes ( ?is "p-- 7#a7 ,9 g5]al ,! t]m /&>d d$uction means ! sum (-- 7,a7 ! basic /&>d d$uction1 plus 7,b7 ! additional /&>d d$uction4 7#b7 ,basic /&>d d$uction ,= purposes ( p>agraph 7#a71 ! basic /&>d d$uction is-- 7,a7 #cb1dif 9 ! case (-- 7i7 a jo9t return1 or 7ii7 a surviv+ sp\se 7z def9$ 9 section #b7;a771 7,b7 #bj1gci 9 ! case ( a head ( h\sehold 7z def9$ 9 section #b7;b771 & 7,c7 #af1bdh 9 ! case ( an individual-- 7i7 :o is n m>ri$ & :o is n a surviv+ sp\se or head ( h\sehold1 or 7ii7 :o is a m>ri$ individual fil+ a sep>ate return4 7#c7 ,additional /&>d d$uction ,= purposes ( p>agraph 7#a71 ! additional /&>d d$uction is #f1iih = ea* dep5d5t 7z def9$ 9 section #aeb7 :o is a qualify+ *ild 7z def9$ 9 section #aeb7;c77#a77 = ! taxable ye> & :o is n requir$ to file a return = su* taxable ye>4 7d7 ,retirem5t di/ributions ,= purposes ( ?is section1 ! t]m retirem5t di/ribution means any di/ribution f-- 7#a7 a plan describ$ 9 section #dja7;a7 :i* includes a tru/ exempt f tax "u section #eja7;a71 7#b7 an annuity plan describ$ 9 section #djc7;a71 7#c7 an annuity contract describ$ 9 section #djc7;b71 7#d7 an individual retirem5t acc\nt describ$ 9 section #djh7;a71 7#e7 an individual retirem5t annuity describ$ 9 section #djh7;b71 7#f7 an eligible def]r$ comp5sation plan 7z def9$ 9 section #deg71 7#g7 a gov]nm5tal plan 7z def9$ 9 section #dad7;d771 or 7#h7 a tru/ describ$ 9 section #eja7;c77#ah74 ,su* t]m includes any plan1 contract1 acc\nt1 annuity1 or tru/ :i*1 at any "t1 has be5 det]m9$ by ! ,secret>y to be su* a plan1 contract1 acc\nt1 annuity1 or tru/4 7e7 ,income ( c]ta9 *ildr5 ,= purposes ( ?is "p-- 7#a7 an individual's taxable income %all include ! taxable income ( ea* dep5d5t *ild ( su* individual :o has n atta9$ age #ad z ( ! close ( su* taxable ye>1 & 7#b7 su* dep5d5t *ild %all h no liability = tax impos$ by ?is section ) respect to su* income & %all n be requir$ to file a return = su* taxable ye>4 7f7 ,inflation adju/m5t 7#a7 ,9 g5]al ,9 ! case ( any taxable ye> beg9n+ 9 a cal5d> ye> aft] #bjac1 ea* doll> am\nt conta9$ 9 subsection 7c7 %all be increas$ by an am\nt det]m9$ by ! ,secret>y to be equal to-- 7,a7 su* doll> am\nt1 multipli$ by 7,b7 ! co/-(-liv+ adju/m5t = su* cal5d> ye>4 7#b7 ,co/-(-liv+ adju/m5t ,= purposes ( p>agraph 7#a71 ! co/-(-liv+ adju/m5t = any cal5d> ye> is ! p]c5tage 7if any7 by :i*-- 7,a7 ! ,,cpi = ! prec$+ cal5d> ye>1 exce$s 7,b7 ! ,,cpi = ! cal5d> ye> #bjab4 7#c7 ,,cpi = any cal5d> ye> ,= purposes ( p>agraph 7#b71 ! ,,cpi = any cal5d> ye> is ! av]age ( ! ,consum] ,price ,index z ( ! close ( ! #ab-mon? p]iod end+ on ,augu/ #ca ( su* cal5d> ye>4 7#d7 ,consum] ,price ,index ,= purposes ( p>agraph 7#c71 ! t]m ,consum] ,price ,index means ! la/ ,consum] ,price ,index = all-urban consum]s publi%$ by ! ,dep>tm5t ( ,labor4 ,= purposes ( ! prec$+ s5t5ce1 ! revision ( ! ,consum] ,price ,index :i* is mo/ consi/5t ) ! ,consum] ,price ,index = cal5d> ye> #aihf %all be us$4 7#e7 ,r\nd+ ,if any increase det]m9$ "u p>agraph 7#a7 is n a multiple ( #aj1 su* increase %all be r\nd$ to ! next highe/ multiple ( #aj4 7g7 ,m>ital /atus ,= purposes ( ?is section1 m>ital /atus %all be det]m9$ "u section #ggjc4 #fj;,b4 ,tax impos$ on bus9ess activities 7a7 ,tax impos$ ,!re is h]eby impos$ on e p]son engag$ 9 a bus9ess activity :o makes an election to be tax$ "u ?is "p a tax equal to-- 7#a7 #ai p]c5t ( ! bus9ess taxable income ( su* p]son = su* taxable ye> 9 ! case ( ! fir/ #b taxable ye>s ( ! p]son beg9n+ ) ! taxable ye> = :i* ! election is made1 & 7#b7 #ag p]c5t ( ! bus9ess taxable income ( su* p]son = su* taxable ye> 9 ! case ( all taxable ye>s subsequ5t to ! taxable ye>s describ$ 9 p>agraph 7#a74 7b7 ,liability = tax ,! tax impos$ by ?is section %all be paid by ! p]son engag$ 9 ! bus9ess activity1 :e!r su* p]son is an individual1 p>tn]%ip1 corporation1 or o!rwise4 7c7 ,bus9ess taxable income ,= purposes ( ?is section-- 7#a7 ,9 g5]al ,! t]m bus9ess taxable income means gross active income r$uc$ by ! d$uctions specifi$ 9 subsection 7d74 7#b7 ,gross active income 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m gross active income means gross receipts f-- 7i7 ! sale or ex*ange ( prop]ty or s]vices 9 ! ,unit$ ,/ates by any p]son 9 connection ) a bus9ess activity1 & 7ii7 ! export ( prop]ty or s]vices f ! ,unit$ ,/ates 9 connection ) a bus9ess activity4 7,b7 ,ex*anges ,= purposes ( ?is section1 ! am\nt treat$ z gross receipts f ! ex*ange ( prop]ty or s]vices is ! fair m>ket value ( ! prop]ty or s]vices receiv$1 plus any money receiv$4 7,c7 ,coord9ation ) special rules = f9ancial s]vices1 etc ,except z provid$ 9 subsection 7e7-- 7i7 ! t]m prop]ty does n include money or any f9ancial in/rum5t1 & 7ii7 ! t]m s]vices does n include f9ancial s]vices4 7#c7 ,exemption f tax = activities ( gov]nm5tal entities & tax-exempt organizations ,= purposes ( ?is section1 ! t]m bus9ess activity does n include any activity ( a gov]nm5tal entity or ( any o!r organization :i* is exempt f tax "u ?is *apt]4 7d7 ,d$uctions 7#a7 ,9 g5]al ,! d$uctions specifi$ 9 ?is subsection are-- 7,a7 ! co/ ( bus9ess inputs = ! bus9ess activity1 7,b7 wages 7z def9$ 9 section #caba7;a7 )\t reg>d to p>agraph 7#a7 !re(7 :i* are paid 9 ca% = s]vices p]=m$ 9 ! ,unit$ ,/ates z an employee1 & 7,c7 retirem5t contributions to or "u any plan or arrangem5t :i* makes retirem5t di/ributions 7z def9$ 9 section #fj;,a7d77 = ! b5efit ( su* employees to ! ext5t su* contributions are all[$ z a d$uction "u section #djd4 7#b7 ,bus9ess inputs 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 ! t]m co/ ( bus9ess inputs means-- 7i7 ! am\nt paid = prop]ty sold or us$ 9 connection ) a bus9ess activity1 7ii7 ! am\nt paid = s]vices 7o!r ?an = ! s]vices ( employees1 includ+ fr+e b5efits paid by reason ( su* s]vices7 9 connection ) a bus9ess activity1 & 7iii7 any excise tax1 sales tax1 cu/oms duty1 or o!r sep>ately /at$ levy impos$ by a ,f$]al1 ,/ate1 or local gov]nm5t on ! pur*ase ( prop]ty or s]vices :i* are = use 9 connection ) a bus9ess activity4 ,su* t]m %all n include any tax impos$ by *apt] #b or #ba4 7,b7 ,exceptions ,su* t]m %all n include-- 7i7 items describ$ 9 subp>agraphs 7,b7 & 7,c7 ( p>agraph 7#a71 & 7ii7 items = p]sonal use n 9 connection ) any bus9ess activity4 7,c7 ,ex*anges ,= purposes ( ?is section1 ! am\nt treat$ z paid 9 connection ) ! ex*ange ( prop]ty or s]vices is ! fair m>ket value ( ! prop]ty or s]vices ex*ang$1 plus any money paid4 7e7 ,special rules = f9ancial int]m$iation s]vice activities ,9 ! case ( ! bus9ess activity ( provid+ f9ancial int]m$iation s]vices1 ! taxable income f su* activity %all be equal to ! value ( ! int]m$iation s]vices provid$ 9 su* activity4 7f7 ,exception = s]vices p]=m$ z employee ,= purposes ( ?is section1 ! t]m bus9ess activity does n include ! p]=mance ( s]vices by an employee = ! employee's employ]4 7g7 ,c>ryov] ( cr$it-,equival5t ( excess d$uctions 7#a7 ,9 g5]al ,if ! aggregate d$uctions = any taxable ye> exce$ ! gross active income = su* taxable ye>1 ! cr$it-equival5t ( su* excess %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is section = ! foll[+ taxable ye>4 7#b7 ,cr$it-equival5t ( excess d$uctions ,= purposes ( p>agraph 7#a71 ! cr$it-equival5t ( ! excess describ$ 9 p>agraph 7#a7 = any taxable ye> is an am\nt equal to-- 7,a7 ! sum (-- 7i7 su* excess1 plus 7ii7 ! product ( su* excess & ! #c-mon? ,treasury rate = ! la/ mon? ( su* taxable ye>1 multipli$ by 7,b7 ! rate ( ! tax impos$ by subsection 7a7 = su* taxable ye>4 7#c7 ,c>ryov] ( unus$ cr$it ,if ! cr$it all[able = any taxable ye> by reason ( ?is subsection exce$s ! tax impos$ by ?is section = su* ye>1 !n 79 lieu ( treat+ su* excess z an ov]paym5t7 ! sum (-- 7,a7 su* excess1 plus 7,b7 ! product ( su* excess & ! #c-mon? ,treasury rate = ! la/ mon? ( su* taxable ye>1 %all be all[$ z a cr$it aga9/ ! tax impos$ by ?is section = ! foll[+ taxable ye>4 7#d7 #c-mon? ,treasury rate ,= purposes ( ?is subsection1 ! #c-mon? ,treasury rate is ! rate det]m9$ by ! ,secret>y bas$ on ! av]age m>ket yield 7dur+ any #a-mon? p]iod select$ by ! ,secret>y & end+ 9 ! cal5d> mon? 9 :i* ! det]m9ation is made7 on out/&+ m>ketable obligations ( ! ,unit$ ,/ates ) rema9+ p]iods to maturity ( #c mon?s or less4 #fj;,c4 ,tax on nonca% comp5sation provid$ to employees n engag$ 9 bus9ess activity 7a7 ,imposition ( tax ,!re is h]eby impos$ on e employ] ( an employee to :om ?is section applies & :o makes an election to be tax$ "u ?is "p a tax equal to-- 7#a7 #ai p]c5t ( ! value ( excludable comp5sation provid$ dur+ ! cal5d> ye> by ! employ] = ! b5efit ( employees to :om ?is section applies 9 ! case ( ! fir/ #b cal5d> ye>s beg9n+ ) ! cal5d> ye> = :i* ! election "u section #fj is made1 & 7#b7 #ag p]c5t ( su* excludable comp5sation dur+ ! cal5d> ye> 9 ! case ( all cal5d> ye>s subsequ5t to ! cal5d> ye>s describ$ 9 p>agraph 7#a74 7b7 ,liability = tax ,! tax impos$ by ?is section %all be paid by ! employ]4 7c7 ,excludable comp5sation ,= purposes ( subsection 7a71 ! t]m excludable comp5sation means any remun]ation = s]vices p]=m$ z an employee o!r ?an-- 7#a7 wages 7z def9$ 9 section #caba7;a7 )\t reg>d to p>agraph 7#a7 !re(7 :i* are paid 9 ca%1 7#b7 remun]ation = s]vices p]=m$ outside ! ,unit$ ,/ates1 & 7#c7 retirem5t contributions to or "u any plan or arrangem5t :i* makes retirem5t di/ributions 7z def9$ 9 section #fj;,a7d774 7d7 ,employees to :om section applies ,?is section %all apply to an employee :o is employ$ 9 any activity by-- 7#a7 any organization :i* is exempt f taxation "u ?is *apt]1 or 7#b7 any ag5cy or in/rum5tality ( ! ,unit$ ,/ates1 any ,/ate or political subdivision ( a ,/ate1 or ! ,di/rict ( ,columbia4 4 7b7 ,cl]ical am5dm5t ,! table ( p>ts = sub*apt] ,a ( *apt] #a ( su* ,code is am5d$ by add+ at ! end ! foll[+ new item3 ,"p ,,viii4 ,! flat tax4 4 7c7 ,effective date ,! am5dm5ts made by ?is section %all apply to taxable ye>s beg9n+ aft] ,decemb] #ca1 #bjac4 #c4 ,repeal ( e/ate & gift taxes 7a7 ,9 g5]al ,subtitle ,b ( ! ,int]nal ,rev5ue ,code ( #aihf is h]eby repeal$4 7b7 ,effective date ,! repeal made by subsection 7a7 %all apply to ! e/ates ( dec$5ts dy+1 & gifts & g5]ation-skipp+ transf]s made1 aft] ,decemb] #ca1 #bjac4 7c7 ,cross ref]5ce ,see section #ajb ( ! ,int]nal ,rev5ue ,code ( #aihf = exclusion ( gifts & inh]itances f gross income4 #d4 ,sup]majority requir$ to consid] rev5ue measure ,a bill1 jo9t resolution1 am5dm5t to a bill or jo9t resolution1 or conf]5ce report t-- 7#a7 includes an increase 9 ! rates ( tax specifi$ 9 section #fj;,a7a7 or #fj;,b7a7 ( ! ,int]nal ,rev5ue ,code ( #aihf 7z am5d$ by ?is ,act71 or 7#b7 r$uces ! /&>d d$uction1 z def9$ 9 section #fj;,a7c7 ( su* ,code 7z s am5d$71 or ! d$uctions specifi$ 9 section #fj;,b7d7 ( su* ,code 7z s am5d$71 may n be consid]$ z pass$ or agre$ to by ! ,h\se ( ,repres5tatives or ! ,s5ate unless s det]m9$ by a vote ( n less ?an two-?irds ( ! ,memb]s ( ! ,h\se ( ,repres5tatives or ! ,s5ate 7z ! case may be7 vot+1 a quorum be+ pres5t4