Sec. 3. Surcharge on high income individuals, estates, and trusts
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Part I of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 1 the following new section: In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to the sum of— 5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds— $10,000,000, in the case of any taxpayer not described in subparagraph
(B)or (C), $5,000,000, in the case of a married individual filing a separate return, and $200,000, in the case of an estate or trust, plus 3 percent of so much of the modified adjusted gross income of the taxpayer as exceeds— $25,000,000, in the case of any taxpayer not described in subparagraph
(B)or (C), $12,500,000, in the case of a married individual filing a separate return, and $500,000, in the case of an estate or trust. For purposes of this section, the term modified adjusted gross income means adjusted gross income reduced by any deduction (not taken into account in determining adjusted gross income) allowed for investment interest (as defined in section 163(d)) or business interest (as defined in section 163(j)). In the case of an estate or trust, adjusted gross income shall be determined as provided in section 67(e), and reduced by the amount allowed as a deduction under section 642(c). In the case of a nonresident alien individual (other than an individual described in section 876(a) or 877(a)) or a foreign trust, only amounts taken into account in connection with the tax imposed under section 871(b) shall be taken into account under this section. Each dollar amount which is applicable to any taxpayer under subsection
(a)shall be decreased (but not below zero) by the excess (if any) of— the sum of— amounts excluded from the taxpayer’s gross income under section 911, amounts excluded from the taxpayer’s gross income under section 931, and amounts excluded from the taxpayer’s gross income under section 933, over the sum of— amounts of any deductions or exclusions disallowed under section 911(d)(6) with respect to the amounts described in subparagraph (A)(i), amounts of any deductions or exclusions disallowed under section 931(b) with respect to the amounts described in subparagraph (A)(ii), and amounts of any deductions or exclusions disallowed under section 933 with respect to the amounts described in subparagraph (A)(iii). Subsection
(a)shall not apply to— a trust all the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B), an electing settlement trust (as defined in section 646(h)), or a cemetery perpetual care fund described in section 642(i). The tax imposed under this section shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter (other than sections 27 and 901). For purposes of the determination of adjusted gross income, section 641(c)(1)(A) shall not apply and all portions of any electing small business trust shall be treated as a single trust. The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance to prevent the avoidance of the purposes of this section. . Section 453A(c) of the Internal Revenue Code of 1986 is amended by redesignating paragraph
(6)as paragraph
(7)and by inserting after paragraph
(5)the following new paragraph: For purposes of paragraph (3)(B), the maximum rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs
(1)and
(2)of section 1A(a). . Section 876(a) of such Code is amended by striking section 1 and inserting sections 1 and 1A . Section 877(b) of such Code is amended by inserting and section 1A after section 1 or 55 . Section 904(b)(3)(E) of such Code is amended— in clause (i)(I), by inserting increased by the sum of the rates set forth in paragraphs
(1)and
(2)of section 1A(a) after (whichever applies) , in clause (i)(II) by inserting increased by the sum of the rates set forth in paragraphs
(1)and
(2)of section 1A(a) after section 1(h) , and in clause (ii), by striking referred to in and inserting determined under . Section 962(a)(1) of such Code is amended by inserting , 1A, after sections 1 . Section 1291(c)(2) of such Code is amended by adding at the end the following: For purposes of the preceding sentence, the highest rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs
(1)and
(2)of section 1A(a). . Section 1301(a) of such Code is amended by striking section 1 both places it appears and inserting sections 1 and 1A . Section 1398(c)(2) of such Code is amended by inserting and tax shall be imposed under section 1A by treating the estate as a married individual filing a separate return before the period at the end. Section 1446(b)(2) of such Code is amended by adding at the end the following flush sentence: For purposes of subparagraph (A), the highest rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs
(1)and
(2)of section 1A(a). . Section 6015(d)(2)(B) of such Code is amended by inserting , 1A, after section 1 . Section 6225(b)(1) of such Code is amended by adding at the end the following flush sentence: For purposes of subparagraph (B), the highest rate of tax in effect under section 1 shall be treated as being equal to the sum of such rate and the rates in effect under paragraphs
(1)and
(2)of section 1A(a). . Section 6225(c)(4)(A) of such Code is amended— by striking subsection (b)(1)(A) and inserting subsection (b)(1)(B) , and by striking or at the end of clause (i), by adding or at the end of clause (ii), and by inserting after clause
(ii)the following new clause: is not an individual subject to one or both of the rates of tax in effect under paragraphs
(1)and
(2)of section 1A(a), . Section 7519(b) of such Code is amended by inserting and increased by the sum of the rates in effect under paragraphs
(1)and
(2)of section 1A(a) before the period at the end. The table of sections for part I of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 1 the following new item: Sec. 1A. Surcharge on high income individuals. . The amendments made by this section shall apply to taxable years beginning after December 31, 2021.