II 116TH CONGRESS 1ST SESSION S. 2231 To establish American opportunity accounts, to modify estate and gift tax rules, to reform the taxation of capital income, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 23, 2019 Mr. BOOKER introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To establish American opportunity accounts, to modify estate and gift tax rules, to reform the taxation of capital income, and for other purposes. 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘American Opportunity Accounts Act’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. TITLE I—AMERICAN OPPORTUNITY ACCOUNTS Sec. 101. Definitions. Sec. 102. American Opportunity Fund. VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 2 •S 2231 IS Sec. 103. AO accounts. Sec. 104. Assignment, alienation, and treatment of deceased individuals. Sec. 105. Rules governing AO accounts relating to investment, accounting, and reporting. Sec. 106. American Opportunity Fund Board. Sec. 107. Fiduciary responsibilities. Sec. 108. Accounts disregarded in determining eligibility for Federal benefits. Sec. 109. Reports. Sec. 110. Programs for promoting financial capability. Sec. 111. Tax treatment. TITLE II—REVENUE PROVISIONS Subtitle A—Estate and Gift Tax Provisions Sec. 201. Modification of estate tax rate and basic exclusion amount. Sec. 202. Required minimum 10-year term, etc., for grantor retained annuity trusts. Sec. 203. Certain transfer tax rules applicable to grantor trusts. Sec. 204. Simplifying gift tax exclusion for annual gifts. Sec. 205. Modification of rules for value of certain farm real property. Subtitle B—Reform of Taxation of Capital Income Sec. 211. Increase in capital gains rate. Sec. 212. Deemed realization of capital gains at time of gift or death. Sec. 213. Exclusion of certain amounts of realized capital gain. Sec. 214. Extension of time for payment of tax. Sec. 215. Waiver of penalty for underpayment of estimated tax. Sec. 216. Effective date. TITLE I—AMERICAN 1 OPPORTUNITY ACCOUNTS 2 SEC. 101. DEFINITIONS. 3 For purposes of this title— 4 (1) AMERICAN OPPORTUNITY FUND.—The term 5 ‘‘American Opportunity Fund’’ means the fund es- 6 tablished under section 102. 7 (2) AO ACCOUNT.—The term ‘‘AO account’’ 8 means an American opportunity account established 9 under section 103. 10 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 3 •S 2231 IS (3) SECRETARY.—The term ‘‘Secretary’’ means 1 the Secretary of the Treasury or the Secretary’s del- 2 egate. 3 (4) AMERICAN OPPORTUNITY FUND BOARD.— 4 The term ‘‘American Opportunity Fund Board’’ 5 means the board established pursuant to section 6 106. 7 (5) EXECUTIVE DIRECTOR.—The term ‘‘Execu- 8 tive Director’’ means the executive director ap- 9 pointed pursuant to section 106. 10 SEC. 102. AMERICAN OPPORTUNITY FUND. 11 (a) ESTABLISHMENT.—There is established in the 12 Treasury of the United States a fund to be known as the 13 ‘‘American Opportunity Fund’’. 14 (b) AMOUNTS HELD BY FUND.—The American Op- 15 portunity Fund consists of the sum of all amounts paid 16 into the Fund under this title, increased by the total net 17 earnings from investments of sums held in the Fund or 18 reduced by the total net losses from investments of sums 19 held in the Fund, and reduced by the total amount of pay- 20 ments made from the Fund (including payments for ad- 21 ministrative expenses). 22 (c) USE OF FUND.— 23 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 4 •S 2231 IS (1) IN GENERAL.—The sums in the American 1 Opportunity Fund are appropriated and shall re- 2 main available without fiscal year limitation— 3 (A) to make contributions to AO accounts; 4 (B) to invest under section 105; 5 (C) to make distributions in accordance 6 with this title; 7 (D) to pay the administrative expenses of 8 carrying out this title; and 9 (E) to purchase insurance as provided in 10 section 107(c)(2). 11 (2) EXCLUSIVE PURPOSES.—The sums in the 12 American Opportunity Fund shall not be appro- 13 priated for any purpose other than the purposes 14 specified in this section and may not be used for any 15 other purpose. 16 (d) TRANSFERS TO AMERICAN OPPORTUNITY 17 FUND.—The Secretary shall make transfers from the gen- 18 eral fund of the Treasury to the American Opportunity 19 Fund as follows: 20 (1) INITIAL CONTRIBUTION FOR ELIGIBLE INDI- 21 VIDUALS BORN AFTER DECEMBER 31, 2019.—Upon 22 receipt of a certification under section 103(b)(2) 23 with respect to an individual born after December 24 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 5 •S 2231 IS 31, 2019, the Secretary shall transfer $1,000 to the 1 AO account of the individual. 2 (2) ANNUAL CONTRIBUTIONS.— 3 (A) IN GENERAL.—Each year which occurs 4 after the year in which an AO account is estab- 5 lished for an eligible individual and before the 6 year the eligible individual attains the age of 7 18, the Secretary shall transfer the annual con- 8 tribution amount to the AO account of the indi- 9 vidual. 10 (B) ANNUAL CONTRIBUTION AMOUNT.— 11 The annual contribution amount shall be the 12 amount such that the annual contribution 13 amount for any taxpayer whose household in- 14 come is within an income tier specified in the 15 following table shall decrease, on a sliding scale 16 in a linear manner, from the initial amount to 17 the final amount specified in such table for 18 such income tier: 19 In the case of household income (expressed as a percent of the poverty line) within the following income tier: The initial amount is— The final amount is— Up to 100 percent .................................................. $2,000 $2,000 100 percent up to 125 percent ............................... 2,000 1,500 125 percent up to 175 percent ............................... 1,500 1,000 175 percent up to 225 percent ............................... 1,000 500 225 percent up to 325 percent ............................... 500 250 325 percent up to 500 percent ............................... 250 0 500 percent or more ............................................... 0 0 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 6 •S 2231 IS (C) APPLICABLE HOUSEHOLD INCOME; 1 POVERTY LINE.—For purposes of this para- 2 graph— 3 (i) APPLICABLE HOUSEHOLD IN- 4 COME.—The term ‘‘applicable household 5 income’’ means household income (as de- 6 fined in section 36B(d) of the Internal 7 Revenue Code of 1986), except that— 8 (I) with respect to any calendar 9 year, the Secretary shall use the in- 10 come of the most recent taxable year 11 for which information is available; and 12 (II) in determining household in- 13 come the Secretary shall aggregate 14 the income of married individuals fil- 15 ing separate tax returns. 16 (ii) POVERTY LINE.—The term ‘‘pov- 17 erty line’’ has the meaning given such term 18 under section 36B(d) of the Internal Rev- 19 enue Code of 1986. 20 (D) AUTHORITY TO PROVIDE TAX INFOR- 21 MATION.— 22 (i) IN GENERAL.—Section 6103(l) of 23 the Internal Revenue Code of 1986 is 24 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 7 •S 2231 IS amended by adding at the end the fol- 1 lowing new paragraph: 2 ‘‘(23) DISCLOSURE OF RETURN INFORMATION 3 TO CARRY OUT ELIGIBILITY REQUIREMENTS FOR 4 CERTAIN PROGRAMS.— 5 ‘‘(A) IN GENERAL.—The Secretary shall 6 disclose to officers and employees of the De- 7 partment of Treasury or the American Oppor- 8 tunity Fund Board return information of any 9 taxpayer whose income is relevant in deter- 10 mining any annual contribution to an American 11 Opportunity Account under section 102 of the 12 American Opportunity Accounts Act. Such re- 13 turn information shall be limited to— 14 ‘‘(i) taxpayer identity information 15 with respect to such taxpayer, 16 ‘‘(ii) the filing status of such tax- 17 payer, 18 ‘‘(iii) the number of individuals for 19 whom a deduction is allowed under section 20 151 with respect to the taxpayer (including 21 the taxpayer and the taxpayer’s spouse), 22 ‘‘(iv) the modified adjusted gross in- 23 come (as defined in section 36B) of such 24 taxpayer, of any spouse of such taxpayer 25 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 8 •S 2231 IS who filed a separate return, and of each of 1 the other individuals included under clause 2 (iii) who are required to file a return of tax 3 imposed by chapter 1 for the taxable year, 4 ‘‘(v) such other information as is pre- 5 scribed by the Secretary by regulation as 6 might indicate whether the taxpayer is eli- 7 gible for such an annual contribution (and 8 the amount thereof), and 9 ‘‘(vi) the taxable year with respect to 10 which the preceding information relates or, 11 if applicable, the fact that such informa- 12 tion is not available. 13 ‘‘(B) RESTRICTION ON USE OF DISCLOSED 14 INFORMATION.—Return information disclosed 15 under subparagraph (A) may be used by offi- 16 cers and employees of the Department of Treas- 17 ury or the American Opportunity Fund Board 18 for the purposes of, and to the extent necessary 19 in establishing eligibility for, and verifying the 20 appropriate amount of, any annual contribution 21 described in subparagraph (A).’’. 22 (ii) PROCEDURES AND RECORD- 23 KEEPING RELATED TO DISCLOSURES.— 24 Paragraph (4) of section 6103(p) of such 25 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 9 •S 2231 IS Code is amended by striking ‘‘or (22)’’ 1 each place it appears and inserting ‘‘(22), 2 or (23)’’. 3 (E) STUDY ON INCORPORATION OF OTHER 4 WEALTH FACTORS.—Not later than 2 years 5 after the date of the enactment of this Act, the 6 Comptroller General shall submit to Congress 7 and the Secretary of Treasury a report on the 8 feasibility and distributive impacts of a new 9 measure for determining the amount of the an- 10 nual contribution amount under this paragraph 11 based on family wealth, total assets, and overall 12 net worth. Such measure may— 13 (i) include financial assets, the value 14 of family home, retirement accounts, busi- 15 ness and entrepreneurial ventures, poten- 16 tial future inheritances, and any other as- 17 sets or debts; and 18 (ii) continue to factor in current or 19 past income to the extent such information 20 is useful in estimating overall household 21 wealth. 22 (3) ADJUSTMENT FOR INFLATION.— 23 (A) IN GENERAL.—For each calendar year 24 beginning after 2020, each of the dollar 25 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 10 •S 2231 IS amounts under paragraphs (1) and (2)(B)(i) 1 shall be increased by such dollar amount multi- 2 plied by the cost-of-living adjustment deter- 3 mined under section 1(f)(3) of the Internal 4 Revenue Code of 1986 determined by sub- 5 stituting ‘‘calendar year 2019’’ for ‘‘calendar 6 year 2016’’ in subparagraph (A)(ii) thereof. 7 (B) ROUNDING.—If any amount adjusted 8 under paragraph (1) is not a multiple of $50, 9 such amount shall be rounded to the next low- 10 est multiple of $50. 11 (e) PROHIBITION ON USE OF PAYROLL TAXES TO 12 FUND AO ACCOUNTS.—The American Opportunity Fund 13 and AO accounts are wholly separate and unique from the 14 Social Security system. No amount from any tax on em- 15 ployment may be contributed to the American Opportunity 16 Fund or AO accounts. 17 SEC. 103. AO ACCOUNTS. 18 (a) IN GENERAL.— 19 (1) ESTABLISHMENT.—The Executive Director 20 shall establish in the American Opportunity Fund an 21 account (to be known as an ‘‘American Opportunity 22 account’’ or an ‘‘AO account’’) for each eligible indi- 23 vidual certified under subsection (b). Each such ac- 24 count shall be identified to its account holder by 25 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 11 •S 2231 IS means of a unique personal identifier currently rec- 1 ognized by the Internal Revenue Service and shall 2 remain in the American Opportunity Fund. 3 (2) ACCOUNT BALANCE.—The balance in an ac- 4 count holder’s AO account at any time is the excess 5 of— 6 (A) the sum of— 7 (i) all deposits made into the Amer- 8 ican Opportunity Fund and credited to the 9 account under paragraph (3); and 10 (ii) the total amount of allocations 11 made to and reductions made in the ac- 12 count pursuant to paragraph (4); over 13 (B) the amounts paid out of the account 14 with respect to such individual under subsection 15 (c). 16 (3) CREDITING OF CONTRIBUTIONS.—Pursuant 17 to regulations which shall be prescribed by the Exec- 18 utive Director, the Executive Director shall credit to 19 each AO account the amounts paid into the Amer- 20 ican Opportunity Fund under section 102(d) which 21 are attributable to the account holder of such ac- 22 count. 23 (4) ALLOCATION OF EARNINGS AND LOSSES.— 24 The Executive Director shall allocate to each AO ac- 25 VerDate Sep 11 2014 06:03 Aug 02, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2231.IS S2231 kjohnson on DSK79L0C42 with BILLS 12 •S 2231 IS count an amount equal to the net earnings and net 1 losses from each investment of sums in the Amer- 2 ican Opportunity Fund which are attributable, on a 3 pro rata basis, to sums credited to such account, re- 4 duced by an appropriate share of the administrative 5 expenses paid out of the net earnings, as determined 6 by the Executive Director. 7 (b) ELIGIBLE INDIVIDUAL.—For purposes of this 8 title— 9 (1) IN GENERAL.—The term ‘‘eligible indi- 10 vidual’’ means any individual who— 11 (A) was born after December 31, 2003; 12 (B) has not yet attained the age of 18 13 years; and 14 (C) has a valid, unique, Federal Govern- 15 ment issued identification number recognized by 16 the Internal Revenue Service. 17 (2) CERTIFICATION OF ACCOU [Text truncated for display. 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