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SEC. 101. REDUCTION OF NORMAL TAX AND SURTAX.

Section 12 (c) of the Internal Revenue Code is hereby amended to read

as follows:

"(c) REDUCTION OF TENTATIVE NORMAL TAX AND TENTATIVE SURTAX.-

“(1) The combined normal tax and surtax under section 11 and subsection

(b) of this section shall be the aggregate of the tentative normal tax and

tentative surtax, reduced as follows:

If the aggregate is:

The deduction shall be:

Not over $200---

3312% of the aggregate.

Over $200 but not over $279.17-

$67.

Over $279.17 but not over $840_

24% of the aggregate.

Over $840_

$201.60, plus 1442% of excess over

$810.

(2) In no event shall the combined normal tax and surtax exceed 77 per centum.

of the net income.”

SEC. 102. REDUCTION IN SUPPLEMENT T TAX.

For reduction in the tax under Supplement T of Chapter 1 of the Internal

Revenue Code (tax table which may be used by taxpayer at his election if his

adjusted gros sincome is less than $5,000), see section 401.

SEC. 102. INCOME OF HUSBAND AND WIFE.

For tax in case of joint return of husband and wife (the so-called "splitting

of income”), see section 301.

SEC. 104. TECHNICAL AMENDMENTS.

(a) Section 11 of the Internal Revenue Code (relating to the normal tax on

individuals) is hereby amended by striking out “by 5 per centum thereof” and

inserting in lieu thereof “as provided in section 12 (c)”.

(b) Section 12 (b) of the Internal Revenue Code (relating to the rate of

surtax on individuals) is hereby amended by striking out "by 5 per centum

thereof” and inserting in lieu thereof “as provided in subsection (c) of this

section”.

(c) Subsections (d), (e), (f), (g), and (h) of section 12 of the Internal

Revenue Code are amended to read as follows:

“(e) COMPUTATION OF TAX WITHOUT REGARD TO CREDITS AGAINST Tax.-In the

application of this section, the combined normal tax and surtax shall be com-

puted without regard to the credits provided in sections 31, 32, and 35.

“(f) ASCERTAINMENT OF NORMAL TAX AND SURTAX SEPARATELY.-Whenever it is

necessary to ascertain the normal tax and the surtax separately, the surtax

shall be an amount which is the same proportion of the combined normal tax

and surtax as the tentative surtax is of the aggregate of the tentative normal

tax and tentative surtax; and the normal tax shall be the remainder of such

combined normal tax and surtax.

“(g) CROSS REFERENCF.8.-

“(1) ALTERNATIVE TAX.–For alternative tax which may be elected if

adjusted gross income is less than $5,000, see Supplement T.

“(2) TAX IN CASE OF CAPITAL GAINS.-For rate and computation of alterna-

tive tax in lieu of normal tax and surtax in the case of capital gain from

the sale or exchange of capital assets held for more than 6 months, see

section 117 (c).

(3) TAX ON PERSONAL HOLDING COMPANIES.–For surtax on personal holding companies, see section 500.

“(4) AVOIDANCE OF SURTAXES BY INCORPORATION.-For surtax on corporations which accumulate surplus to avoid surtax on shareholders, see section 102.

"(5) SALE OF OIL OR GAS PROPERTIES.–For limitation of surtax attributable

to the sale of oil or gas properties, see section 105." SEC. 105. TAXABLE YEARS TO WHICH AMENDMENTS APPLICABLE.

The amendments made by this title shall be applicable with respect to taxable years beginning after December 31, 1947. For treatment of taxable years beginning in 1947 and ending in 1948, see section 601.

TITLE II-CREDITS AGAINST NET INCOME FOR NORMAL

TAX AND SURTAX

SEC. 201. ADDITIONAL CREDITS AGAINST NET INCOME FOR NORMAL

TAX AND SURTAX. Paragraphs (1) and (2) of section 25 (b) of the Internal Revenue Code are hereby amended to read as follows:

“(1) CREDITS.—There shall be allowed for the purposes of both the normal tax and the surtax, the following credits against net income:

"(A) An exemption of $600 for the taxpayer; and an additional exemption of $600 for the spouse of the taxpayer if a separate return is made by the taxpayer, and if the spouse, for the calendar year in which the taxable year begins, has no gross income and is not the dependent of another taxpayer;

“(B) (i) An additional exemption of $600 for the taxpayer if he has attained the age of 65 before the close of the taxable year; and

"(ii) An additional exemption of $600 for the spouse of the taxpayer if a separate return is made by the taxpayer, and if the spouse has attained the age of 65 before the close of such taxable year, and, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer;

“(C) (i) An additional exemption of $600 for the taxpayer if he is blind at the close of his taxable year; and

"(ii) An additional exemption of $600 for the spouse of the taxpayer if a separate return is made by the taxpayer, and if the spouse is blind and, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer. For the purposes of this clause the determination of whether the spouse is blind shall be made as of the close of the taxable year of the taxpayer, unless the spouse dies during such taxable year, in which case such determination shall be made as of the time of such death.

“(iii) For the purposes of this subparagraph an individual is blind only if either : his central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or his visual acuity is greater than 20/200 but is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees

“(D) An exemption of $600 for each dependent whose gross income for the calendar year in which the taxable year of the taxpayer begins is less than $500, except that the exemption shall not be allowed in respect of a dependent who has made a joint return with his spouse under section 51 for the taxable year beginning in such calendar year. “(2) DETERMINATION OF STATUS.-For the purposes of this subsection

(A) the determination of whether an individual is married shall be made as of the close of his taxable year, unless his spouse dies during his taxable year, in which case such determination shall be made as of the time of such death; and

(B) an individual legally separated from his spouse under a decree

of divorce or of separate maintenance shall not be considered as married.” SEC. 202. TECHNICAL AMENDMENTS.

(a) DECLARATION OF ESTIMATED Tax.-Section 58 (a) of the Internal Revenue Code (relating to requirement of declaration of estimated tax) is hereby amended to read as follows:

“(a) REQUIREMENT OF DECLARATION.-Every individual (other than an estate or trust and other than a nonresident alien with respect to whose wages, as

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defined in section 1621 (a), withholding under Subchapter Dor Chapter 9 is not made applicable) shall, at the time prescribed in subsection (d), make a declaration of his estimated tax for the taxable year if

“(1) his gross income from wages (as defined in section 1621) can reasonably be expected to exceed the sum of $4,500 plus $600 with respect to each exemption provided in section 25 (b); or

“(2) his gross income from sources other than wages (as defined in section 1621) can reasonably be expected to exceed $100 for the taxable year

and his gross income to be $600 or more.” (b) WITHHOLDING EXEMPTIONS.

(1) IN GENERAL.-Section 1622 (h) (1) of the Internal Revenue Code is hereby amended to read as follows:

“(1) IN GENERAL.-An employee receiving wages shall on any day be entitled to the following withholding exemptions:

“(A) An exemption for himself.

“(B) One additional exemption for himself if, on the basis of facts existing at the beginning of such day, there may reasonably be expected to be allowable an exemption under section 25 (b) (1) (B) (i) (relating to old age) for the taxable year under Chapter 1 in respect of which amounts deducted and withheld under this subchapter in the calendar year in which such day falls are allowed as a credit.

(C) One additional exemption for himself if, on the basis of facts existing at the beginning of such a day, there may reasonably be expected to be allowable an exemption under section 25 (b) (1) (C) (i) (relating to the blind) for the taxable year under Chapter 1 in respect of which amounts deducted and withheld under this subchapter in the calendar year in which such day falls are allowed as a credit.

“(D) If the employee is married, any exemption to which his spouse is entitled, or would be entitled if such spouse were an employee receiving wages, under subparagraph (A), (B), or (C), but only if such spouse does not have in effect a withholding exemption certificate claiming such exemption.

(E) An exemption for each individual with respect to whom, on the basis of facts existing at the beginning of such day, there may reasonably be expected to be allowable an exemption under section 25 (b) (1) (D) for the taxable year under Chapter 1 in respect of which amounts deducted and withheld under this subchapter in the calendar year in

which such day falls are allowed as a credit." (2) STATUS DETERMINATION DATE.—In the case of an individual entitled to an additional withholding exemption under section 1622 (h) (1) of the Internal Revenue Code by reason of the amendment made thereto by paragraph (1) of this subsection, the term "status determination date” as used in section 1622 (h) (3) (B) of such Code includes also the ninetieth day

after the date of the enactment of this Act. (c) REQUIREMENT OF RETURNS,

(1) INDIVIDUAL RETURNS.-Section 51 (a) of the Internal Revenue Code (relating to the requirement of individual returns) is hereby amended by striking out “$500" and inserting in lieu thereof “$600”.

(2) FIDUCIARY RETURNS.—Section 142 (a) of such Code (relating to the requirement of fiduciary returns) is hereby amended by striking out "$500" wherever appearing therein and inserting in lieu thereof “$600”.

(3) INFORMATION RETURNS.—Section 147 (a) of such Code (relating to returns of information) is hereby amended by striking out “$500" wherever appearing therein and inserting in lieu thereof “$600". (d) CREDIT OF ESTATE AGAINST NET INCOME.—Section 163 (a) (1) of such Code (relating to credits against net income of an estate) is hereby amended by striking out “$500” and inserting in lieu thereof “$600”.

(e) REPEAL OF DEDUCTION FOR BLIND INDIVIDUALS.—Effective with respect to taxable years beginning after December 31, 1947, section 23 (y) of such Code (relating to special deduction for blind individuals) is repealed. SEC. 203. TAXABLE YEARS TO WHICH AMENDMENTS APPLICABLE.

The amendments made by this title shall be applicable with respect to taxable years beginning after December 31, 1947. For treatment of taxable years beginning in 1947 and ending in 1948, see section 601.

TITLE III-HUSBAND AND WIFE

PART 1-INCOME TAX

SEC. 301. SPLITTING OF INCOME.

Section 12 of the Internal Revenue Code (relating to surtax of individuals) is hereby amended by adding after subsection (c) of such section the following new subsection:

“(d) Tax in CABE OF JOINT RETURN.-In the case of a joint return of husband! and wife under section 51 (b), the combined normal tax and surtax under section. 11 and subsection (b) of this section shall be twice the combined normal tax. and surtax that would be determined if the net income and the applicable credits. against net income provided by section 25 were reduced by one-half.” SEC. 302. STANDARD DEDUCTION.

(a) INCREASE OF STANDARD DEDUCTION IN CASE OF JOINT RETURN OR RETURN BY UNMARRIED PERSON.-Section 23 (aa) (A) (A) of the Internal Revenue Code (relating to the standard deduction) is hereby amended to read as follows:

“(A) Adjusted Gross Income $5,000 or More.-If his adjusted gross income is $5,000 or more, the standard deduction shall be $1,000 or an amount equal to 10 per centum of the adjusted gross income, whichever is the lesser, except that in the case of a separate return by a married

individual, the standard deduction shall be $500." (b) ELECTION BY HUSBAND AND WIFE.-Section 23 (aa) (4) of such Code is hereby amended to read as follows:

“(4) HUSBAND AND WIFE.-In the case of husband and wife, the standard deduction shall not be allowed to either if the net income of one of the

spouses is determined without regard to the standard deduction." (c) DETERMINATION OF STATUS.—Section 23 (aa) of such Code is hereby amended by adding at the end thereof the following new paragraph:

“(6) DETERMINATION OF STATUS.-For the purposes of this subsection

“(A) the determination of whether an individual is married shall be made as of the close of his taxable year, unless his spouse dies during his taxable year, in which case such determination shall be made as of the time of such death; and

“(B) an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as

married.” SEC. 303. JOINT RETURNS OF HUSBAND AND WIFE.

Section 51 (b) of the Internal Revenue Code (relating to joint returns) is hereby amended to read as follows: “(b) HUSBAND AND WIFE.

“(1) IN GENERAL.-A husband and wife may make a single return jointly. Such a return may be made even though one of the spouses has neither gross income nor deductions. If a joint return is made the tax shall be computed on the aggregate income and the liability with respect to the tax shall be joint and several.

“(2) NONRESIDENT ALIEN.-No joint return may be made if either the husband or wife at any time during the taxable year is a nonresident alien.

“(3) D:FFERENT TAXABLE YEARS.—No joint return shall be made if the husband and wife have different taxable years; except that if such taxable years begin on the same day and end an different days because of the death of either or of both, then the joint return may be made with respect to the taxable year of each. The above exception shall not apply if the surviving spouse remarries before the close of his taxable year, nor if the taxable year of either spouse is a fractional part of a year under section 47 (a).

“(4) JOINT RETURN AFTER DEATH.- .- In the case of the death of one spouse or both spouses the joint return with respect to the decedent may be made only by his executor or administrator ; except that in the case of the death of one spouse the joint return may be made by the surviving spouse with respect to both himself and the decedent if (A) no return for the taxable year has been made by the decedent, (B) no executor or administrator has been appointed, and (C) no executor or administrator is appointed before the last day prescribed by law for filing the return of the surviving spouse. If an executor or administrator of the decedent is appointed after the making of the joint return by the surviving spouse, the executor or administrator may disaffirm such joint return by making, within one year after the last day

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