Tax Reduction and Simplification Act of 1977

Summary

Tax Reduction and Simplification Act - Title I: Refund of 1976 Individual Income Taxes; Payments to Recipients of Certain Benefits - Amends the Internal Revenue Code to provide a refund from 1976 income taxes equal to $50 multiplied by the taxpayer's number of personal exemptions. Limits this refund to the taxpayer's 1976 tax liability except where he (1) is entitled to the credit for earned income, or (2) has earned income while living with a dependent child and who, if married, filed a joint return. Prohibits such refunds from being made to any estate, trust or nonresident alien. Reimburses the Governments of American Samoa, Guam, and the Virgin Islands for the revenues lost through these refunds and specified provisions of Title II. Directs the Secretary of the Treasury to make a $50 payment to each individual paid benefits for March, 1977 under the Railroad Retirement Act, the Old-Age, Survivors, and Disability Insurance program of the Social Security Act, or the Supplemental Security Income program of the Social Security Act. Prohibits the refunds or $50 payments made under this title from being regarded as income for purposes of any Federal, State or local program where income is a criterion of eligibility, or from being considered income for Federal income tax purposes. Prohibits the refunds from being considered a reduction in Federal income tax for purposes of any State tax law. Title II: Reduction and Simplification of Individual Income Taxes - Lowers the income tax rates for individuals by raising the threshold for each tax bracket. Allows taking the $35 general tax credit for each exemption for old-age and blindness as well as each of the other personal exemptions. Provides that the tax tables shall reflect the changes in the tax rates and in each of the allowable general tax credits. Revises the determination of individual income taxes by eliminating the standard deduction and adding a comparable amount into the threshold for each tax bracket. Redefines taxable income as adjusted gross income minus the sum of the individual's personal exemption deductions and the excess of all other deductions over the lowest threshold amount of taxable income in the individual's category. Includes additional amounts in the taxable income of certain children, married individuals, and nonresident aliens to the extent that they do not qualify for a standard deduction under the present law. Extends the general tax credit to taxable years beginning before 1978, and the earned income credit to taxable years beginning before 1979. Provides that the withholding tax requirements, and the requirements for filing returns shall reflect the changes made by this Act. Title III: Reduction in Business Taxes - Extends the temporary reduction in the normal tax rates for corporations and mutual insurance companies, the alternative tax rates for certain small companies, and the temporary increase in the surtax exemption, to taxable years ending before 1979. Allows a business to elect, within 90 days of the enactment of this Act and the filing date for the business's first taxable year ending after 1976, either an additional two percent investment tax credit for qualified investments and progress expenditure made before 1977 (under 1976 rates) or, an income tax credit for the sum of four percent of the business's excise taxes for employee Old-Age, Survivors, and Disability Insurance benefits, two percent of its self-employment taxes, and two percent of its railroad retirement excise taxes paid before 1981. Prorates this credit among partners, shareholders of subchapter S corporations and the beneficiaries of estates and trusts according to their proportionate interests, with the election made by the business. Prohibits any governmental agency or subdivision or any tax-exempt organization from taking this credit, except in regard to the employment expenses of a tax-exempt organization's unrelated trade or business.

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Documents

3 official files

• Public Law (PDF)

  Public Law · EN · 24 May 1977

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• Conference report filed in House

  summary · EN · 16 May 1977

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• Introduced in House

  summary · EN · 16 February 1977

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