Amends the Code, as of tax year 2001, to establish (in addition to existing brackets) a 12 percent individual tax bracket for each filing status. Caps taxable income levels for the 12 percent bracket at: (1) $12,000 for married individuals filing jointly; (2) $10,000 for heads of households; and (3) $6,000 for unmarried individuals or married individuals filing separately. Applies the current 15 percent bracket to income levels above the 12 percent caps but below current 15 percent caps.
Prohibits minimum bracket amount inflation adjustments through tax year 2006. Revises the cost-of-living adjustment formula, as of tax year 2007.
Provides, beginning in tax year 2002, for specified reductions in the 12, (maintaining the revised 15 percent bracket without further change), 28, 31, 36, and 39.6 percent individual (and estate) brackets, so that as of 2006 and thereafter, there shall be four tax brackets of 10, 15, 25, and 33 percent.
Repeals mandatory reductions in the additional (three or more children) child tax credit and the earned income credit for taxpayers subject to the alternative minimum tax.
Revises current tax rates in conformity with the amendments made by this Act respecting: (1) accumulated corporate earnings; (2) personal holding companies; (3) voluntary withholding on certain Federal payments, unemployment benefits, gambling winnings, and Indian casino profits; (3) backup withholding; and (4) supplemental wage payments.
States that amounts transferred to any Social Security Act trust fund shall be determined as if this Act had not been enacted.