,,ii  #aag? ,,congress  #b;d ,session   
,s4 #dcic  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,june #ad1 #bjbb,mr4   
,grassley 7= himself1 ,mr4 ,b>rasso1    
,mr4 ,da9es1 ,mr4 ,lank=d1 ,mr4 ,"y1 &  
,mr4 ,cassidy7 introduc$ ! foll[+ bill2 
:i* 0 read twice & ref]r$ to !          
,committee on ,f9ance  ,a ,,bill  ,to   
am5d ! ,int]nal ,rev5ue ,code ( #aihf to
 modify ! maximum capital ga9s tax rate1
 to modify ! tax on net inve/m5t income1
 & = o!r purposes4  #a4 ,%ort title ,?is
 ,act may be cit$ z ! ,middle-,class    
,sav+s & ,inve/m5t ,act4  #b4           
,modification ( capital ga9 rates  7a7  
,expansion ( z]o p]c5t rate  7#a7 ,9    
g5]al ,section #a7;h77#a77;,b77i7 ( !   
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by /rik+ :i* w\ld 7)\t reg>d to ?is     
p>agraph7 be tax$ at a rate bel[ #be    
p]c5t & ins]t+ bel[ ! maximum z]o rate  
am\nt4  7#b7 ,maximum z]o rate am\nt    
,section #a7;h7 ( ! ,int]nal ,rev5ue    
,code ( #aihf is am5d$ by add+ at ! end 
! foll[+ new p>agraph3  7#ab7 ,maximum  

z]o rate am\nt  7,a7 ,9 g5]al ,! maximum
 z]o rate am\nt %all be-- 7i7 9 ! case (
 a jo9t return or surviv+ sp\se1        
#afe1jjj1  7ii7 9 ! case ( any o!r      
individual 7o!r ?an an e/ate or tru/71  
an am\nt equal to  ( ! am\nt 9 effect = 
! taxable ye> "u clause 7i71 &  7iii7 9 
! case ( an e/ate or tru/1 #b1fjj4  7,b7
 ,inflation adju/m5t ,9 ! case ( any    
taxable ye> beg9n+ aft] #bjba1 ea* ( !  
doll> am\nts 9 subp>agraph 7,a7 %all be 
increas$ by an am\nt equal to-- 7i7 su* 
doll> am\nt1 multipli$ by  7ii7 !       
co/-(-liv+ adju/m5t det]m9$ "u          
subsection 7f77#c7 = ! cal5d> ye> 9 :i* 
! taxable ye> beg9s1 det]m9$ by         
sub/itut+ cal5d> ye> #bjag = cal5d> ye> 
#bjaf 9 subp>agraph 7,a77ii7 !re(4  ,if 
any increase "u ?is subp>agraph is n a  
multiple ( #ej1 su* increase %all be    
r\nd$ to ! next l[e/ multiple ( #ej4  4 
7#c7 ,con=m+ am5dm5ts ,p>agraph 7#e7 (  
section #a7;j7 ( su* ,code is am5d$--   
7,a7 9 subp>agraph 7,a71 by /rik+ %all  
be appli$ & all t foll[s ?r\gh by       

sub/itut+ bel[ ! maximum #ae-p]c5t rate 
am\nt & ins]t+ %all be appli$ by        
sub/itut+ bel[ ! maximum #ae-p]c5t rate 
am\nt1  7,b7 9 subp>agraph 7,b7-- 7i7 by
 /rik+ all t prec$+ clause 7ii71  7ii7  
by r$esignat+ clause 7ii7 z subp>agraph 
7,b71  7iii7 by r$esignat+ subclauses   
7,i7 ?r\gh 7,,iv7 ( subp>agraph 7,b7 7z 
s r$esignat$7 z clauses 7i7 ?r\gh 7iv71 
respectively1 &  7iv7 by mov+           
subp>agraph 7,b7 & ea* ( clauses 7i7    
?r\gh 7iv7 7z s r$esignat$7 #b ems to ! 
left1 &  7,c7 9 subp>agraph 7,c71 by    
/rik+ clauses 7i7 & 7ii7 (4  7b7        
,effective date ,! am5dm5ts made by ?is 
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjba4  #c4   
,p>tial exclusion ( c]ta9 int]e/ receiv$
 by individuals  7a7 ,9 g5]al ,"p ,,iii 
( sub*apt] ,b ( *apt] #a ( ! ,int]nal   
,rev5ue ,code ( #aihf 7relat+ to am\nts 
specifically exclud$ f gross income7 is 
am5d$ by ins]t+ aft] section #aae !     
foll[+ new section3  #aaf4 ,p>tial      
exclusion ( c]ta9 int]e/ receiv$ by     

individuals  7a7 ,exclusion f gross     
income ,gross income does n include !   
sum ( ! am\nts receiv$ dur+ ! taxable   
ye> by an individual z qualifi$ int]e/4 
7b7 ,limitations ,! aggregate am\nt     
exclud$ "u subsection 7a7 = any taxable 
ye> %all n exce$ #cjj 7#fjj 9 ! case ( a
 jo9t return74  7c7 ,qualifi$ int]e/ ,= 
purposes ( ?is section-- 7#a7 ,9 g5]al  
,! t]m qualifi$ int]e/ means any int]e/ 
o!r ?an int]e/ exclud$ f gross income "u
 any o!r provision ( ?is *apt]4  7#b7   
,special rules = divid5ds receiv$ f     
c]ta9 money m>ket mutual funds  7,a7 ,9 
g5]al ,! t]m qualifi$ int]e/ %all       
include qualifi$ int]e/-relat$ divid5ds4
 7i7 ,9 g5]al ,except z provid$ 9 clause
 7ii71 a qualifi$ int]e/-relat$ divid5d 
is any divid5d or "p !re( 7o!r ?an a    
capital ga9 divid5d or exempt int]e/    
divid5d7-- 7,i7 paid by a regulat$      
inve/m5t company regulat$ z a money     
m>ket fund "u section #bgj4b;a-#g (     
title #ag1 ,code ( ,f$]al ,regulations1 
&  7,,ii7 report$ by ! company z a      

qualifi$ int]e/-relat$ divid5d 9 writt5 
/atem5ts furni%$ to its %>ehold]s4  7ii7
 ,excess report$ am\nts ,if ! aggregate 
report$ am\nt ) respect to ! company =  
any taxable ye> exce$s ! applicable     
qualifi$ int]e/ ( ! company = su*       
taxable ye>1 a qualifi$ int]e/-relat$   
divid5d is ! excess (-- 7,i7 ! report$  
qualifi$ int]e/-relat$ divid5d am\nt1   
ov]  7,,ii7 ! excess report$ am\nt :i*  
is allocable to su* report$ qualifi$    
int]e/-relat$ divid5d am\nt4  7iii7     
,allocation ( excess report$ am\nt  7,i7
 ,9 g5]al ,except z provid$ 9 subclause 
7,,ii71 ! excess report$ am\nt 7if any7 
:i* is allocable to ! report$ qualifi$  
int]e/-relat$ divid5d am\nt is t portion
 ( ! excess report$ am\nt :i* be>s !    
same ratio to ! excess report$ am\nt z !
 report$ qualifi$ int]e/-relat$ divid5d 
am\nt be>s to ! aggregate report$ am\nt4
  7,,ii7 ,special rule = noncal5d> ye>  
taxpay]s ,9 ! case ( any taxable ye> :i*
 does n beg9 & end 9 ! same cal5d> ye>1 
if ! po/-,decemb] report$ am\nt equals  

or exce$s ! excess report$ am\nt = su*  
taxable ye>1 subclause 7,i7 %all be     
appli$ by sub/itut+ po/-,decemb] report$
 am\nt = aggregate report$ am\nt & no   
excess report$ am\nt %all be allocat$ to
 any divid5d paid on or be=e ,decemb]   
#ca ( su* taxable ye>4  7iv7 ,def9itions
 ,= purposes ( ?is subp>agraph-- 7,i7   
,report$ qualifi$ int]e/-relat$ divid5d 
am\nt ,! t]m report$ qualifi$           
int]e/-relat$ divid5d am\nt means !     
am\nt report$ to its %>ehold]s "u clause
 7i7 z a qualifi$ int]e/-relat$ divid5d4
  7,,ii7 ,excess report$ am\nt ,! t]m   
excess report$ am\nt means ! excess ( ! 
aggregate report$ am\nt ov] ! applicable
 qualifi$ int]e/ ( ! company = ! taxable
 ye>4  7,,iii7 ,aggregate report$ am\nt 
,! t]m aggregate report$ am\nt means !  
aggregate am\nt ( divid5ds report$ by ! 
company "u clause 7i7 z qualifi$        
int]e/-relat$ divid5ds = ! taxable ye>  
7includ+ qualifi$ int]e/-relat$ divid5ds
 paid aft] ! close ( ! taxable ye>      
describ$ 9 section #hee74  7,,iv7       

,po/-,decemb] report$ am\nt ,! t]m      
po/-,decemb] report$ am\nt means !      
aggregate report$ am\nt det]m9$ by tak+ 
into acc\nt only divid5ds paid aft]     
,decemb] #ca ( ! taxable ye>4  7,v7     
,applicable qualifi$ int]e/ ,! t]m      
applicable qualifi$ int]e/ means int]e/ 
describ$ 9 p>agraph 7#a74  7d7          
,nonresid5t ali5s ineligible = exclusion
 ,subsection 7a7 %all n apply to any    
nonresid5t ali5 individual4  7e7        
,regulations ,! ,secret>y may prescribe 
su* regulations z are appropriate       
7includ+ regulations requir+ report+7 to
 apply ?is section 9 ! case ( int]e/    
receiv$-- 7#a7 f p>tn]%ips & ,s         
corporations1 &  7#b7 f a trade or      
bus9ess ( ! taxpay]4  4  7b7 ,con=m+    
am5dm5ts  7#a7 ,! table ( sections = "p 
,,iii ( sub*apt] ,b ( *apt] #a ( su*    
,code is am5d$ by ins]t+ aft] ! item    
relat+ to section #aae ! foll[+ new     
item3  ,sec4 #aaf4 ,p>tial exclusion (  
c]ta9 int]e/ receiv$ by individuals4  4 
7#b7 ,p>agraph 7#b7 ( section #bfe7;a7 (

 su* ,code is am5d$ by ins]t+ be=e !    
p]iod at ! end ! foll[+3 1 or to pur*ase
 or c>ry obligations or %>es1 or to make
 deposits1 to ! ext5t ! int]e/ !reon is 
excludable f gross income "u section    
#aaf4  7#c7 ,subsection 7c7 ( section   
#ehd ( su* ,code is am5d$ by add+ at !  
end ! foll[+3 ,! proportionate %>e ( ea*
 p>ticipant 9 ! am\nt ( qualifi$ int]e/ 
7z def9$ 9 section #aaf7 receiv$ by !   
common tru/ fund %all be consid]$ =     
purposes ( su* section z hav+ be5       
receiv$ by su* p>ticipant44  7#d7       
,subsection 7a7 ( section #fdc ( su*    
,code is am5d$ by r$esignat+ p>agraph   
7#g7 z p>agraph 7#h7 & by ins]t+ aft]   
p>agraph 7#f7 ! foll[+ new p>agraph3    
7#g7 ,qualifi$ int]e/ ,!re %all be      
includ$ ! am\nt ( any qualifi$ int]e/ 7z
 def9$ 9 section #aaf7 exclud$ f gross  
income pursuant to section #aaf 7r$uc$  
by am\nts :i* w\ld be d$uctible 9       
respect ( disbursem5ts allocable to su* 
income b = ! provisions ( section #bfe74
  4  7c7 ,effective date ,! am5dm5ts    

made by ?is section %all apply to       
taxable ye>s beg9n+ aft] ,decemb] #ca1  
#bjba4  #d4 ,modification ( ?re%old     
am\nt "u net inve/m5t income tax  7a7 ,9
 g5]al ,section #adaa7;b7 ( ! ,int]nal  
,rev5ue ,code ( #aihf is am5d$ to read z
 foll[s3  7b7 ,?re%old am\nt ,= purposes
 ( ?is *apt]-- 7#a7 ,9 g5]al ,! t]m     
?re%old am\nt means-- 7,a7 9 ! case ( a 
taxpay] mak+ a jo9t return "u section   
#fjac or a surviv+ sp\se 7z def9$ 9     
section #b7;a771 #djj1jjj1 &  7,b7 9 any
 o!r case1  ( ! doll> am\nt det]m9$ "u  
p>agraph 7#a74  7#b7 ,inflation adju/m5t
 ,9 ! case ( any taxable ye> beg9n+ 9 a 
cal5d> ye> aft] #bjbb1 ! doll> am\nt 9  
p>agraph 7#a77;,a7 %all be increas$ by  
an am\nt equal to-- 7,a7 su* doll>      
am\nt1 multipli$ by  7,b7 ! co/-(-liv+  
adju/m5t det]m9$ "u section #a7;f77#c7 =
 ! cal5d> ye> 9 :i* ! taxable ye> beg9s1
 det]m9$ by sub/itut+ cal5d> ye> #bjba =
 cal5d> ye> #bjaf 9 subp>agraph 7,a77ii7
 !re(4  ,any increase det]m9$ "u !      
prec$+ s5t5ce %all be r\nd$ to ! ne>e/  

multiple ( #a1jjj4  4  7b7 ,effective   
date ,! am5dm5t made by ?is section %all
 apply to taxable ye>s beg9n+ aft]      
,decemb] #ca1 #bjba4  #e4 ,enhancem5t ( 
,sav]'s ,cr$it  7a7 ,maximum            
contribution am\nt ,section #be;,b7a7 ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by /rik+ #b1jjj & ins]t+ #b1ejj4  
7b7 ,modification ( cr$it rate  7#a7 #ej
 p]c5t cr$it rate ,section #be;,b7a7 ( !
 ,int]nal ,rev5ue ,code ( #aihf is am5d$
 by /rik+ ! applicable p]c5tage & ins]t+
 #ej p]c5t4  7#b7 ,adju/$ gross income  
phase\ts ,section #be;,b7b7 ( su* ,code 
is am5d$ to read z foll[s3  7b7         
,limitation ,= purposes ( ?is section-- 
7#a7 ,9 g5]al ,! am\nt ( cr$it all[able 
"u subsection 7a7 7det]m9$ )\t reg>d to 
?is subsection7 %all be r$uc$ 7b n bel[ 
z]o7 by an am\nt :i* be>s ! same ratio  
to ! cr$it o!rwise s all[able z-- 7,a7 !
 excess 7if any7 (-- 7i7 adju/$ gross   
income ( ! taxpay]1 ov]  7ii7 ! ?re%old 
am\nt1 be>s to  7,b7 ! phase\t am\nt4   
7#b7 ,?re%old am\nt ,! t]m ?re%old am\nt

 means-- 7,a7 9 ! case ( a jo9t return  
or a surviv+ sp\se 7z def9$ 9 section   
#b7;a771 #de1jjj1  7,b7 9 ! case ( a    
head ( h\sehold1 #ge p]c5t ( ! am\nt 9  
effect = ! taxable ye> "u subp>agraph   
7,a71 &  7,c7 9 ! case ( any o!r        
individual1 #ej p]c5t ( ! am\nt 9 effect
 = ! taxable ye> "u subp>agraph 7,a74   
7#c7 ,phase\t am\nt ,! t]m phase\t am\nt
 means-- 7,a7 9 ! case ( a jo9t return  
or a surviv+ sp\se 7z def9$ 9 #b7;a771  
#dj1jjj1  7,b7 9 ! case ( a head (      
h\sehold 7z def9$ 9 section #b7;b771 #ge
 p]c5t ( ! am\nt 9 effect = ! taxable   
ye> "u subp>agraph 7,a71 &  7,c7 9 !    
case ( any o!r individual1 #ej p]c5t ( !
 am\nt 9 effect = ! taxable ye> "u      
subp>agraph 7,a74  7#d7 ,inflation      
adju/m5t  7,a7 ,9 g5]al ,9 ! case ( any 
taxable ye> beg9n+ 9 a cal5d> ye> aft]  
#bjbb1 ! #de1jjj doll> am\nt 9 p>agraph 
7#b7 & ! #dj1jjj 9 p>agraph 7#c7 %all   
ea* be increas$ by an am\nt equal to--  
7i7 su* doll> am\nt1 multipli$ by  7ii7 
! co/-(-liv+ adju/m5t det]m9$ "u section

 #a7;f77#c7 = ! cal5d> ye> 9 :i* !      
taxable ye> beg9s1 det]m9$ by sub/itut+ 
cal5d> ye> #bjba = cal5d> ye> #bjaf 9   
subp>agraph 7,a77ii7 !re(4  7,b7 ,r\nd+ 
,any increase det]m9$ "u subp>agraph    
7,a7 t is n a multiple ( #ejj %all be   
r\nd$ to ! ne>e/ multiple ( #ejj4  4    
7c7 ,effective date ,! am5dm5ts made by 
?is section %all apply to taxable ye>s  
beg9n+ aft] ,decemb] #ca1 #bjba4  #f4   
,ext5sion ( limitation on d$uction =    
/ate & local taxes  7a7 ,9 g5]al        
,section #afd7;b77#f7 ( ! ,int]nal      
,rev5ue ,code ( #aihf is am5d$-- 7#a7 by
 /rik+ ,janu>y #a1 #bjbf & ins]t+       
,janu>y #a1 #bjbi1 &  7#b7 by /rik+     
#bjbe 9 ! head+ !re( & ins]t+ #bjbh4    
7b7 ,effective date ,! am5dm5ts made by 
?is section %all apply to taxable ye>s  
beg9n+ aft] ,decemb] #ca1 #bjbb4