text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Tax Reduction and Economic Growth 
  Act of 1995''.
  
  SEC. 2. TAX REDUCTION IN THE EVENT OF LOW GROWTH.
  
      (a) Low-Growth Report.--
              (1) In general.--At any time, the Director of the Office of 
          Management and Budget (hereafter in this section referred to as 
          the ``Director'') shall notify the President and the Congress 
          if the Director has determined that for any of the periods 
          described in paragraph (2)--
                      (A) economic growth as measured by the change in 
                  real Gross Domestic Product (GDP) at an annual rate is 
                  estimated to be less than 1.5 percent, and
                      (B) the rate of national unemployment (seasonally 
                  adjusted) is estimated to be greater than 6.5 percent.
              (2) Testing periods.--For purposes of paragraph (1), the 
          periods described in this paragraph are--
                      (A) the period consisting of the quarter during 
                  which the notification is given and the quarter 
                  preceding such notification,
                      (B) the period consisting of the preceding 4 
                  quarters, and
                      (C) the period consisting of the 2 quarters 
                  following such notification.
      (b) Presidential Authorization of Temporary Tax Reductions.--
              (1) Presidential declaration.--After notification under 
          subsection (a), the President may issue a declaration that 
          temporary income tax reductions are required for a specified 
          calendar year to provide a quick and necessary fiscal stimulus 
          to the economy. Any such declaration shall be transmitted to 
          the Congress.
              (2) Temporary tax modifications.--If the President 
          transmits a declaration under paragraph (1) to the Congress--
                      (A) Temporary tax reductions.--
                              (i) In general.--Effective for taxable 
                          years beginning in the calendar year specified 
                          in such declaration--
                                      (I) the rates applicable to the 
                                  first income bracket in the tax tables 
                                  contained in section 1 of the Internal 
                                  Revenue Code of 1986 shall be reduced 
                                  by a percentage (not to exceed 3 
                                  percent) specified in such declaration, 
                                  and
                                      (II) the amounts set fourth as tax 
                                  in such tables shall be adjusted to 
                                  reflect such rate reduction.
                              (ii) Withholding adjustments.--The 
                          withholding tables or procedures prescribed by 
                          the Secretary of the Treasury or his delegate 
                          under section 3402(a) of such
                           Code shall be modified so that, to the maximum 
  extent possible, the full calendar year effect of such reduction is 
  reflected through withholding reductions during the portion of the 
  calendar year after such declaration.
                      (B) Temporary surtax where economic growth 
                  requirements subsequently satisfied.--
                              (i) In general.--Effective for taxable 
                          years beginning in the first subsequent 
                          calendar year for which the economic growth 
                          requirements of paragraph (3) are satisfied--
                                      (I) each rate of tax in the tax 
                                  tables contained in section 1 of the 
                                  Internal Revenue Code of 1986 shall be 
                                  increased by the percentage determined 
                                  under paragraph (4) for such year, 
                                  except the tax rate for individuals 
                                  with Adjusted Gross Income of less than 
                                  $50,000 and taxpayers filing jointly 
                                  with Adjusted Gross Income of less than 
                                  $75,000 shall not exceed the rates 
                                  established in the year prior to the 
                                  temporary tax reduction, and
                                      (II) the amounts set forth as tax 
                                  in such tables shall be adjusted to 
                                  reflect such rate increases.
                              (ii) Withholding adjustments.--Effective 
                          for such subsequent calendar year, the 
                          withholding tables or procedures prescribed by 
                          the Secretary of the Treasury or his delegate 
                          under section 3402(a) of such Code shall be 
                          modified to reflect the increase in tax rates 
                          under clause (i).
              (3) Economic growth requirements.--The economic growth 
          requirements of this paragraph are satisfied for any calendar 
          year if, before the beginning of such calendar year, the 
          President determines (and publishes such determination in the 
          Federal Register) that for such calendar year and the 
          immediately preceding calendar year--
                      (A) economic growth as measured by the change in 
                  the real Gross Domestic Product (GDP) is estimated to 
                  be greater than 4.5 percent, and
                      (B) the rate of national unemployment (seasonally 
                  adjusted) is estimated to be less than 5.5 percent.
              (4) Rate increase percentage.--The percentage determined 
          under this paragraph is the percentage increase in the tax 
          rates contained in section 1 of the Internal Revenue Code of 
          1986 which the President estimates will result in an aggregate 
          increase in receipts under chapter 1 of such Code equal to the 
          aggregate decrease in receipts under such Code by reason of 
          subparagraph (A) of paragraph (2) without increasing the tax 
          rate for individuals with Adjusted Gross Income of less than 
          $50,000 and taxpayers filing jointly with Adjusted Gross Income 
          of less than $75,000 above the rates established in the year 
          prior to the temporary tax reduction. Such percentage shall be 
          published in the Federal Register before the beginning of the 
          calendar year for which the economic requirements of paragraph 
          (2) are satisfied.
  
  SEC. 3. TREATMENT UNDER PAY-AS-YOU-GO PROCEDURES.
  
      Any reduction or increase in receipts resulting from section 2 of 
  this Act shall not be considered for any purpose under the Balanced 
  Budget and Emergency Deficit Control Act of 1985.
target: Tax Reduction and Economic Growth Act of 1995 - Authorizes the President to issue a declaration that a temporary reduction in the rates of the first income bracket no greater than 3 percent are required if the Director of the Office of Management and Budget finds that:  (1) the annual rate of the Gross Domestic Product is less than 1.5 percent; and (2) the adjusted national unemployment rate is higher than 6.5 percent.
feat_title: Tax Reduction and Economic Growth Act of 1995