Economic Mobility Act of 2019

IB Union Calendar No. 307 116TH CONGRESS 2D SESSION H. R. 3300 [Report No. 116–384] To amend the Internal Revenue Code of 1986 to provide tax relief for workers and families, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 18, 2019 Mr. NEAL introduced the following bill; which was referred to the Committee on Ways and Means FEBRUARY 4, 2020 Additional sponsors: Mr. SAN NICOLAS and Mr. NORCROSS FEBRUARY 4, 2020 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on June 18, 2019] VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 3300 RH A BILL To amend the Internal Revenue Code of 1986 to provide tax relief for workers and families, and for other purposes. VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 3300 RH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; ETC. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Economic Mobility Act of 2019’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; etc. TITLE I—EARNED INCOME TAX CREDIT Sec. 101. Strengthening the earned income tax credit for individuals with no qualifying children. Sec. 102. Taxpayer eligible for childless earned income credit in case of quali- fying children who fail to meet certain identification require- ments. Sec. 103. Credit allowed in case of certain separated spouses. Sec. 104. Elimination of disqualified investment income test. Sec. 105. Application of earned income tax credit in possessions of the United States. TITLE II—CHILD TAX CREDIT Sec. 201. Child tax credit fully refundable for 2019 and 2020. Sec. 202. Payments to possessions. TITLE III—DEPENDENT CARE ASSISTANCE Sec. 301. Refundability and enhancement of child and dependent care tax credit. Sec. 302. Increase in exclusion for employer-provided dependent care assistance. TITLE IV—CERTAIN FRINGE BENEFIT EXPENSES Sec. 401. Repeal of inclusion of certain fringe benefit expenses in unrelated busi- ness taxable income. (c) AMENDMENT OF 1986 CODE.—Except as otherwise 8 expressly provided, whenever in this Act an amendment or 9 repeal is expressed in terms of an amendment to, or repeal 10 of, a section or other provision, the reference shall be consid- 11 ered to be made to a section or other provision of the Inter- 12 nal Revenue Code of 1986. 13 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 3300 RH TITLE I—EARNED INCOME TAX 1 CREDIT 2 SEC. 101. STRENGTHENING THE EARNED INCOME TAX 3 CREDIT FOR INDIVIDUALS WITH NO QUALI- 4 FYING CHILDREN. 5 (a) SPECIAL RULES FOR 2019 AND 2020.—Section 32 6 is amended by adding at the end the following new sub- 7 section: 8 ‘‘(n) SPECIAL RULES FOR INDIVIDUALS WITHOUT 9 QUALIFYING CHILDREN.—In the case of any taxable year 10 beginning in 2019 or 2020— 11 ‘‘(1) CREDIT ALLOWED FOR CERTAIN INDIVID- 12 UALS OVER AGE 18.— 13 ‘‘(A) IN GENERAL.—Except in the case of a 14 full-time student (or, in the case of a married in- 15 dividual, except if both the individual and the 16 individual’s spouse are full-time students), sub- 17 section (c)(1)(A)(ii)(II) shall be applied by sub- 18 stituting ‘age 19’ for ‘age 25’. 19 ‘‘(B) FULL-TIME STUDENT.—For purposes 20 of this paragraph, the term ‘full-time student’ 21 means, with respect to a taxable year, an indi- 22 vidual who is an eligible student (as defined in 23 section 25A(b)(3)) during at least 5 calendar 24 months during the taxable year. 25 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 3300 RH ‘‘(2) INCREASE IN MAXIMUM AGE FOR CREDIT.— 1 Subsection (c)(1)(A)(ii)(II) shall be applied by sub- 2 stituting ‘age 66’ for ‘age 65’. 3 ‘‘(3) INCREASE IN CREDIT AND PHASEOUT PER- 4 CENTAGES.—The table contained in subsection (b)(1) 5 shall be applied by substituting ‘15.3’ for ‘7.65’ each 6 place it appears therein. 7 ‘‘(4) INCREASE IN EARNED INCOME AND PHASE- 8 OUT AMOUNTS.— 9 ‘‘(A) IN GENERAL.—The table contained in 10 subsection (b)(2)(A) shall be applied— 11 ‘‘(i) by substituting ‘$9,570’ for 12 ‘$4,220’, and 13 ‘‘(ii) by substituting ‘$11,310’ for 14 ‘$5,280’. 15 ‘‘(B) COORDINATION WITH INFLATION AD- 16 JUSTMENT.— 17 ‘‘(i) IN GENERAL.—In the case of any 18 taxable year beginning after 2019, the 19 $9,570 and $11,310 amounts in subpara- 20 graph (A) shall each be increased by an 21 amount equal to— 22 ‘‘(I) such dollar amount, multi- 23 plied by 24 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 3300 RH ‘‘(II) the cost-of-living adjustment 1 determined under section 1(f)(3) for 2 the calendar year in which the taxable 3 year begins, determined by substituting 4 ‘2018’ for ‘2016’ in subparagraph 5 (A)(ii) thereof. 6 ‘‘(ii) ROUNDING.—If any increase 7 under clause (i) is not a multiple of $10, 8 such increase shall be rounded to the nearest 9 multiple of $10. 10 ‘‘(iii) COORDINATION WITH OTHER IN- 11 FLATION ADJUSTMENT.—Subsection (j) shall 12 not apply to any dollar amount specified in 13 this paragraph.’’. 14 (b) INFORMATION RETURN MATCHING.—As soon as 15 practicable, the Secretary of the Treasury (or the Sec- 16 retary’s delegate) shall develop and implement procedures 17 for checking an individual’s claim for a credit under section 18 32 of the Internal Revenue Code of 1986, by reason of sub- 19 section (n)(1) thereof, against any information return made 20 with respect to such individual under section 6050S (relat- 21 ing to returns relating to higher education tuition and re- 22 lated expenses). 23 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 3300 RH (c) EFFECTIVE DATE.—The amendment made by this 1 section shall apply to taxable years beginning after Decem- 2 ber 31, 2018. 3 SEC. 102. TAXPAYER ELIGIBLE FOR CHILDLESS EARNED IN- 4 COME CREDIT IN CASE OF QUALIFYING CHIL- 5 DREN WHO FAIL TO MEET CERTAIN IDENTI- 6 FICATION REQUIREMENTS. 7 (a) IN GENERAL.—Section 32(c)(1) is amended by 8 striking subparagraph (F). 9 (b) EFFECTIVE DATE.—The amendment made by this 10 section shall apply to taxable years beginning after the date 11 of the enactment of this Act. 12 SEC. 103. CREDIT ALLOWED IN CASE OF CERTAIN SEPA- 13 RATED SPOUSES. 14 (a) IN GENERAL.—Section 32(d) is amended— 15 (1) by striking ‘‘MARRIED INDIVIDUALS.—In the 16 case of’’ and inserting the following: ‘‘MARRIED INDI- 17 VIDUALS.— 18 ‘‘(1) IN GENERAL.—In the case of’’, and 19 (2) by adding at the end the following new para- 20 graph: 21 ‘‘(2) DETERMINATION OF MARITAL STATUS.—For 22 purposes of this section— 23 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 3300 RH ‘‘(A) IN GENERAL.—Except as provided in 1 subparagraph (B), marital status shall be deter- 2 mined under section 7703(a). 3 ‘‘(B) SPECIAL RULE FOR SEPARATED 4 SPOUSE.—An individual shall not be treated as 5 married if such individual— 6 ‘‘(i) is married (as determined under 7 section 7703(a)) and does not file a joint re- 8 turn for the taxable year, 9 ‘‘(ii) lives with a qualifying child of 10 the individual for more than one-half of 11 such taxable year, and 12 ‘‘(iii)(I) during the last 6 months of 13 such taxable year, does not have the same 14 principal place of abode as the individual’s 15 spouse, or 16 ‘‘(II) has a decree, instrument, or 17 agreement (other than a decree of divorce) 18 described in section 121(d)(3)(C) with re- 19 spect to the individual’s spouse and is not 20 a member of the same household with the 21 individual’s spouse by the end of the taxable 22 year.’’. 23 (b) CONFORMING AMENDMENTS.— 24 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 3300 RH (1) Section 32(c)(1)(A) of such Code is amended 1 by striking the last sentence. 2 (2) Section 32(c)(1)(E)(ii) of such Code is 3 amended by striking ‘‘(within the meaning of section 4 7703)’’. 5 (3) Section 32(d)(1) of such Code, as amended by 6 subsection (a), is amended by striking ‘‘(within the 7 meaning of section 7703)’’. 8 (c) EFFECTIVE DATE.—The amendments made by this 9 section shall apply to taxable years beginning after the date 10 of the enactment of this Act. 11 SEC. 104. ELIMINATION OF DISQUALIFIED INVESTMENT IN- 12 COME TEST. 13 (a) IN GENERAL.—Section 32 of the Internal Revenue 14 Code of 1986 is amended by striking subsection (i). 15 (b) CONFORMING AMENDMENTS.— 16 (1) Section 32(j)(1) of such Code is amended by 17 striking ‘‘subsections (b)(2) and (i)(1)’’ and inserting 18 ‘‘subsection (b)(2)’’. 19 (2) Section 32(j)(1)(B)(i) of such Code is amend- 20 ed by striking ‘‘subsections (b)(2)(A) and (i)(1)’’ and 21 inserting ‘‘subsection (b)(2)(A)’’. 22 (3) Section 32(j)(2) of such Code is amended— 23 (A) by striking subparagraph (B), and 24 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 3300 RH (B) by striking ‘‘ROUNDING.—’’ and all 1 that follows through ‘‘If any dollar amount’’ and 2 inserting the following: ‘‘ROUNDING.—If any dol- 3 lar amount’’. 4 (c) EFFECTIVE DATE.—The amendments made by this 5 section shall apply to taxable years beginning after the date 6 of the enactment of this Act. 7 SEC. 105. APPLICATION OF EARNED INCOME TAX CREDIT IN 8 POSSESSIONS OF THE UNITED STATES. 9 (a) IN GENERAL.—Chapter 77 of the Internal Revenue 10 Code of 1986 is amended by adding at the end the following 11 new section: 12 ‘‘SEC. 7529. APPLICATION OF EARNED INCOME TAX CREDIT 13 TO POSSESSIONS OF THE UNITED STATES. 14 ‘‘(a) PUERTO RICO.— 15 ‘‘(1) IN GENERAL.—With respect to calendar 16 year 2020 and each calendar year thereafter, the Sec- 17 retary shall, except as otherwise provided in this sub- 18 section, make payments to Puerto Rico equal to— 19 ‘‘(A) the specified matching amount for 20 such calendar year, plus 21 ‘‘(B) in the case of calendar years 2020 22 through 2024, the lesser of— 23 ‘‘(i) the expenditures made by Puerto 24 Rico during such calendar year for edu- 25 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 3300 RH cation efforts with respect to individual tax- 1 payers and tax return preparers relating to 2 the earned income tax credit, or 3 ‘‘(ii) $1,000,000. 4 ‘‘(2) REQUIREMENT TO REFORM EARNED INCOME 5 TAX CREDIT.—The Secretary shall not make any pay- 6 ments under paragraph (1) with respect to any cal- 7 endar year unless Puerto Rico has in effect an earned 8 income tax credit for taxable years beginning in or 9 with such calendar year which (relative to the earned 10 income tax credit which was in effect for taxable 11 years beginning in or with calendar year 2019) in- 12 creases the percentage of earned income which is al- 13 lowed as a credit for each group of individuals with 14 respect to which such percentage is separately stated 15 or determined in a manner designed to substantially 16 increase workforce participation. 17 ‘‘(3) SPECIFIED MATCHING AMOUNT.—For pur- 18 poses of this subsection— 19 ‘‘(A) IN GENERAL.—The term ‘specified 20 matching amount’ means, with respect to any 21 calendar year, the lesser of— 22 ‘‘(i) the excess (if any) of— 23 ‘‘(I) the cost to Puerto Rico of the 24 earned income tax credit for taxable 25 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 3300 RH years beginning in or with such cal- 1 endar year, over 2 ‘‘(II) the base amount for such 3 calendar year, or 4 ‘‘(ii) the product of 3, multiplied by 5 the base amount for such calendar year. 6 ‘‘(B) BASE AMOUNT.— 7 ‘‘(i) BASE AMOUNT FOR 2020.—In the 8 case of calendar year 2020, the term ‘base 9 amount’ means the greater of— 10 ‘‘(I) the cost to Puerto Rico of the 11 earned income tax credit for taxable 12 years beginning in or with calendar 13 year 2019 (rounded to the nearest mul- 14 tiple of $1,000,000), or 15 ‘‘(II) $200,000,000. 16 ‘‘(ii) INFLATION ADJUSTMENT.—In the 17 case of any calendar year after 2020, the 18 term ‘base amount’ means the dollar 19 amount determined under clause (i) in- 20 creased by an amount equal to— 21 ‘‘(I) such dollar amount, multi- 22 plied by— 23 ‘‘(II) the cost-of-living adjustment 24 determined under section 1(f)(3) for 25 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR 3300 RH such calendar year, determined by sub- 1 stituting ‘calendar year 2019’ for ‘cal- 2 endar year 2016’ in subparagraph 3 (A)(ii) thereof. 4 Any amount determined under this clause 5 shall be rounded to the nearest multiple of 6 $1,000,000. 7 ‘‘(4) RULES RELATED TO PAYMENTS AND RE- 8 PORTS.— 9 ‘‘(A) TIMING OF PAYMENTS.—The Secretary 10 shall make payments under paragraph (1) for 11 any calendar year— 12 ‘‘(i) after receipt of the report described 13 in subparagraph (B) for such calendar 14 year, and 15 ‘‘(ii) except as provided in clause (i), 16 within a reasonable period of time before 17 the due date for individual income tax re- 18 turns (as determined under the laws of 19 Puerto Rico) for taxable years which began 20 on the first day of such calendar year. 21 ‘‘(B) ANNUAL REPORTS.—With respect to 22 calendar year 2020 and each calendar year 23 thereafter, Puerto Rico shall provide to the Sec- 24 retary a report which shall include— 25 VerDate Sep 11 2014 20:50 Feb 04, 2020 Jkt 099200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6203 E:\BILLS\H3300.RH H3300 pamtmann on DSKBC07HB2PROD with BILLS 14 •HR 3300 RH ‘‘(i) an estimate of the costs described 1 in paragraphs (1)(B)(i) and (3)(A)(i)(I) 2 with respect to such calendar year, and 3 ‘‘(ii) a statement of such costs with re- 4 spect to the preceding calendar year. 5 [Text truncated for display. 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