text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Family Living Wage Act''.
  
  SEC. 2. INCREASE IN EARNED INCOME TAX CREDIT.
  
      (a) General Rule.--Subsections (a) and (b) of section 32 of the 
  Internal Revenue Code of 1986 (relating to earned income tax credit) 
  are amended to read as follows:
      ``(a) Allowance of Credit.--
              ``(1) In general.--In the case of an eligible individual, 
          there shall be allowed as a credit against the tax imposed by 
          this subtitle for the taxable year an amount equal to the 
          credit percentage of so much of the earned income for the 
          taxable year as does not exceed $8,000.
              ``(2) Limitation.--The amount of the credit allowable to a 
          taxpayer under this subsection for any taxable year shall not 
          exceed the excess (if any) of--
                      ``(A) the credit percentage of $8,000, over
                      ``(B) the phaseout percentage of so much of the 
                  adjusted gross income (or, if greater, the earned 
                  income) of the taxpayer for the taxable year as exceeds 
                  $10,000.
      ``(b) Percentages.--For purposes of subsection (a)--
              ``(1) Credit percentage.--
                      ``(A) In general.--The credit percentage is the 
                  percentage equal to the sum of--
                              ``(i) 20 percent,
                              ``(ii) 5 percent for each school age 
                          qualifying child, plus
                              ``(iii) 10 percent for each preschool age 
                          qualifying child.
                      ``(B) Not more than 4 children taken into 
                  account.--Not more than 4 children shall be taken into 
                  account under subparagraph (A), and preschool age 
                  qualifying children shall be taken into account before 
                  any other children are taken into account.
              ``(2) Phaseout percentage.--
                      ``(A) Phasedown to minimum benefit.--
                              ``(i) In general.--The phaseout percentage 
                          is the percentage determined in accordance with 
                          the following table:
  
                           ``If the combination of
                                                                         
                             qualifying children taken
                                                                         
                             into account under
                                                             The phaseout
                             paragraph (1) is--
                                                          percentage is--
                                   1 S.................          13      
                                   2 S, or 1 P.........          14      
                                   3 S, or 1 S and 1 P.          15      
                                   4 S, or 2 S and 1 P,          16      
                              or 2 P.
                                   3 S and 1 P, or 1 S           17      
                              and 2 P.
                                   2 S and 2 P, or 3 P.          18      
                                   1 S and 3 P.........          19      
                                   4 P.................         20.      
                              ``(ii) Symbols used in table.--For purposes 
                          of clause (i)--
                                      ``(I) S means school age qualifying 
                                  child, and
                                      ``(II) P means preschool age 
                                  qualifying child.
                      ``(B) Minimum benefit for taxpayers with incomes 
                  below $50,000.--Except as provided in subparagraph (C), 
                  subparagraph (A) shall not apply so as to reduce the 
                  credit allowed by this section to a taxpayer to less 
                  than the minimum benefit determined in accordance with 
                  the following table:
  
                      ``If the phaseout percentage
                                                              The minimum
                        applicable to the taxpayer is--
                                                             benefit is--
                                13.....................          $200    
                                14.....................           400    
                                15.....................           600    
                                16.....................           800    
                                17.....................         1,000    
                                18.....................         1,200    
                                19.....................         1,400    
                                20.....................        1,600.    
                      ``(C) Phaseout of minimum benefit.--If the adjusted 
                  gross income (or, if greater, the earned income) of the 
                  taxpayer for the taxable year exceeds $50,000, the 
                  minimum benefit determined under subparagraph (B) shall 
                  be reduced by 15 percent of such excess.
              ``(3) Special rules for individual whose only children have 
          attained age 16.--For purposes of this section, in the case of 
          an individual who is an eligible individual solely by reason of 
          children each of whom has attained age 16 as of the close of 
          the taxable year--
                      ``(A) the credit percentage shall be 20 percent,
                      ``(B) the phaseout percentage shall be 12 percent, 
                  and
                      ``(C) subparagraphs (B) and (C) of paragraph (2) 
                  shall not apply.''
      (b) Preschool Age and School Age Qualifying Children Defined.--
  Subsection (c) of section 32 of such Code is amended by adding at the 
  end the following new paragraph:
              ``(4) Preschool age and school age qualifying children.--
                      ``(A) Preschool age qualifying child.--The term 
                  `preschool age qualifying child' means any qualifying 
                  child who has not attained age 6 as of the close of the 
                  taxable year.
                      ``(B) School age qualifying child.--The term 
                  `school age qualifying child' means any qualifying 
                  child who has attained age 6 but not age 16 as of the 
                  close of the taxable year.''
      (c) Advance Payment Provisions.--
              (1) Subsection (b) of section 3507 of such Code is amended 
          by striking ``and'' at the end of paragraph (2), by striking 
          the period at the end of paragraph (3) and inserting ``, and'', 
          and by inserting after paragraph (3) the following new 
          paragraph:
              ``(4) states the number and ages of qualifying children (as 
          defined in section 32(c)) of the employee for the taxable 
          year.''
              (2) Paragraph (2) of section 3507(c) of such Code is 
          amended--
                      (A) in subparagraph (B)(i), by striking ``(without 
                  regard to subparagraph (D)'' and by striking ``section 
                  32(a)(1)'' and inserting ``section 32(a)'',
                      (B) in subparagraph (B)(ii), by striking ``section 
                  32(b)(1)(B)(ii)'' and inserting ``section 32(a)(2)'' 
                  and by striking ``section 32(a)(1)'' and inserting 
                  ``section 32(a)'', and
                      (C) by adding at the end the following new 
                  sentence:
          ``For purposes of this paragraph, the credit percentage shall 
          be determined under section 32(b) on the basis of the number 
          and ages of qualifying children specified in the earned income 
          eligibility certificate and the determination of the amounts 
          referred to in subparagraph (B)(ii) shall be made on the basis 
          of the number and ages of qualifying children so specified.''
              (3) Clause (i) of section 3507(e)(3)(A) of such Code is 
          amended by inserting before ``, or'' the following: ``(or 
          changing the percentages applicable to the employee under 
          section 32(b) for the taxable year)''.
      (d) Conforming Amendments.--
              (1) Paragraph (2) of section 32(f) of such Code is 
          amended--
                      (A) by striking ``subsection (b)'' each place it 
                  appears in subparagraphs (A) and (B) and inserting 
                  ``subsection (a)(2)'', and
                      (B) by adding at the end the following new 
                  sentence:
          ``Separate tables shall be prescribed for each of the phaseout 
          percentages specified in the table contained in subsection 
          (b)(2)(A)(i).''
              (2) Paragraphs (1) and (2) of section 32(i) of such Code 
          are amended to read as follows:
              ``(1) In general.--In the case of any taxable year 
          beginning after 1995, each amount referred to in paragraph (2) 
          shall be increased by an amount equal to--
                      ``(A) such amount, multiplied by
                      ``(B) the cost-of-living adjustment determined 
                  under section 1(f)(3) for the calendar year in which 
                  the taxable year begins by substituting `1994' for 
                  `1989' in subparagraph (B) thereof.
              ``(2) Amounts.--The amounts referred to in this paragraph 
          are--
                      ``(A) the credit percentages used for purposes of 
                  subsection (a),
                      ``(B) the $10,000 amount contained in subsection 
                  (a)(2)(B), and
                      ``(C) the $50,000 amount contained in subsection 
                  (b)(2)(C).''
              (3) Section 213 of such Code (relating to medical, dental, 
          etc., expenses) is amended by striking subsection (f).
              (4) Paragraph (3) of section 162(l) of such Code is amended 
          to read as follows:
              ``(3) Coordination with medical deduction.--Any amount paid 
          by a taxpayer for insurance to which paragraph (1) applies 
          shall not be taken into account in computing the amount 
          allowable to the taxpayer as a deduction under section 
          213(a).''
      (e) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 1993; except that 
  the amendments made by subsection (c) shall take effect on January 1, 
  1994.
  
  SEC. 3. DEPENDENT CARE CREDIT LIMITED TO HANDICAPPED DEPENDENTS AND 
                SPOUSES.
  
      (a) In General.--Paragraph (1) of section 21(b) of the Internal 
  Revenue Code of 1986 (defining qualifying individual and employment-
  related expenses) is amended by striking subparagraph (A), by 
  redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), 
  respectively, and by adding at the end the following new sentence:
          ``In the case of an individual described in subparagraph (A) 
          who has not attained age 16 as of the close of the taxable 
          year, such individual may be treated as a qualifying individual 
          for purposes of this section only if the taxpayer elects not to 
          treat such individual as a qualifying child under section 32 
          for such year.''
      (b) Conforming Amendments.--
              (1) Subparagraph (B) of section 21(b)(2) of such Code is 
          amended by striking ``care of--'' and all that follows and 
          inserting ``care of a qualifying individual who regularly 
          spends at least 8 hours each day in the taxpayer's household.''
              (2) Paragraph (2) of section 21(d) of such Code is amended 
          by striking ``subsection (b)(1)(C)'' and inserting ``subsection 
          (b)(1)(B)''.
              (3) Paragraph (5) of section 21(e) of such Code is 
          amended--
                      (A) by striking ``is under the age of 13 or'' in 
                  subparagraph (B), and
                      (B) by striking ``subparagraph (A) or (B) of 
                  subsection (b)(1) (whichever is appropriate)'' and 
                  inserting ``subsection (b)(1)(A)''.
      (c) Effective Date.--The amendments made by this section shall 
  apply to taxable years beginning after December 31, 1993.
  
  SEC. 4. ELIMINATION OF PROPOSED CHANGES IN TREATMENT OF EARNED INCOME 
                CREDIT IN DETERMINING CERTAIN WELFARE BENEFITS.
  
      Paragraphs (1) and (2)(A) of section 402(c) of the Family Support 
  Act of 1988 are repealed.
target: Family Living Wage Act - Amends Internal Revenue Code provisions governing the earned income tax credit to:  (1) increase from $5,714 to $8,000 the amount of earned income subject to the credit; (2) establish the basic credit at 20 percent; and (3) permit an additional credit (to apply to not more than four children) of five percent for each dependent school age child between age six and age 16 and ten percent for each preschool age child.  Reduces the amount of the credit for taxpayers with adjusted gross income over $50,000.  Indexes amounts relating to the credit beginning in 1995. 
  Disallows application of the nonrefundable dependent care income tax credit with respect to a taxpayer's dependents under age 13, unless the child is physically or mentally incapable of self-care.  Permits the credit with respect to handicapped children under age 16 only if the taxpayer elects not to include the child within the framework of the earned income credit. 
  Repeals provisions of the Family Support Act of 1988 that revise the way in which the earned income credit is treated in the context of needs analysis for purposes of State plans for aid and services to needy families with children under title IV of the Social Security Act.
feat_title: Family Living Wage Act